Is drone delivery the future of logistics?

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Is drone delivery the future of logistics?

Supply chains across the globe are witnessing structural transformation as the world adjusts itself into the new post-pandemic era. Growing consumer demand and the business requirement of delivering a superior customer experience require supply chains to be more efficient, seamless, and cost and time effective. Expectations such as on-demand and same-day deliveries are compelling sellers and logistics players to think beyond the existing vehicle-based logistics networks.

According to the World Economic Forum (WEF), 85 million packages and documents are delivered around the world daily. Apart from fulfilling these staggering number of deliveries, studies suggest that last-mile delivery is typically the most time consuming and comprises an estimated 50 per cent of the total logistical costs.

To tackle the inefficiencies in last-mile logistics, a growing number of logistics stakeholders are turning to drone technology as it can control operational costs, overcome traffic bottlenecks and reduce vehicular emissions while satisfying the customer appetite for on-demand and instant delivery. While initial applications were for military activities, today, drones are transforming supply chains and logistics with various implementations in warehouses, location technology, inspections, survey of hazardous locations and delivering transport packages.

drone graph

Where does India stand on drones?

Considering the growing sector-wide applications, India’s Drone Liberalisation Policy, introduced in 2021, aims to accelerate the commercial and industrial use of drones. Apart from policy push, the Government of India has approved the Production-Linked Incentive (PLI) scheme for drones and drone component and has banned the import of drones to boost indigenous manufacturing.

According to the Ministry of Civil Aviation, under this scheme, spread over three financial years, USD15 million will be allocated to manufacturers. Further, programmes such as the ‘Drone Shakti’—aimed to support drone startups—and Drone-as-a-Service (DrAAS) are being promoted by the government. An online platform, called ‘Digital Sky’, will also be functional by October 2022, which will handle various activities related to drone management in the country. The first made-in-India heavy-lift drone,HL-150—estimated to transport 150 kilograms of cargo over 150 kilometres—can also redefine logistics in India. As per the Ministry of Civil Aviation, initiatives such as these are expected to make India the third-largest drone market by 2025 and a drone manufacturing hub by 2030.

The advantages and challenges of drone delivery

drone graph 2

The ease of navigation, for instance, enabled the Indian Council of Medical Research to complete the ‘i-Drone’ project, which involved carrying essential medical supplies to remote parts of the Northeast. A total of 17,275 units of medical supplies were delivered through drones, covering 735 kilometres in 12 hours. Without drone delivery, this would have required covering this 2,000-km journey on land, which would have taken an estimated 50 hours considering various logistical challenges.

Further, drone technology can be a serious contender in tackling climate change concerns. According to a report by the WEF, with the boom in e-commerce, last-mile delivery is expected to grow by 78 per cent by 2030. This could cause carbon emissions to increase by over 30 per cent in the world’s 100 largest cities. While the transport sector in India accounts for the third most emission of carbon dioxide, research suggests that road transport alone is responsible for about 90 per cent of the total emissions. Electric drone-based delivery solutions will consume less energy and are greener than land-based transport, thus making drone delivery a more sustainable method.

Drone delivery and last-mile logistics
Logistics stakeholders are factoring in these benefits, and according to estimates by Fortune Business Insights, this is leading to the global drone package delivery market size to grow from $1.5 billion in 2021 to an estimated $31.2 billion by 2028 at a CAGR of 53.94 per cent. Worldwide, e-commerce giants have already started drone deliveries and are looking at penetrating rural and remote areas with drone deliveries. Retailers in the hyperlocal delivery segment are also adopting drones to fulfill last-mile deliveries requests at the least time possible. With use cases of drones in last-mile logistics multiplying daily, industry reports suggest that global drone investments have surged to $5 billion in the last 10 years with drone manufacturers attracting increasing investments.

In India as well, government incentives are encouraging multiple industries, such as healthcare, agriculture, e-commerce and transportation, to experiment with drones. While until now, the use of drones was confined to essential deliveries, the next phase of growth will largely come from their commercial application. Many companies and startups from the e-commerce and food delivery industries are using drones in pilot exercises of middle-mile as well as last-mile deliveries. Ideal for lightweigh parcels, drones can deliver a parcel within an estimated round-trip time of 30 minutes. Additionally, as drones are equipped with GPS, customers can track their package in real time and enjoy quick and contactless deliveries. With over 200 startups in the drone sector and conducive policies, the drone and drone component manufacturing industry in India, according to the Ministry of Civil Aviation, is estimated to net an investment of over $626 million over the next three years.

Going ahead
While some challenges remain to the widespread application of drone delivery (for instance, the Indian urban sector is not widely spaced, and the rural sector is not well organised, which gives rise to several operational challenges), businesses are increasingly looking at drones for delivery solutions. While they may not immediately replace conventional delivery channels, drones can radically transform logistics operations, leading to a faster, efficient and greener mode of delivery and improved customer satisfaction.



BOOM LOGISTICS has been pursuing its goal of becoming a professional logistics company that creates sustainable benefits while providing comprehensive logistics services and solutions that meet the needs of customers and partners.



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