2019 Trends: 5 Practical Uses for Drones in the Supply Chain

William Craig, CPA – Senior Manager – Market Research 

Done 1aIn the spring of 2019, residents of the remote First Nation Island in Northern Ontario will begin receiving packages delivered using drones. Toronto-based company, Drone Delivery Canada (DDC), will transport supplies, food, medicine and mail from the mainland town of Moosonee (BBC), using drones that can handle payloads up to 11 lbs. Although the island can be accessed via the Moose River by boat in the summer and an ice road in the winter, it is difficult to access in the spring and fall during the freeze-up/ break-up of the river (CBC). After planning and testing for 2 years, the service is now approved for commercial use.

It’s one thing transporting supplies, it’s whole other challenge when Boeing announces a prototype for an autonomous flying taxi (video of prototype). Both Boeing and Bell have partnered with Uber, as Uber is proposing to launch its air taxi service (Uber Air) by 2023! The city Dubai, which wants to be the first city in the world to offer a flying taxi service, has staged a maiden voyage of an autonomous, two-seater, 18-rotor flying taxi made by German firm Volocopter. With that said, how far are we from autonomous or remote-controlled commercial planes?

Today, drones or unmanned aerial vehicles (UAV’s) are more commonly seen in use by the military, media, photography, as well as by hobbyists. Although the possibilities for drone use in the supply chain are endless, their use so far has been somewhat limited in real-world commercial application, but the times are changing!

The FAA is projecting 2.85 million small drones in use by 2022 and 450,000 of them will be used for commercial purposes (Deloitte), while Goldman Sachs forecasts a $100B market for drones by 2020. With numerous pilot projects (or should we say pilotless) underway, the use of UAV’s in the following areas is not far off; farming, delivery, construction, energy, warehouses, inspections, environmental, transportation, internet access, disaster relief, security, law enforcement, search and rescue, healthcare, real estate and more.

Let’s discuss some of major application areas in the supply chain.

WarehousesDrone 2

Researchers at MIT have developed small, lightweight and safe drones, called Rfly, that can fly around large warehouses, distribution centers and yards reading inventory RFID tags for continuous monitoring of inventory, preventing inventory mismatches, and determining item locations. It is currently being tested at a retailer in Massachusetts.

Walmart has put similar drones through trials in its warehouses. The Walmart autonomous drones can scan inventory in one hour that would normally require 50 humans. With its 150-plus warehouses, the savings could be tremendous for Walmart. Drones could also be used to transport boxes around the warehouse or distribution center, as well as perform other tasks.

Companies like PINC, now provides inventory and yard management solutions using drones that leverage IoT sensors, passive RFID’s, GPS, optical, cellular, and other sensors helping companies optimize their supply chain execution.

Last Mile Delivery

FlyTrex has started delivering groceries, clothing, medication and other items to the people of Iceland. Although the delivery service is only to specific drop-off zones authorized by the Icelandic Transport Authority, they do anticipate delivering to customer backyards in the near future. Wing, the Alphabet-owned drone delivery startup will launch a pilot in Finland, to deliver packages in Helsinki starting in the spring of 2019.

Amazon Prime Air made its first test delivery of an Amazon Fire TV to a customer in Cambridge, England in late 2016, although it has yet to launch commercially to date. Dominos, DHL Express, UPS, Alphabet, and other companies have similar pilot and test programs in place. UPS is testing drone deliveries, using the top of its vans as a mini-helipad and estimates cutting just one mile from its delivery routes could save $50 million annually (Business Insider).

Before commercial drone delivery is feasible on a broader scale; regulatory, safety, security, privacy, noise and other challenges, still need to be addressed, especially in large urban areas (Deloitte). In May 2018, 10 states were selected to participate in the Federal Aviation Administration’s 3-year commercial pilot program, to test the future of drone delivery in the United States with the help of private companies; including Apple, Uber, FedEx, Alphabet, Intel, Microsoft, Qualcomm, Zipline, Flirtey and PrecisionHawk.

Drone 3Farming/Agriculture

Over the next five years, Goldman Sacks predicts the agricultural sector to be the largest user of drone technology in the US, while research company