UPS Aims to Deliver Last Mile Efficiencies by Drone

While much has been made about Amazon’s Prime Air drone delivery program, the world’s largest parcel delivery company is not sitting by idly. A UPS initiative is outfitting its iconic brown trucks with drone systems but technological and regulatory hurdles loom on the horizon.

Looking Skyward for Opportunities

United Parcel Service (UPS) is known for embracing digitization to improve process efficiency, including using data to optimize the order in which deliveries are made and reducing the number of left turns its trucks make through smart routing.1,2 Given the rapid increase in drone technology and affordability over the past decade, UPS is exploring avenues to integrate autonomous systems into its existing delivery practices. While launching drones from a central warehouse to a network of customers is currently cost ineffective due to delivery distances and aircraft weight limits, large efficiencies can be gained by pairing a drone with a human driver in parallel processes to complete the last mile.3 These efficiencies have the potential to be economically significant, too, with UPS estimating that one less mile driven per truck each day will result in $50 million in annual cost savings.4

But UPS is not alone in the race towards making drone delivery a reality. Major players in the space include Amazon, Google, and Mercedes Benz, among others, each investing millions to deliver your package the fastest.3,4 With supply chains becoming increasingly open to incorporating drones into their distribution strategies the industry will only become more crowded and complicated, and that’s before you introduce the government.5

An Idea Takes Flight

In February 2017, UPS unveiled to the public its vision for drone-augmented delivery when it successfully launched a drone from a modified truck, delivered a package to a nearby yard, and recovered the aircraft atop the truck in a different location.4 Although a second test showed the program still needs improvement before it is ready for full integration, UPS is optimistic that in time the initiative will greatly improve driver efficiency and result in substantial time and emissions savings.4,6 In the short term, UPS is working to improve reliability and will continue testing in rural areas where the company most immediately expects to realize efficiency gains due to greater driving distances between delivery locations and a relatively easier regulatory environment in those areas.4

In the longer term, UPS is positioning itself to help shape government policy regarding drone operations within the national airspace system by serving on the Federal Aviation Administration’s (FAA) drone advisory committee.4 The committee, established in 2016, is charged with exploring issues pertinent to a variety of stakeholders in order to accelerate manned and unmanned aviation integration.7 Under current regulations, drones flown for commercial purposes must be flown within line-of-sight of a certified drone pilot in uncontrolled airspace and may not overfly people or fly at night.8 While these rules are designed to minimize risks associated with current drone technology, as unmanned systems mature there will be opportunities to relax regulations to lessen pilot burden and expand operational environments. By collaborating with the FAA and leading experts from industry, academia, and local government, UPS is ensuring it has a voice in discussions to safely integrate autonomous technology and make drones a more commercially viable solution for reaching its last mile customers.

Reaching Cruise Altitude

There are several technological and regulatory opportunities for UPS to improve its efficiency and operational timeline. The present implementation employs one drone per delivery truck and the drone can only deliver to one location before it must be manually reloaded by the driver.4 A more efficient system may see multiple package “bays” on each drone into which presorted parcels are automatically loaded by the truck, freeing the driver to conduct more hand deliveries and increasing the number of deliveries that can be made per flight.

From a regulatory standpoint, UPS stands to benefit from a recent presidential memorandum directing the Department of Transportation (DOT) to establish an experimental program that empowers state and local governments to develop solutions for integrating manned and unmanned aviation.9 The program, designed to keep drone innovation within the United States, will allow municipalities to apply for blanket approvals for drone operations within their jurisdictions. Additionally, the FAA will source best practices from these local operations for the development of future national regulations.9 As such, UPS can gain valuable opportunities to test and implement its drone delivery program by partnering with early adopting governments while also having influence over ideas presented to the FAA.

Clear Air or Stormy Skies?

While the February test was an important milestone and UPS has much to be excited about, there are still many unanswered questions surrounding the program’s long-term prospects. Considering the bureaucratic nature of aviation regulation and the hot-button issues of privacy and safety, what will it take for the government, and most importantly the public, to trust drones being a part of everyday life? Additionally, as large e-commerce companies that comprise the bulk of parcel deliveries enter the drone delivery business themselves, how can UPS compete with them for talent and technology?10,11

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Sources

Photo Credit: REUTERS/Scott Audette

  1. Marcus Wohlsen, “The Astronomical Math Behind UPS’ New Tool to Deliver Packages Faster,” Wired, June 13, 2003, https://www.wired.com/2013/06/ups-astronomical-math/, accessed November 2017.
  2. Matthew Phenix, “No-Left-Turn Software Saves UPS a Bundle,” Wired, December 7, 2007, https://www.wired.com/2007/12/no-left-turn-so/, accessed November 2017.
  3. Jack Stewart, “A Drone-Slinging UPS Van Delivers the Future,” Wired, February 21, 2017, https://www.wired.com/2017/02/drone-slinging-ups-van-delivers-future/, accessed November 2017.
  4. Graham Warwick Washington, “UPS Tests Truck-Launched Drone Delivery With Workhorse,” Aviation Week and Space Technology, February 24, 2017, http://awin.aviationweek.com/ArticlesStory.aspx?id=4b53c274-7352-4034-ba04-74c12ff35a99, accessed November 2017.
  5. Kevin O’Marah, “Why Drones Belong On Your Supply Chain Roadmap,” Forbes, September 22, 2016, https://www.forbes.com/sites/kevinomarah/2016/09/22/drones-belong-on-your-digital-roadmap/#67e50bde26fe, accessed November 2017.
  6. “UPS delivery drone has glitch at launch event,” February 22, 2017, BBC, http://www.bbc.com/news/technology-39051971, accessed November 2017.
  7. Federal Aviation Administration, “FAA Administrator Makes Two Major Drone Announcements,” https://www.faa.gov/news/updates/?newsId=85528, accessed November 2017.
  8. Federal Aviation Administration, “Fly for Work/Business,” https://www.faa.gov/uas/getting_started/fly_for_work_business/, accessed November 2017.
  9. Tanya Snyder, “White House rolls out state and local drone pilot program,” Politico, October 25, 2017, https://www.politicopro.com/transportation/story/2017/10/white-house-rolls-out-state-and-local-drone-pilot-program-163895, accessed November 2017.
  10. Matthew Boyle, “Wal-Mart Applies for Patent for Blimp-Style Floating Warehouse,” Bloomberg, August 18, 2017, https://www.bloomberg.com/news/articles/2017-08-18/wal-mart-s-amazon-war-takes-to-skies-with-floating-warehouses, accessed November 2017.
  11. Amazon, “Amazon Prime Air,” https://www.amazon.com/Amazon-Prime-Air/b?node=8037720011, accessed November 2017.

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4 thoughts on “UPS Aims to Deliver Last Mile Efficiencies by Drone

  1. MJP, this is a great write-up of a truly disruptive technology in parcel delivery. I found the question you posed at the end to be the most interesting from UPS’s perspective. How does a traditional package delivery company like UPS compete with the likes of Amazon for talent to remain relevant in a drone-enabled future? Partnerships with companies like Workhorse are a good start, but it seems to me that to avoid being completely supplanted by Amazon, UPS must begin to remold itself (and market itself to potential employees) as a technology company. Longer term, I fear that while UPS works on integrating drones into its existing delivery system to improve last-mile efficiency, more innovative companies will make that entire business model obsolete by making it feasible to launch drones from a central warehouse to a network of customers.

  2. Super interesting read – esp since your article nicely points outlines all 3 risks: commercial, regulatory, and tech. Particularly enjoyed your thought on a “a more efficient system may see multiple package “bays” on each drone into which presorted parcels are automatically loaded by the truck.”

    Building on alternative ‘more efficient systems’, curious for your thoughts on potential integrations of data for further efficiencies. For example, could imagine 2 potential applications:
    1. Data from retail partners or UPS with drones? For example, in a future world where next-day delivery is the norm even for rural customers, could a UPS truck/ drone be pre-loaded w anticipated customer orders?
    2. Data for route optimizations btwn drones + trucks? For example, could drones and trucks be equipped w sensors to track traffic patterns/ weather conditions/ pedestrian foot-traffic decide in real-time which routes are done by drone vs truck (or even if still by truck, which route to take)?

  3. Great post. Completing the last mile in a cost effective manner has for long been a major headache for logistics companies of all types.

    I’m wondering if you have any thoughts on whether traditional delivery companies like UPS, FedEx, and the USPS are in pole position to solve the last mile or if drones will open the door to new competition. UPS and FedEx have a formidable strategic moat in their route density: as a newcomer to the market, it’s simply impossible to compete from a cost perspective with UPS if they are delivering 10 packages to a block where you are delivering one. But a small delivery drone goes out and back to a single home or business. It’s no longer the route density that matters, but proximity of package staging areas.

  4. Brilliant! I’m really excited to see how this plays out, but you’re absolutely right to point out the issues that you do. From my previous job I’m all-too-familiar with demonstrations that garner media attention while there remains work to be done, and while there’s certainly potential here, UPS obviously hasn’t solved the problem per se. It also looks like there could be a significant opportunity here from a tech-development perspective, as UPS and the other major couriers will likely have to have automated and integrated truck-drone platforms in order to make this truly cost-competitive. One could almost imagine each truck becoming a mini distribution center in its own right, carrying a fleet of drones to rural areas for last mile deployment.

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