Will changing consumer preferences bring widespread delivery by drone?

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The military uses them. So do aerial photographers and filmmakers. And this year they featured prominently in the Super Bowl halftime show. But will unmanned aircraft systems—more commonly known as drones—ever take over delivery of packages to our homes and businesses?

The TPB’s Freight Subcommittee recently learned more about how consumer demands for greater choices, lower prices, and fast and free delivery are changing the way businesses distribute their products. According to experts at the meeting, delivery by drones will indeed one day be ubiquitous, but rural areas are likely to see these services first, and the National Capital Region may be one of the last to see them, given federal airspace and other security restrictions.

Consumers are demanding individualized goods with fast and “free” delivery

At the recent meeting, freight expert Anne Strauss-Wieder, from the North Jersey Transportation Planning Authority, explained that consumers expect access to a wide variety of goods that are always in stock. The internet and smartphones give consumers access to every imaginable retailer and product and they will shop around until they find what they want.

Consumers are now demanding free and faster shipping. Companies have to compete and be able to deliver anywhere. (NJTPA)
Consumers are now demanding free and faster shipping. Companies have to compete and be able to deliver anywhere. (NJTPA)

With so much competition, if one online store doesn’t have an item, a consumer can usually find it somewhere else. Traditional retail stores have limited shelf space while online retailers can pull products from large warehouses with many times more products in stock. This enables an individualized shopping experience for each consumer.

Online shopping has also conditioned consumers to demand that these goods are delivered instantaneously and for free. Most online retailers offer some kind of free shipping but consumers can pay more to receive an item the next day. Consumers, armed with more information and more choices, can more easily pick and choose the online retailer that can provide exactly what they want, for the lowest price, and the fastest shipping options.

Strauss-Weider explained that this demand for a more convenient way of shopping and a faster, cheaper, and more reliable delivery process is pushing suppliers to remake their businesses, from the way products are ordered to the way they are delivered.

Businesses are remaking their supply-chains

To meet these changing demands, retailers are remaking their entire supply-chains. Some of the resulting transformations are easy to see, like next-day (or even same-day!) delivery, the use of social media to market products and build demand, and the ability to have products delivered to any address.

Other transformations are occurring behind the scenes. Companies have begun to construct “fulfillment centers” focused on breaking apart large shipments and assembling items for delivery to individual customers. These facilities are more labor-intensive than their distribution-center cousins, which focus on moving large pallets of goods to retail outlets. These newer fulfillment centers need to be close to larger labor pools, and they need good access to a variety of transportation options, including transit services, so that those workers can get to work.

(BeyondDC/Flickr)
Lockers like these at a new Amazon store in College Park, MD provide a secure location for consumers to pick up their packages. (BeyondDC/Flickr)

Retailers are also creating networks of smaller distribution points closer to their customers to make next-day or same-delivery more possible. In many cases, stores are using their brick-and-mortar locations as mini urban distribution centers, enabling consumers to pick up same-day shipments. Companies are also using package lockers and third-party package pick-up locations, like local neighborhood retail establishments. These alternatives eliminate the potential for theft of packages left at consumers’ residences, reduce the number of stops that a delivery driver must make, helping to keep down costs, and can also drive foot traffic—and potential sales—to neighborhood stores.

Drones could be a cheaper alternative, but supportive regulation is needed

Companies like Amazon and Dominoes have already been testing delivery of packages (including pizza!) by drone, but does that mean widespread use of drones for package-delivery is on the horizon?

Darryl Jenkins, a futurist who also spoke at the meeting, explained that powerful economic forces are driving businesses to explore drones as a cheaper alternative to today’s truck-delivery paradigm. According to Jenkins, drones could significantly lower average delivery costs, yielding a savings of more than $70 million a day based on current trends.

But before that can happen, there needs to be new regulatory frameworks, safety protocols, and control systems for operating unmanned aircraft. Carol Might, of the Federal Aviation Administration (FAA), was on hand at the meeting to discuss the role of the federal government. She said the FAA is working to create new frameworks and protocols and develop operating procedures that ensure safety. But, she said private business is leading the way in developing new control systems to facilitate safe and efficient drone operations.

Security concerns in the National Capital Region restrict flight in a 15 mile radius of Reagan National Airport. (FAA)
Security concerns in the National Capital Region restrict flight in a 15 mile radius of Reagan National Airport. (FAA)

Jenkins pointed out that drone-delivery is likely to take hold first in rural areas where there are fewer people and less development, which makes it easier to ensure safe operations. Eventually, as safety protocols and control systems are refined, drone delivery can move into more urban areas. But the National Capital Region is likely to be one of the last places to see widespread drone deployment, given various federal airspace and other security restrictions. Currently, according to Might, a 15-mile “special flight restriction zone” around Reagan National Airport prohibits unmanned aircraft operations of any kind. This restriction isn’t likely to be lifted any time soon.

The future of freight is already here

Although we might not see drones flying around delivering packages tomorrow, other technological innovations are popping up in our region. A new food-delivery service in the District of Columbia delivers orders using small, wheeled robots that roll down city sidewalks. Amazon has locker kiosks around the region and just opened a new brick-and-mortar store in College Park which allows University of Maryland students same day pickup and a place to box up and ship back items for return for free.

Innovations like these will increasingly allow people to live virtually anywhere and be able to order anything and have it be delivered quickly and inexpensively. These changes will affect the design of residential and commercial buildings—with more space in lobbies for package storage, the size of or need for delivery truck zones, and even whether people decide to own a car. Drones may not be here yet, but changes in how we get goods are already underway and are having an effect on our lives and the built environment.

MORE: See all the presentations from the March 9 TPB Freight Subcommittee meeting

RELATED: Our updated Freight Plan points to a future with more people—and more delivery trucks on our roads

Cover photo by UPS

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