Launched in fall 2020, the Extensiv Supply Chain Scholarship aims to foster the talent that will drive the future of our industry, inspiring fresh ideas and voices in logistics and the supply chain.
Below, we present Marissa Panzetta from Duquesne University, a runner-up in the Fall 2024 Extensiv Supply Chain Scholarship, and their essay on how the air freight industry—experiencing increased demand driven by the growth of ecommerce—is innovating the last mile of the supply chain with drones.
Sky High Innovations in Supply Chain Management
Logistics is a key function of the supply chain, as it is crucial to accurately and efficiently transport goods and services from their origin to final destination. When consumers imagine their goods being transported, they typically neglect air shipping, as most would think of a truck or a boat, since we are able to see these carriers shipping our goods daily.
However, in more recent times, there has been more social awareness around the air cargo industry, which has been historically overlooked as a mode of transportation for goods. The COVID-19 pandemic is responsible for bringing a spotlight on the air cargo industry due to the rise of ecommerce.
This expected growth comes from consumers becoming accustomed to the convenience and speed at which their ecommerce products are being delivered. Christopher Jackson, an expert in the air cargo industry, stated that “[e]-consumers expect speed, predictability of delivery times, and visibility…[so] air cargo logistics providers are very well positioned to take advantage of this growing sector of the market.”2
Express shipping is transitioning from a want to a need for consumers, giving the air cargo industry a competitive advantage in the new world of ecommerce and the potential to become a dominant player in the transportation market. To fully take advantage of this opportunity while in high demand, the air freight industry is working on developing the next big advancement in supply chain management:
Drones.
The benefits that come with this new market entrant are immensely large, as they will provide increased accessibility, safety, environmental impacts, and dramatically lower costs in the long run.
Air cargo must go outside the industry to execute last-mile delivery to consumers, as a motor carrier is needed to move goods from an airport to the final customer. However, drones will be able to streamline the process and provide increased accessibility, as a drone can fly directly to a consumer's doorstep. Decreasing the need for human labor with a drone will also solve the current issue of the shortage of workers in the trucking industry and will make the overall delivery process more efficient.
Furthermore, increased safety goes along with the decreased need of motor carriers, since there are motor carrier accidents occurring daily. From 2019 to 2021, UPS “encountered a staggering 2,632 collisions, causing 950 injuries and 56 fatalities."3
With drones being piloted without the need of human intervention in the sky, small package deliveries will be transported free of human error and collisions. Although trucking will still be needed for large capacity shipments, there were 21.7 billion small parcel deliveries made in the US in 2023.4 With the increased popularity of ecommerce shopping, small parcel shipments are expected to increase, which is ever more important for drones to replace trucking to increase safety.
Another advantage of delivery via drones rather than motor carriers is the positive environmental impacts. Unlike all other transportation modes, drones can use a battery rather than fuel to travel. There are drones that do use regular unleaded fuel for transport, but it is estimated that they have “94% lower energy consumption per package compared with other vehicles.”5 Therefore, using a drone will improve fuel consumption and decrease emissions, which will promote sustainability and save the environment, while also decreasing costs.
FedEx's experiments with drone delivery
Companies have been experimenting with drone delivery, including the leader of the air cargo industry, FedEx. FedEx’s subsidiary dedicated to air shipping, Fed Express, has begun drone testing at their airports in conjunction with the US Department of Transportation to provide data for policymakers. If laws are reformed to allow drones to fly safely around airports, they will be able to optimize countless processes, including “aircraft [and] runaway safety inspections, wildlife management, security surveillance, [and] maintenance of delivery and parts.”6
These drone operations have the potential to also be used in manufacturing facilities and warehouses to streamline operations across the entire supply chain. FedEx also “completed the first scheduled commercial residential drone delivery service and the first scheduled ecommerce delivery via drone” in 2019.6 However, final delivery efforts by drone have been halted by FedEx Express due to other improvement programs.
Amazon's Prime Air initiative
Yet, one of their competitors, Amazon, has become the first company to offer drone delivery services to their customers. Amazon’s Prime Air drone delivery service was launched in 2022, which offers “free drone delivery within 1 hour” with the press of a button.7
Although Amazon only offers this delivery service in two locations, the company is working on expanding their operations across the US, UK, and Italy in 2024. To achieve this expansion, “drone deliveries will integrate with Amazon’s Same Day facility network in 2024 to…move even faster and more efficiently.”8 This year, Amazon will be the first company to make drone express delivery a reality.
Despite the skepticism surrounding drones, the monetary benefits in the long run will prove that this technological advancement is worthwhile for companies to invest in. The initial investment of developing drone technology will be a high expense, but the companies that follow in Amazon’s footsteps will decrease the need of human labor, which can be reallocated into value-added tasks and continuous improvement initiatives for their company.
The new and exciting possibilities that come with drone delivery will optimize supply chain operations and elevate the air cargo industry to new heights.
Sources
1. eCommerce - Worldwide | Statista Market Forecast. Statista. (n.d.). LINK
2. Jackson, C. (2022, January 12). Surge in Demand for Air Freight Raises Aviation’s Outlook, But for How Long? Reed Smith LLP. LINK
3. Trucking Companies with the Most Accidents (Statistics). Trevino Injury Law. (2024, July 3). LINK
4. Taylor, G. (2024, April 18). Amazon Surpasses UPS in Parcel Volume for First Time, Index Says. Sourcing Journal. LINK
5. Crandall, R. E. (2023, October 18). How Drones, Evs and ADV are Advancing Last-Mile-Delivery. Association for Supply Chain Management. LINK
6. Innovation & Technology Policy Perspectives. FedEx. (n.d.). LINK
7. Drone Delivery FAQs - Amazon Customer Service. Amazon. (n.d.). LINK
8. Carter, C. (2024, April 1). 6 Cool Facts About Amazon’s Drone Delivery Program. US About Amazon. LINK
