What does your next large pepperoni pie, a six-pack of craft beer, and a new Mercedes all have in common?

Drones.

The reality of commercial drone delivery services is almost upon us.

Companies that are considering implementing drones in their operations value efficiency above all else.

It’s time to squash the common idea that a time will come when a swarm of drones will fly out of their warehouse hive to deliver all of our online-purchased goods, plop them onto our front steps, and buzz and bob their way back to home base.

That’s simply not efficient. It wastes precious time and energy.

As drones are incapable of carrying more than a few pounds, the box truck and beloved driver remain essential parts of the delivery equation.

Instead, drivers can use drone-loaded trucks to cover the last mile or so. This saves the driver the hassle of parking the truck, finding your correct package, getting out, and hoofing it to the front door.

Simply writing the process down makes it seem very inefficient.

Just think of the new process of employed drones as comparable to a paperboy riding his bike down the street, tossing the Sunday newspaper onto each porch.

There’s a company already experimenting with drone usage, and it’s closer than anyone else.

And it’s not who you think.

It’s NOT Amazon

UPS made its first successful test run using drones back in February in Tampa, Florida.

Driver Sid Perrin rolled through a rural neighborhood in a UPS van sporting an odd lump on the roof.

Instead of taking a long driveway to deliver a package, she put the truck in park, climbed into the back, and placed the package in the belly of the drone.

As the drone flew off to its destination from the roof of the truck, Perrin continued on up the road to the next destination.

The drone successfully dropped off the package, returned to the truck, and docked itself onto its charging station awaiting its next mission.

It worked.

In the test flight, UPS deployed a super-sized version of the common consumer drones already in use for recreational purposes.

The super-sized commercial drone weighs approximately 10 pounds, features eight rotors, and can stay aloft for 30 minutes.

The van is an electric-diesel hybrid, and although the driver must come to a complete stop in order to dispatch the drones, everything else about it works like the typical UPS delivery truck.

The setup comes from Workhouse Group, an Ohio company that builds hybrid electric trucks, and the University of Cincinnati.

UPS calculates that just cutting off one mile from the route of each of its 66,000 drivers each day would potentially save the company $50 million a year.

In just covering the last mile of the delivery route, the drones will pay for themselves in no time.

“Our drivers are still key, and our drones aren’t going to be replacing our service providers, but they can assist and improve efficiency,” says Mark Wallace, senior vice president of global engineering and sustainability at UPS.

Other companies such as Amazon, 7-Eleven, Google, and many others are eager to employ drones because they can improve how fast orders can be delivered to customers in the competitive online shopping world.

However, it will be some time yet before UPS drones will be buzzing up to your door.

But UPS is working with the FAA to make it happen.

It requires drafting new rules to allow commercial drone deliveries and amending the current rule requiring operators to keep their machines within sight at all times.

Until then, drivers will continue to bring your packages to your door.

The Pizza…

A New Zealand couple were the first people in the world to have a pizza delivered to their home via drone.

Domino’s Pizza flew its Peri-Peri Chicken and Chicken and Cranberry pizzas to the backyard of Emma and Johnny Norman’s home in Whangaparaoa, about 20 miles north of Auckland.

The company claimed the flying pie touched down on a Wednesday last November around 11:19 a.m. Auckland time after a short flight of less than five minutes.

In a press release, Domino’s Group CEO and Managing Director Don Meij said the successful delivery service came just three short months after the announced partnership with Flirtey drone delivery service.

Meij went on to say:

We invested in this partnership, and technology, because we believe drone delivery will be an essential component of our pizza deliveries. They can avoid traffic congestion and traffic lights, and safely reduce the delivery time and distance by traveling directly to consumer’s homes. This is the future. This will actually create jobs. As we expand, we will look to hire additional team members whose roles will be focused on the drone order loading a fleet management.

Although the United States is not in the sights of Domino’s drone delivery service just yet, it is checking out implementing the new technology in six other markets: Australia, Belgium, France, the Netherlands, Japan, and Germany.

Hopefully, if all goes according to plan, the U.S. will have the opportunity to get drone-delivered pizza in the future.

The Beer…

Google has also been considering adding delivery drones to its arsenal of user-friendly consumer technology.

Google’s drone executive Dave Vos told a crowd of aviation experts in 2016 that the tech company’s drone delivery service could deliver a cold one right to the palm of your hand.

He even added that it could happen as early as 2017.

Vos explained the possibilities of the company’s future drone delivery service during a speech in Washington, D.C.

He included an example where someone could “ask Google” to order them a beer and have it delivered right into their palms in no less than three minutes.

When asked about the possible timeline for implementing these ideas, Vos stated within a year or two, earlier than many other experts expect the technology to be up and running.

Vos shared a compelling vision of instant drone delivery that would work similar to ordering an Uber.

Just get on your phone to order whatever you’d like, like a cold beer, and have it there within a few minutes.

The New Mercedes…

Mercedes-Benz showed off a self-driving concept van earlier this year that will serve as a hub charging station for drones, TechCrunch reports.

The luxury automaker partnered with drone manufacturer Matternet to develop the concept van, which it unveiled this past September.

While the van is merely a work-in-progress and won’t likely be available in the immediate future, it represents an upcoming competitiveness within the drone delivery industry that will most likely become legally and technologically feasible in the very near future.

And that’s a pretty big deal.

The Future of Delivery Drones

Drones turned the corner back in 2015 when they became they new must-have consumer device, while the framework for regulations for drones was just beginning to take shape in the U.S.

Drone manufacturers and software providers have been working together to develop technologies like “geo-fencing” and collision avoidance that will make flying drones safer and more efficient.

Safer technology and better regulation will open up new applications for drones in the commercial sector, including drone delivery programs like Amazon’s Prime Air and Google’s Project Wing initiatives.

In a recent report, Business Insider had this to say about the future of delivery drones:

• We project revenues from drones sales to top $12 billion in 2021, up from just over $8 billion last year.
• Shipments of consumer drones will more than quadruple over the next five years, fueled by increasing price competition and new technologies that make flying drones easier for beginners.
• Growth in the enterprise sector will outpace the consumer sector in both shipments and revenues as regulations open up new use cases in the U.S. and EU, the two biggest potential markets for enterprise drones.
• Technologies like geo-fencing and collision avoidance will make flying drones safer and make regulators feel more comfortable with larger numbers of drones taking to the skies.
• Right now FAA regulations have limited commercial drones to a select few industries and applications like aerial surveying in the agriculture, mining, and oil and gas sectors.
• The military sector will continue to lead all other sectors in drone spending during our forecast period thanks to the high cost of military drones and the growing number of countries seeking to acquire them.

The FAA has been slow to figure out its drone policy.

Frustrated, Amazon had blasted the agency for dragging its feet, ultimately forcing the company to move its drone testing operations to the UK.

President Trump has been hinting at completely privatizing air traffic management and undoing the FAA.

This might not necessarily be such a bad idea.

Privatizing air traffic control will have implications for the future of U.S. drone regulations, much of which hinges on efforts to create a national drone air traffic control system capable of real-time reporting, tracking, and managing of flights.

Since drones don’t take off and land from designated locations the way airplanes do, drone pilots need to be able to track aircraft to avoid collisions and flying over restricted airspace.

Right now, it’s legal to fly a drone in the U.S. within an operator’s line of sight, but for drone delivery to come to fruition, unmanned aircraft will need some kind of shared, nationwide flight tracking system.

Although the public air traffic system currently in place in the U.S. is the safest in the world, those who are in favor of privatization, including the National Association of Air Traffic Controllers and many major airlines, say air traffic management is too important to be subject to the whims of potential government shutdowns or budgetary issues.

Much is in the works right now, from delivery test runs to new legislation to potentially reconstructed management, all trying hard to make commercial drone delivery systems a reality as soon as possible.

That’s all for now.

Until next time,

John Peterson
Pro Trader Today