Autonomous Last Mile Delivery: What is it and Why is it Growing?

by Ruth Seeley

Last-mile delivery, in its traditional state, refers to the movement of a product to its final destination. This part of the delivery process often comprises over half of the overall delivery costs on the entire process. As free shipping and excessive orders are being placed more frequently, there’s been a need for a more high-tech and efficient solution.

That’s why more and more organizations are implementing aerial delivery drones and autonomous last-mile delivery options and perpetuating the growth in the market. According to Research and Markets, the autonomous last-mile delivery market is expected to grow to $91.5 billion between now and 2030.

Contributing to this overall growth are the advancements being made in drone technology, as well as the rising demand for autonomous last-mile delivery applications. Regulatory safety issues for flying drones are, however, expected to restrain the growth of the market across the globe, although the aerial delivery drones market is projected to grow at the highest rate during the forecasted period.

The demand for aerial delivery drones in autonomous last-mile delivery is expected to increase because of the advantages that come along with it. Advantages like timely delivery, lower traffic congestion, and low cost of operation. Major manufacturers of aerial delivery drones include Wing, Zipline, and Prime Air, among others.

The greater than 22 lbs. weight segment is estimated to account for the largest market share in the autonomous last-mile delivery drones market in 2019.

The payload weight segment of the global autonomous last mile delivery drones market has been segmented into >5 kilograms (>11 pounds), 5-10 kilograms, and >10 kilograms. The >5 kilograms category includes package delivery applications for retail and food last mile delivery. The 5-10 kilograms category consists of the aerial delivery drones and ground delivery vehicles required for postal & medical equipment delivery. 

The demand for greater than 22 lbs. category is increasing across industries due to the changing consumption patterns and production of goods and services. For example, in the logistics industry, freight forwarders are employing autonomous last-mile delivery capabilities to address the changing needs of customers. The demand for autonomous last-mile delivery is increasing, which is leading to the increasing demand in the aerial delivery drones market.

North America is leading the way

The North America region is estimated to lead the global autonomous last-mile delivery market in 2019, and the trend is expected to continue during the forecast period. This region is upgrading various capabilities by undertaking developments in the field of aerial delivery drone manufacture. The U.S. and Canada are investing in next-generation drone technologies to enhance and gain a tactical edge. This is an opportunity for drone manufacturers to conduct long term partnerships with various logistics and transportation and e-commerce companies.

The autonomous last mile delivery market includes key players, such as include Starship Technologies (US), Savioke(US), Nuro (US), (China), and Flirtey (US), among others.

Aerial Delivery Drones Growth Drivers

Growth drivers for aerial delivery drones include: 

  • demand for the fast delivery of packages;
  • incorporation of advanced sense-and-avoid systems in aerial delivery drones;
  • amendments in regulatory frameworks to encourage the use of aerial delivery drones; and
  • increased use of low-cost and light payload drones for product delivery by startups.

Lack of required infrastructure to support operations of aerial delivery drones in emerging economies and limited bandwidth and battery life of aerial delivery drones will act as growth restraints but opportunities for growth include:

  • development of aerial delivery drones that function smoothly in geographically challenging areas
  • growth opportunities for vendors at different levels of the value chain of aerial drone deliveries
  • incorporation of Internet of Things (IoT) in the ecosystem of aerial delivery drones

Market challenges that currently exist are data security breaches, issues related to traffic management, safety and security issues and risk management framework and insurance coverage deficits.

Ground Delivery Vehicles Growth Factors

Factors responsible for growth in this market segment are lower delivery costs, tech advances in vehicles, and an increase in venture funding for the development of next-level ground delivery vehicles.

But the stringent implementation of regulations and performance issues in untested environments may stifle growth, although as e-commerce continues to flourish, this market should continue its rapid growth. Ground delivery vehicles still have a very limited operational range and are vulnerable to cyber threats. And of course, they need to be operated safely and smoothly, particularly in heavily populated areas.

For more information about this report, click here.  

Source: Research and Markets

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