Dec 27, 2013 • FeaturesAmazonFuture of FIeld ServicedeliverydronesParts Pricing and Logistics

In the part one of this two-part feature we looked at the launch of Amazon Prime Air and whether Amazon’s announcement heralded a revolutionary new delivery method which could change field service as we know it, or if it was little more than a PR stunt to put the ecommerce giant in the public eye ahead of a key revenue-generating period and whether (or not) the public was ready for fleets of drones delivering their goods?

Now in the second part of the series we review how the business world has reacted to the launch, the regulatory challenges that stand in Amazon’s way and one reason why it might just work after all….

The business world poured scorn…

Whilst public opinion remained divided, in the corporate world Amazon’s competitors both current and potentially those from the future if they step into the realms of delivery and logistics.

When asked if Amazon could emerge as a competitor, FedEx CEO Fred Smith commented:

“Quite frankly I don’t think I’ve seen more mythology in the press about anything than I have about the e-commerce space over the last year or so…”

He further clarified FedEx’s position by adding:

“Now that’s not to belittle UAS [unmanned aerial systems] technology because we’ve got a lot of studies underway in that area ourselves,” he said. “…but at the end of the day [most products will be delivered through] the intercity transportation networks of FedEx and UPS and to a lesser degree the Postal Service, which is designed around delivering very lightweight items.”

John Donahoe, CEO of Ebay was equally dismissive of Amazon’s plans. Not pulling his punches he commented that Ebay were “Not really focusing on long-term fantasies, we're focusing on things that will change consumers' experience today," 

Meanwhile in a fantastic parody of the Amazon announcement British book retailer Waterstones, announced they were launching a new service using specially trained Owls to deliver online purchases within 30 minutes.

A question of regulations...

In fact whilst it does seem that open season has been declared on Amazon and mischievous sniggering can be heard in corporate boardrooms around the globe, the simple fact is that the technology to make this happen is very much a reality and should Amazon be able to overcome the regulatory obstacles then they may well find themselves not only laughing last but also lughing loudest.

So what exactly is the current state of affairs in terms of the regulation Unmanned Ariel Systems (UAS) to give the drones their official moniker?

Well last year the US Congress passed a law that required the FAA to publish their final regulations that would allow certain applications of commercial UAS by September 30th 2015 – which is the likely the source of Amazon’s own claim that Prime Air could be launched as soon as then.

Having recently published its first annual “road map” in which it laid out the necessary steps it will be taking to move forward with plans for draft legislation within the next year, the agency has already approved certain UAS for use by energy firms off the Alaska coast, as instructed by Congress.

However, both types of UAS that the FAA certified had already been approved for military use, something the Amazon drones don’t have behind them. Whilst law enforcement agencies and other public organisations have also received permission from the FAA to fly UAS in US airspace for surveillance and other purposes, corporate uses are a long way from being cleared. One un-named source at the FAA is even quoted as saying:

“We can’t even handle the simpler cases… this is taking ridiculously long. We’re hurting a lot of industries.”

In fact as the Washington Post highlighted:

"The fact that Amazon had to leave the country to make the video underscores how slowly U.S. officials have embraced the policy challenge."

In the UK the Civil Aviation Authority (CAA) are responsible for the authorization of UAS. In response to the Amazon announcement a CAA spokesman commented

“There are rules in place to make sure unmanned aircraft are operated safely and don’t pose any risk of harm to the public. A key element of this is the operator must have the aircraft within visual sight at all times during the flight. So there are a number of safety issues Amazon would need to address before this type of operation could go ahead.”

Yet it could still work…

However, there is one potential application of delivery drones which has been overlooked by the Amazon spin machine but could actually prove to be a much more viable solution in terms of both the logistics of operation and also meeting existing regulations, which was outlined by Ralph Rio, A Research Director with the ARC group in an article on Forbes Magazine.

“Instead of replacing, think about augmenting.  Jeff [Bezo] said that 80% of the packages are light enough for a drone to carry.  That means 20% of packages will need a delivery truck and person to carry the package to the destination…”

“…Consider a truck with sides that roll-up to reveal shelves with drones.  The truck stops at a home and, while the delivery person gets and delivers a package, multiple drones emerge and deliver packages within a few hundred feet, and return.  If a drone has a problem, the delivery person is there to help.  Also, the drones could be limited to a lower altitude that avoids FAA issues. “

“With the delivery augmentation approach, each stop releases a swarm of drones.  One stop delivers five packages rather than one.  This would be a huge productivity improvement for a dense, same day delivery route – like in suburbia.”

“ Of course, this approach to package delivery requires creation of complex algorithms for issues like when to use, route optimisation, sequencing, error correction, failure response, and more.  Amazon has the PhD math scientists to solve these problems.  The major impediment may be the business agreement between Amazon and the package delivery service providers.  But, this may solved with the next iteration of its agreement with the post office.”

“The technology is known, and could be deployed.  We will be watching for you to see how the application of this technology unfolds.”

This would certainly seem to provide a more practical application of the drones for deliveries, rather than Amazon’s initial more simplistic version drones leaving direct from the factory. Of course drones have been applied in other field service environments such as this example here as well. So whether the announcement was a perfect PR exercise or not, perhaps the idea of seeing delivery drones is the next few years is not as far fetched as it might seem…