CBRE recently reported that forward-thinking ecommerce giants have made huge strides in newer and more efficient delivery methods and that autonomous drones are viewed as the way of the future. In fact, many companies and communities are already pushing to turn science fiction into reality. Embracing this new technology will shorten the gap between warehouse and consumers, while offering reduced logistics costs.
Aviation giant Boeing, after assessing the viable impact for drone service on last-mile delivery, unveiled its drone prototype in January, and this will position Boeing as a key supplier of drone tech for smaller parcel-delivery companies that wish to compete against the largest ecommerce giant, which is currently set to launch its own drone fleet soon, says CBRE. And on an international level, drone delivery has already taken off, with Israeli-based drone manufacturer Flytrex partnered with AHA (Allra Hagur), an Icelandic ecommerce company, to deliver packages via drone in the Reykjavik metro-area. Flytrex and AHA have been greatly successful in Iceland, reporting a 60 percent reduction in drone-delivery costs versus land alternatives.
Ecommerce companies are racing to duplicate the Reykjavik success in Southern California, once regulation permits, according to CBRE. Southern California is more densely populated than Reykjavik, but two factors could make the economics of drone delivery work. First, most goods purchased online in the region are lightweight packages such as clothes, electronics, books, etc. Second, delivery distance to the populated areas is relatively short. The estimated last-mile distance in the region is 9.2 miles, meaning a drone could reach 95 percent of the adult population in Southern California. Despite these advantages, the biggest hurdle delaying mass drone deliveries to consumers is FAA authorization, which could swing in their favor in 2018 as more FAA clarifications are expected.
In order to find out more about drone delivery’s acceptance and adaptation in Southern California, SoCal Real Estate spoke with CBRE executive managing director Kurt Strasmann and senior research analyst Jamil Harnkess, author of CBRE’s research paper on the subject.
SoCal Real Estate: How successful do you believes drone technology will be in the Southern California market?
Strasmann: Once the major issues associated with delivering products are worked out, drone technology has the potential to be very successful. It’s one of the most efficient and cost-effective delivery methods for transporting small parcels for end users in densely populated infill locations. With increasing traffic congestion and the high cost of current deliveries for ecommerce firms, the potential for drone deliveries can only ease this process.
Which geographical areas of SoCal might benefit the most from drone technology?
Harkness: Residential neighborhoods with single-family homes throughout Los Angeles and Orange County would be the greatest beneficiaries, as the land parcel on which a residential property sits on would provide plenty of security and a safe drop space area for packages. In addition, gated communities — in other words hard-to-access communities — or remote locations would benefit as well, as access can be restricted for truck delivery.
How soon will this technology gain prominence in this market?
Strasmann: The technology basically exists now, but obviously it is not a proven delivery system until all the logistics are worked out — this includes all technology associated with drones and delivery, several aspects of regulation in multiple areas, liability issues in the event there is an accident, or the potential hacking of the drone, etc.
What else should our readers know about drone technology in SoCal?
Harkness: Drone technology is only meant to deliver small packages, limiting insurance and liability issues in case of an accident. Drone technology would work extremely well in Southern California due to traffic congestion and population density. As a result, drone technology could offer 3PLs a reduction in cost versus land alternatives.