Amazon Drone Delivery — Reality or Distant Dream?

Drone U
Drone U
May 2, 2018 · 6 min read

Amazon reported impressive numbers last week — Q1 18 sales touched a mammoth $51 billion, and operating margins were at a respectable 3.8%. However, Amazon is in the news for reasons other than their stellar performance also — their race to make Amazon Prime Air a reality. Along with Amazon, corporate behemoths such as Google and DHL are also keen on this technology. This is not surprising. Adopting this technology shall significantly add to a company’s bottom line.

However, FAA rules, safety and privacy concerns are hindering this technology from taking off. Until there is a massive change in societal perception, drone deliveries are unlikely to find acceptance. You just need to recount the David Boggs and Drone Slayer incident to understand that my skepticism is not really misplaced.

Drone deliveries is a massive logistical challenge. Do current FAA rules permit drone deliveries? How will drones “talk” and avoid crashing into each other? Is a completely autonomous drop-off possible? Are drone deliveries good for the environment? Let us dive deeper into these issues.

Are current FAA rules conducive for Drone Delivery operations?

Please refer the below chart which shows the approval rates/rejection rates for Part 107 waivers. Drone U managed to get this information from the FAA Symposium:

So, what are your chances of getting a BVLOS waiver? Out of 1392 waiver applications, only 14 were accepted — an approval rate of barely 1%. What does this mean for the UAV operator? This means that you have to keep a distance of less than 2250 feet between your drone and you. Clearly, delivery services cannot take off with such regressive FAA rules in place. However, there are some positive developments as well.

The emergence of remote identification for drones is a step in the right direction.

Remote ID’s on drones lets law enforcement officials pinpoint the exact location of a drone. DJI’s Aeroscope tracking system can be termed as an electronic license plate for drones. This remote identification system lets DJI users voluntarily identify the location of their drone to authorities. DJI’s remote identification system has the capability of generating a TCAS (Traffic Collision and Avoidance System) like file. TCAS is the system that permits safe flight of planes and helicopter.

The 2018 FAA Reauthorization Bill proposes that the Controller General of United States can levy an additional fee on drone pilots. This fee is for funding the infrastructure for a safety management system. The implementation of this fee, however is a challenge. There are nearly 800,000 registered drones in the United States. However, this number is minuscule when we look at the total number of unregistered drones. So, will law abiding pilots be the only ones forking out this fee? Not exactly fair. Is it?

This Bill also proposes the requirement of an air carrier certificate for drone delivery service providers. Clearly this establishes an entry barrier for drone service providers. So, will drone delivery become the sole domain of larger corporations? Only time will tell.

Are drone deliveries environment friendly?

Transportation is one of the biggest contributors of pollution in the United States. As of 2013, 25% of hydrocarbons emitted can be attributed to transportation. So, is replacing a diesel truck with a fleet of drones good for the environment? Determining this is a huge challenge. There are many real life factors that need to be taken into account. Nature Communications attempted to answer this question. And they came up with some interesting theories.

#1 Greater improvement in greenhouse emissions is witnessed in states relying on cleaner sources of energy

Different US states use different sources of energy for producing electricity. While some states rely more on non-renewable polluting sources, others have been prudent in increasing their reliance on solar and nuclear energy. So, for instance, Washington is one of the cleanest energy states with the largest installed capacity for renewable energy. And Wyoming and New Mexico have the least reliance on renewable energy. So what does this mean?

Charging your drone in Washington will be less polluting and leave less of a carbon footprint as against charging your drone in a state like Wyoming or New Mexico.

Likewise, using drones for delivery will necessitate the requirement for a number of small warehouses. Warehouse electricity is another factor that we need to consider while determining any environmental advantages.

# 2 Small drone delivery results in significant gains as compared to large drone deliveries

Findings suggest that using smaller drones will result in significantly lesser pollution. However, findings for larger drones were not really conclusive. Because larger drones require more warehouse energy, using electric vehicles would be a better alternative in states which rely heavily on clean sources of energy.

Is the Trump vs. Bezos feud preventing Amazon Prime Air from taking off?

Bezos purchased The Washington Post in 2013. And they have been relentless in their criticism of Trump.

“McCain takes his Trump criticism to a whole new level, suggesting blame for chemical weapons attack in Syria”

“Many GOP politicians dislike Trump. They’re terrified to admit it”.

“Macron resists Trump’s ‘America first’ in speech to Congress”

And Trump is clearly irked. This is Trump’s tweet from March 29, 2018

“I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”

USPS needs Amazon to stay afloat

So, is Trump’s criticism for Amazon justified? Is Amazon really taking advantage of USPS? The figures suggest otherwise.

Let us take a look at their financials. Last year, the postal service reported a loss of $2.7 billion on revenues of $69.6 billion.

Shipping packages is not the only stream of revenue for USPS. In fact, they get their biggest revenue from First Class Mail. However, revenues from First Class Mail contracted from $27.5 billion in 2016 to $25.6 billion in 2017. Whereas, revenues from Shipping Packages grew from $17.4 billion in 2016 to $19.4 billion.

If anything, USPS needs more Amazons to survive and come out its financial mess.

But, does Amazon have an alternative to USPS? Sure. Competitors like UPS and Fedex would be quite willing to grab a chunk of the USPS business. Or, maybe Amazon could create its own infrastructure for shipping out their packages.

And clearly, Amazon Prime Air would be a cheaper and more efficient alternative to using a fleet of trucks.

However, Amazon needs permission from the FAA in order to kick off drone deliveries. With Trump’s strong stance on USPS pricing, it will be interesting to see how this Bezos vs. Trump feud plays out.

It seems that we will not be seeing drone deliveries in the US anytime soon. A proper safety management system, progressive laws and greater political will are the factors needed to push this nascent technology into the mainstream.

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