Are robots and drones the answer to supply chain challenges

Though relatively rare sights on our high streets, trundling along pavements, almost inconspicuous in the crowds of pedestrians, odd-looking robot delivery carts could in future become as common as dispatch riders or even parcel vans.

The rapid expansion of e-commerce during the pandemic coupled with advances in automation have spurred growth in the autonomous last-mile delivery sector – the use of robots and drones to ferry goods from depot to customer.

Last-mile delivery is an expensive and inefficient part of the supply chain, largely because it is conducted in congested urban environments and incurs high labour costs. And it is also believed to account for more than 20 per cent of pollution in cities, a figure likely to increase in the coming years as demand for last-mile delivery is expected to grow by 78 per cent globally by 2030.

It is against this background that automated solutions to the final, problematic stage of the supply chain have begun to emerge, with some of the biggest retailers and parcel services in the world employing largely battery-powered robots and drones. At the same time,  an array of start-ups are developing the former and the latter. And demand for their services is growing. Indeed, the market for autonomous delivery robots, valued at $17 billion in 2020, is expected to more than triple by 2026.

Some of  the technology used in driverless cars and mobile warehouse robots is being employed in robot couriers, which were originally used on campuses for delivering food to students. Pandemic lockdowns and social distancing saw a surge in e-commerce which combined with consumers’ increasing preference for same-day or next-day deliveries have provided optimal conditions for these new dispatch services. And as e-commerce competition grows, their role in improving efficiency in the last-mile supply chain ecosystem could prove to be critical.

The technology is already well-advanced, with robots possessing sensors, such as cameras, radar and GPS to facilitate navigation, says the Economist. It points out that their progress can be tracked on a phone app – which also unlocks them for goods to be retrieved – and ‘telemonitored’ by people in a control room who can take command.

Retail giant Amazon has been deploying its Scout autonomous delivery device in a number of US cities and last year announced plans to further develop the technology in Finland and the UK. Meanwhile, not to be outdone, Amazon’s great rival Alibaba, revealed last autumn that its own robot, dubbed Xiaomanlv or ‘small donkey’ in Mandarin, delivered more than one million parcels in China within a year of its launch.

In an effort to assist retailers’ last-mile operations, FedEx has developed a robot, the FedEx SameDay Bot, to enable companies to accept orders from customers living nearby, with the capacity to negotiate steps to deliver straight to the door. Some British and American stores have been rolling out their own services. For example, in the UK, the Co-op supermarket announced last year plans to more than double its pool of robots to 500, serving several new towns and cities. US regional grocery chain Safeway has piloted its autonomous cart in northern California, while another food retailer Save Mart has expanded its own service in the region.

Also in its infancy, and possessing equal, if not more, potential, is the use of drones for last-mile delivery, especially in remote regions poorly served by transport infrastructure. Drone technology is already quite sophisticated, with a number of applications, including for search and rescue, the monitoring of crops and livestock and, controversially, the military. In terms of the delivery of goods, drones have several benefits, notably a lower environmental impact than ground-based delivery methods and are possibly speedier and less costly, the latter seemingly resonating with some online shoppers.

The technology’s potential is now being developed by several companies. Amazon and UPS have received US Federal Aviation Administration approval for their drone models. Amazon is currently “flying and testing”  its Prime Air service, while UPS last year began ferrying Covid vaccines to a hospital in North Carolina.

Specialist drone operators, meanwhile, are making great strides. Wing, an Alphabet subsidiary, completed more than 140,000 deliveries to its customers in the US, Australia and Finland in 2021. And Silicon Valley startup Zipline has been gaining a reputation for transporting medicines, vaccines and blood products in Africa. As of March 2021, it had made more than 50,000 flights in Ghana.

For both robots and drones, however, there are regulatory challenges that need to be met before they become more established and accepted shipping methods.

Several US states have passed laws permitting robots to operate on pavements, but there has been push back from some cities. Critics include the association representing city transport officials across the US, which has called for them to be “severely restricted if not banned outright”, concerned that they could make walking increasingly difficult. For drones, the issue of safety is more acute. Law firm Reed Smith points out that current regulatory limitations in the UK, European Union and the US restrict “how close drones can fly to people”, which, it says, limits the possibility of introducing drones into urban areas in the near future.

These are still early days in the use of both robots and drones in the last-mile delivery ecosystem. Technical innovation combined with planning that integrates them into urban transport architecture could address regulatory objections as well as any lingering consumer doubts about their reliability.

More and more evidence of their utility and economy is emerging, with key players in the logistics industry persuaded that they are worthy of investment. There may be setbacks along the road to wider adoption, but it seems inevitable that it will happen.

Mileson Qiang Guo is an entrepreneur and investor, and the founder of The Institute for Emerging Technologies and Social Impact (ITSI). He founded ITSI to foster debate and discussion about the social impact of emerging technologies amongst industry pioneers and policy leaders. The Institute aims to cultivate original research, share ideas and connect people with the shared goal of harnessing technology for the greatest social and economic benefit.