Where Are The Drones?

The Industry Is Growing But It's Too Slow - Why?

Thank you to everyone for reading and I hope you enjoy this week’s article. Please find me at SkyTrade or jonathan@sky.trade

“Embracing landowner airspace rights and business models around them is the crucial step drone companies need to make their vision a reality” - Troy A. Rule, Prof. of Law, Arizona State University (2023)

Drone deliveries have transitioned into a fundamental aspect of commercial activities in various regions globally. The industry experienced an 80% surge in packages delivered by drones from 2021 to 2022, reaching nearly 875,000 deliveries globally. In the first half of this year, an estimated 500,000 commercial deliveries were achieved by the end of June. It is less the total number, which relatively speaking is low, it is more the growth story that’s interesting here.

If we think about the growth of the internet as a comparison it was not just the internet per se that was the most interesting aspect, it was what could be done with the internet. The same is true of the Unmanned Aerial Vehicle (UAV) industry.

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Infrastructure

With drones the need for infrastructure is vital. This is decentralised, as is the property market and local governments will, of course, play their part, adding in locations, ports and facilities as they have some of the best prime real estate. Nevertheless, it is the private landowners who will propel this physical infrastructure forward allowing the industry to grow rapidly.

Locations to take off and land at, to swap out batteries and perform maintenance for example are key requirements. Sites to collect frequently purchased packages and highly specialised items, like car parts and deliver them to the mechanic within minutes of ordering.

The current way many of the drone companies are trying to do deliveries is by using a hub, where they package up whatever is close to the hub if ordered, and deliver it to the destination. They then fly back to the hub. An example of this is Malls. Here the drone companies are restricted to the mix the retailer or management has decided works and to the individual retailers within the mall. There are obvious disadvantages to this.

In food delivery or ride share, for example, there are multiple pick-up and drop-off points and the coverage of products is wide and distributed in the community. The existing models for the drone companies who are doing urban delivery are from point A to B and then they come home empty-handed using the same amount of energy that they need to get to their destination. Without the correct infrastructure, this will continue, the unit economics will become squeezed and the promise of efficient energy usage using drones will evaporate.

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Businesses and private landowners that support the UAV industry will allow drones to go to multiple points as and when the demand requires it. These are in the form of localised drop-off points, micro collection hubs, charging stations and maintenance areas on people’s land, and ports on top of buildings. To get to these buildings and properties the drones must first travel through the airspace and to do so legally they require the permission of the infrastructure controllers, the air rights holder.

Regional Growth

Some figures that came out of a recent report highlight the growth. Hit tip to