Market Trends of Drone Logistics and Transportation Industry
This section covers the major market trends shaping the Drone Logistics & Transportation Market according to our research experts:
The Retail and Logistics Segment to Witness Rapid Growth During the Forecast Period
Drone delivery is a disruptive technology redefining the traditional shipping/delivery market with great applications in the future for the retail industry. For online retailers, the drone delivery method has proved to be highly convenient and cheap for ensuring last-mile delivery. Thus, retailers worldwide are piling money into programs that ensure faster product delivery. For instance, Chinese companies like Alibaba and JD.com have been using drones to deliver items to shoppers in hard-to-reach rural areas since 2017. Emerging drone service providers are also ramping up their capabilities to serve an emerging clientele efficiently. In May 2022, Skye Air Mobility, a Delhi-based drone delivery logistics provider, unveiled its long-range drone called 'Artemis' equipped to carry a payload of 6 kg to 100 km.
On the other hand, major logistics service providers are also investing financial resources to integrate drone delivery capabilities into their existing business model. In June 2022, the global logistics giant Amazon announced that it would begin delivering parcels using Prime Air drones in Lockeford, a small town in California, in late 2022. The company plans to use its learnings from the test in Lockeford to improve the services when it expands.
North America to Dominate the Market During the Forecast Period
Drone package delivery is gaining popularity, albeit only in a few limited markets. North America, with favorable drone policies and home to several market players, held the largest market share in 2021 and is expected to continue its market dominance during the forecast period. The Federal Aviation Administration's (FAA) Beyond Visual Line of Sight (BVLOS) ARC delivered a set of recommendations to the aviation authority, including a push for a case-by-case approach to BVLOS operations. It is also increasing the number of permits offered for drone operators each year, which is expected to drive market growth in the region in the years to come. The FAA also permits exemptions to existing rules to enable the use of drones in the delivery service industry. In recent years, companies like Alphabet's Wing and UPS Flight Forward were granted exemptions that permitted limited drone delivery operations. Deliveries using drones are expected to cost less than traditional transportation and are believed to increase the businesses of the service companies. However, the lack of a UAV traffic management system, differences in logistical operations, payloads, size, and the ongoing public debate over privacy and security concerns will act as a barrier to the market's growth in the region. The companies continue to operate under FAA exemptions and test delivery by drone at FAA-approved test sites across the United States. Furthermore, technological improvements to drone architecture and performance are expected to render a positive outlook for North America's drone logistics and transportation market during the forecast period.
