Working Paper
Publication Date
May 2020
Topic(s) Covered:
Abstract

This paper concerns a systems-level assessment of the truck-and-drone cooperative delivery system and its integration into urban environments.

The analysis is grounded in an assessment of the regulatory environment currently applicable to truck-and-drone logistics, with a particular focus on the state of small unmanned aerial vehicle regulation in the United States. This is followed by a broad discussion of the social, environmental, and operational implications of such a system deployed at scale and its potential impact on society. The paper concludes with an appraisal of the compatibility between today's relevant regulation and the evolving truck-and-drone system technology. A proposal for an adaptive regulatory framework to guide the safe, responsible development and deployment of this emerging technology is then proposed that suits the technology's various stakeholders; citizens, municipalities, relevant regulatory bodies, and logistics firms.

Introduction

In the past decade, the logistics industry has experienced substantial growth and its fair share of technological disruption. Particularly in urban settings, consumer demand for same-day or two-hour delivery has ballooned and companies have struggled to meet demand without incurring substantial “last-mile” delivery costs. The “last-mile” can be loosely defined as the last few stages of a parcel’s delivery chain process, which usually happens in the congested neighborhoods of today’s megacities. Whilst shifting consumer expectations have played a pivotal role, a symbiosis of trends has driven immense growth in “last-mile” delivery operations, including intensifying urbanization, increased purchasing power of the global middle class, the rise of new digital business models, and advancements in delivery vehicle and routing technologies. For example, from 2014-2019, e-commerce sales nearly tripled globally, translating to expected growth in the “last-mile” delivery demand of 78% by 2030 (Clement 2020). The “last-mile” in a delivery chain is vitally important to firms because it constitutes a disproportionately large share of the parcel delivery cost to a customer, particularly in urban areas. From the perspective of a logistics firm, this problem currently represents an opportunity to differentiate one’s product from other logistics specialists but also capture more commercial customers that previously managed their own logistics operations inhouse. Amazon, United Parcel Service (UPS), and FedEx, among others, are investing heavily in new operational models, technologies, and scientific brainpower to address their urban logistics woes. Whilst the “last-mile” problem is a global one, much of this investment is being allocated to projects in the United States. Whilst firms will face a multitude of barriers in extrapolating any innovations to different countries and use-cases, the problem and the ideal outcome is the same; what can differ is the solution. With this in mind, this paper will focus solely on the state of the “last-mile” in the United States, with a handful of allusions to international enterprise