The hype is all about package delivery. But some visionary companies have been quietly putting drones to work in the warehouse—with impressive results.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Warehouses are noisy places, with conveyors, cranes, and forklifts shuttling items, cases, and pallets in and out of storage. But the next time you hear a persistent buzz in a busy DC, look up—the sound may not be coming from the material handling equipment, but from a flying drone.
Drones used in logistics usually make the headlines only when they involve deliveries to consumers. Recent examples include Amazon Prime Air's delivery of a bottle of sunscreen to an Amazon-hosted conference in Palm Springs, Calif., and the dropoff of an Amazon Fire streaming device and bag of popcorn to a residence in the British countryside. UPS Inc. also made the news when it whisked an asthma inhaler to an island in Boston Harbor, as did Alphabet Inc., Google's parent company, when it (literally) dropped off burritos from a Chipotle restaurant to hungry students at Virginia Tech's Blacksburg campus.
Despite those high-profile successes, parcel delivery drones face many hurdles before they can transition from trials to widespread use. Limits on battery life and payload weight still restrict the distance they can travel and the size of the packages they can carry. Strict government regulations and public safety concerns have made many companies wary of investing in broader drone programs until the picture clears up.
In the meantime, some see a very different future for drones in logistics—one where the flying bots are used for collecting data instead of delivering parcels. Attach a small camera to a drone and it can send wireless video back to users, allowing them to count inventory, patrol boundaries, or locate trucks.
Without the burden of a payload, the lightweight drones can hover for hours over small areas like truck yards or inside giant warehouses, proponents say. And by avoiding flights that cross public roads and buildings, drones can dodge many of the toughest safety restrictions that now inhibit their use (such as rules requiring them to stay in sight of a human pilot and to avoid private property).
VIEW FROM ON HIGH
Transportation and logistics giant UPS Inc. has already run trials that involve flying drones inside its DCs. The airborne vehicles can perform inventory counts in cavernous warehouses faster than a worker could on foot, and they can verify the quantity or identity of goods on high shelves without the safety risks that come with sending an employee up on an elevated platform, a UPS spokesman said.
Retail powerhouse Wal-Mart Stores Inc. has also been experimenting with indoor drones. It recently applied for a U.S. patent on a system that would leverage both their data collection and delivery capabilities by using drones to locate and drop off merchandise within its giant retail stores, a company spokesman confirmed. Intended to cut the amount of time customers spend waiting for their goods, Wal-Mart's patent application describes a process in which a store employee would dispatch an airborne drone to fetch an item located within that store and bring it to a waiting customer. To avoid having drones flying over the heads of nervous shoppers, the system would configure the flight path so they fly over shelves, not aisles.
Other logistics-related opportunities include using drone cameras to scan buildings for safety and security purposes, inspect lots and yards, track the location of trucks as they approach the dock, and locate trucks in a staging area when it's their turn to load, said Bruce Bleikamp, a sales manager for Cimcorp, a manufacturer and integrator of automated robotic solutions.
"Sometimes drivers get tired of waiting and they just leave," he said. "Say you told the guy to go park in slot #67 at the end of the row, but then when you go back to get him, he's not there. Now you could dispatch a drone to fly over the area and locate him, so you could have somebody go knock on his window and tell him to get back here."
Alternatively, a DC manager could dispatch a drone equipped with a camera to hover over a fourth- or fifth-level rack in a high-bay warehouse and perform a quick inventory count, eliminating the need to send a lift truck to the location, pull the pallet down to ground level, and have someone conduct a manual inspection, Bleikamp said.
Although not yet in widespread use, these applications demonstrate the potential of drones to save precious time in logistics operations. The technology still has a ways to go, Bleikamp said, but adoption rates could soar as vendors address limitations such as the inability of drone-mounted cameras to see inventory stacked in multiple rows, like goods in a push-back or flow-through rack.
CLEARED FOR TAKEOFF?
As for the market outlook for drones in logistics-related applications, Bob Etris, for one, is decidedly bullish. Etris, who is a partner and director at Evans Inc., a Falls Church, Va.-based consulting firm, said this niche market is growing fast and has a great deal of potential.
That's partly because regulations are looser on private property—such as a warehouse—than in public airspace, he said. Right now, Federal Aviation Administration (FAA) rules still apply, particularly if a warehouse is close to an airport or other "controlled airspace" that is tightly managed for aviation safety. But even those rules are expected to change within the next 18 to 36 months, as federal regulators begin easing restrictions on drone use for applications such as search and rescue operations or locating fugitives. Once those changes take effect, the market for drones in business applications could really take off, Etris said.
FAA figures indicate that drone use is already picking up steam. Drone demand is still driven by hobbyists flying small models of unmanned aircraft systems (UAS)—the government term for flying drones—with the market predicted to grow from about 1.1 million vehicles in 2016 to more than 3.5 million units by 2021, according to the agency's "Aerospace Forecast - Fiscal Years2017 to 2037."
But commercial drones—the type that would be used for logistics applications—are closing the gap. The commercial, non-hobbyist UAS fleet is forecast to grow from 42,000 at the end of 2016 to a conservative target of 442,000 aircraft by 2021 or a high-end target of 1.6 million aircraft. That broad range of target estimates reflects uncertainty about the regulatory environment, the FAA says. The higher estimate would only apply if lawmakers decide to ease restrictions such as the rules that allow operation only within daytime hours and within the operator's line of sight.
Loosen those regulations, Etris says, and the market could explode. "The barriers to entry are far [lower] than most people think," he said. "It's not terribly difficult to set one of these up."
Industry figures support those growth predictions. A recent survey conducted by the trade group MHI across 1,100 manufacturing and supply leaders showed that the use of autonomous vehicles and drones (which were grouped together for survey purposes) would nearly quadruple over the next five years—going from just 8 percent of respondents today to 31 percent. The study, titled "The 2017 MHI Annual Industry Report—Next-Generation Supply Chains: Digital, On-Demand, and Always-On," also found that more than half of the respondents (54 percent) believed driverless cars and drones had the potential to transform supply chains and create competitive advantage.
Vendors also see clear skies ahead for the wider adoption of drones in logistics. Drone providers such as Pinc Solutions, Verizon's Skyward division, and Intelligent Flying Machines Inc. (IFM) have seen a steady increase in the number of warehouses that are looking to experiment with drones. IFM, for example, says it can perform automated inventory counts for an entire warehouse within 20 minutes, ensuring accuracy by connecting the system to the facility's warehouse management software.
Between rising market demand, loosening government regulations, and a growing ecosystem of vendors, the case for deploying drones in the warehouse is building quickly. Experts like Evans' Etris advise any company that operates DCs to keep an eye on trade shows and industry publications to keep up with changes in drone technology and regulation. If the forecasts are right, advances in those areas could unleash flocks of flying drones into a warehouse near you soon.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.