{"id":24407,"date":"2017-11-15T18:34:40","date_gmt":"2017-11-15T23:34:40","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/pie-in-the-sky-can-africa-help-ups-in-the-game-of-drones\/"},"modified":"2017-11-15T18:42:39","modified_gmt":"2017-11-15T23:42:39","slug":"pie-in-the-sky-can-africa-help-ups-in-the-game-of-drones","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/pie-in-the-sky-can-africa-help-ups-in-the-game-of-drones\/","title":{"rendered":"Pie in the Sky: can Africa help UPS in the Game of Drones?"},"content":{"rendered":"

In the past years, heightened customer expectations on e-commerce on-demand delivery combined with robotics innovations gave rise to futuristic possibilities of parcel delivery by drones, causing a paradigm shift in last mile distribution and value proposition of traditional logistics providers.<\/p>\n

McKinsey envisions autonomous vehicles and drones to be the \u201cfuture of last mile\u201d contributing ~80% of all consumer delivery [1]. E-commerce leaders are investing heavily to automate and control the costliest and most inefficient \u201clast-mile\u201d delivery and vertically integrate to reduce reliance on 3PL. Amazon announced drone delivery service Prime Air in 2013 when Jeff Bezos made the customer promise of 30-minute delivery [2] to be realized in 4-5 years, and has since filed multiple patents including \u201cbeehive\u201d fulfillment centers (Exhibit 1<\/strong>) [3] and opened a research facility in Paris. Walmart also migrated its battle with Amazon to the skies by patenting an unmanned \u201cairborne warehouse\u201d [4].<\/p>\n

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Most 3PL players are not proactively addressing these challenges. Amazon, the clear first-mover, piloted Prime Air delivery in the UK in 2016 and debuted customer delivery in the US three months later, showcasing capabilities and commitment to change the game. Meanwhile, most logistics players are still playing catch-up in R&D, while some like FedEx remain hesitant due to regulatory uncertainty [5].<\/p>\n

Among global logistics leaders, UPS has the highest potential to lead in this rivalry. Like Amazon, UPS invested in R&D and patents, and partnered with drone developer Workhorse Group [6] to ramp up know-how and integrate drones into their delivery network. In Feb 2017, they successfully tested a drone launch from a UPS truck for home delivery (Exhibit 2<\/strong>). Albeit a reactive move, this was UPS\u2019 first milestone in drone deliveries.<\/p>\n

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A remarkable medium-term strategic move was UPS\u2019 partnership with Zipline (Exhibit 3<\/strong>) [7], California-based drone startup, to deliver blood and critical medical supplies to remote hospitals in Rwanda. Zipline\u2019s \u201csky ambulances\u201d deliver blood within 30 minutes of emergency calls, drastically resolving Africa\u2019s \u201cstock out\u201d problems by making access possible to rural areas with close to no infrastructure. Since 2016, they have transported 20% of Rwanda\u2019s blood supply and expanded to Tanzania where they aim at 2,000 daily deliveries from four distribution centers, the world\u2019s largest drone delivery network. Partnering closely with local African governments enabled speedy regulatory adaptation and leeway for technological experiments, such as air traffic control and data collection.<\/p>\n

Exhibit 3\u00a0 \u00a0Zipline in Rwanda<\/strong><\/p>\n