THE FUTURE OF DRONES IN THE COMMERCIAL WORLD. February 2015

Transcription

1 THE FUTURE OF DRONES IN THE COMMERCIAL WORLD February 2015 Written by: Sophie Lyall, Project Manager Jacob Fries, Business Analyst Emma Davidson, Business Analyst Gareth Blades, Business Analyst

2 INTRODUCTION: DRONE USES AND APPLICATIONS For many, the mention of drones or UAVs (unmanned airborne vehicles) conjures an image of military scouting missions in the Middle East, and this was indeed their original task. However, in recent years the technology has evolved, and its uses have become more widespread. Press stories have included TGI Fridays ill-fated use of drones to dangle mistletoe over diners, and consumers have been rebuked on numerous occasions after flying UAVs over sports games. These two instances highlight why perceptions of the technology have so far been relatively negative: The devices themselves have room for greater technological refinement in order for them to be flown safely near humans and other objects, and privacy concerns have also been raised. However, erring away from the military and personal uses of drone technology, it appears that there is a chance for UAVs to revolutionise many sectors in the commercial world through the way in which goods are delivered, as well as the ways in which landscapes are mapped and images are taken in remote areas. A wide range of companies are already using drones, and there is potential for the technology to be taken up industries from Aviation to Facilities Management to Retail, as the graphic below demonstrates. In this paper, we explore the two key commercial applications for UAV and drone technology: logistics, and surveying and imaging. By drawing out the key benefits and barriers to the widespread commercial use of drones, we ultimately assess the likely extent of uptake of drones in a commercial context in the next 5-10 years. Key Take-Outs: Drones could impact a broad range of industries through their applications relating to logistics, and surveying and imaging. With the exception of the photography and film industries, drones are unlikely to change the competitive environment for companies involved in surveying and imaging. However, there are opportunities for drones to lead to significant cost efficiencies. This will lead to mainstream use of the technology in some sectors: Up to 80% of construction firms could be using drones by Drones could be a game-changer for companies involved in logistics. The possibility of drastically reduced order lead times creates the opportunity to re-define consumer perceptions around the role of e-commerce. Drones have the potential to open up new and geographically remote markets.

3 APPLICATION 1: MOVING GOODS Logistics is perhaps the most publicised commercial application of drones, with trials by high profile brands such as Amazon, Google and Domino s Pizza reaching the headlines. Broad commercial benefits such as cost efficiencies and greatly reduced delivery time have been well covered, but DHL s Parcelcopter (adjacent) exemplifies a less immediately obvious benefit that could change the way that logistics providers assess the attractiveness of different geographical markets in the future. As of September 2014, the Parcelcopter is undertaking small scale deliveries of urgently needed goods, such as DHL s Parcelcopter medication, to the island of Juist, located 12km from the German coast. Despite appearing as an unattractive market for deliveries given its relative remoteness, small population (~2,000 residents) and limited access points, the Parcelcopter highlights how drones can open up new markets, both by making them more physically accessible and by reducing access costs, as drones have lower fuel requirements than conventional carriers. Given that drones could be a game-changer for businesses where logistics play an important role, this raises the issue of why companies have failed to progress beyond trial phases, and when, if ever, drones could realistically be used in a widespread way for logistics applications. The limitations surrounding the Parcelcopter shed light on some barriers to drone adoption more broadly. The biggest limitation for DHL is their restricted flight path and capacity, only being able to fly under 50m altitude and away from residential homes. Consequently, the Parcelcopter has to land in rural areas and have the remaining section of the journey completed by a courier. This represents a significant barrier to drones moving into mainstream parcel delivery. Amazon hopes to be able to enhance its customers e-commerce experience and competitive position by offering same day delivery, with drones dispatching products to customers within 30 minutes. Until regulation changes, however, this ambition is unlikely to become reality. Current technological barriers to wider drone use exacerbate regulatory issues, particularly due to concerns around drones ability to navigate successfully complex urban and suburban environments. For this reason, experts estimate that it will be a decade before technology has advanced enough to make deliveries by drones a commercially viable option. Flight route: 7 min duration Ferry route: 90 min duration Flying close to humans buildings other flying vehicles, and legislation, insurance, air traffic control, all this needs to be sorted maybe in a decade we will have commercial drone delivery in cities Director, Imperial College London Robotics Lab

4 APPLICATION 2: SURVEYING AND IMAGING It follows, then, that the use of drones in more remote, rural areas could be a more realistic prospect in the short-term. In fact, in some cases it is already a reality. Drones under 20kg in weight are legally allowed to fly in rural areas in the UK, as long as they remain within the line of sight of the controller. This opens up a range of applications surrounding surveying and imaging, as light craft are easily able to carry the necessary equipment. Use of drones in photography and film making is already widespread, with the technology bringing clear cost benefits compared to traditional helicopter shots. However, a slightly more obscure use of drones could potentially have an even wider commercial impact for the construction industry. According to the Director of drone manufacturer QuestUAV, 10% of the construction industry is actively using drones in the UK. They are used to collect data in realtime to provide site overviews, and can also be used to aid in mapping of the site or to survey the progress made, producing surveys in dramatically reduced timescales compared with manual methods. The technology has been proven to be quicker, cheaper and more efficient than conventional methods. Uses include a GPS survey: A person could manually inspect an average site over a couple of days. A drone with a reasonably skilled pilot can do the same job in a few hours Director, Quest UAV Energy giants including BP have also already adopted the technology, as it allows images to be taken of locations that would otherwise be expensive and time consuming to reach. BP, for example, uses drones to survey its 100m tall cooling tower on their plant in Hull, avoiding the need to build scaffolding and deploy skilled staff to collect the data. It also uses a larger UAV to survey its gas pipeline in Alaska. Once again, it appears that the key barrier to mainstream adoption is legislation: Laws designed specifically to regulate drone use need to be put in place to ensure safe flights for both UAVs and regular aircraft, in the UK s already crowded airspace. However, the likelihood is that drones will be a mainstream technology for the construction industry in five years time. As regulations become more defined and grey areas are removed, drone use will increase. In 5 years time it will be mainstream in the construction industry BP is using a fixed wing UAV for long pipeline surveys in remote areas, and an octocopter for shorter trips Director, QuestUAV Drones are also beginning to be used to conduct rural surveys for agricultural purposes. Traditionally, sensors attached to machinery are used to map fields for precision agriculture, allowing farmers to assess crop growth and decide where to spread fertiliser to maximise yield. However, drones can carry out the same task while requiring less fuel, and avoiding compacting the soil. With increasing pressure on yield maximisation for UK farmers, precision agriculture is an important tool, especially for large, commercially run estates. A drone-produced farm survey: The difference between germinating barely (light blue) and bare ground (dark blue) is evident

5 However, the historic slow technology uptake rates in the industry, as well as the fact that the majority of UK farms are too small to warrant the cost outlay of 10,000-35,000 to set up the drone and related software, will slow the growth of this application, and ultimately limit its overall market size. Due to intense cost pressures, we need to demonstrate to farmers the commercial value of the data. However, I can reasonably foresee that in 5-10 years 20% of farmers will be using this technology, but that will be market saturation Farmer and Nuffield Scholar Drone use in agriculture in other countries appears to have far greater potential. In Japan, drones are already being widely used for spraying and monitoring purposes and the AUVSI predicts that 80% of the potential worldwide market for drones could come from precision agriculture uses. CONCLUSION There is a broad range of realistic applications for drone technology in the commercial world. While urban areas present unique challenges that will require further technological development and associated regulatory advances, the ability to use drones to deliver to and survey remote rural areas has already been proven. That global corporations such as BP routinely use UAVs in their day-to-day operations is testament to the fact that there is great promise for drone technology in these instances. The technology drives down the costs of surveying isolated areas and reduces the risk that would otherwise have been posed to the staff instructed to carry out the work manually. % UK Companies Using Drones Up To 2025 The commercial benefits to sectors engaged in logistics also have huge potential. In particular, the prospect of reducing the window between a customer placing an online order and the delivery of the order to 30 minutes could have gamechanging effects on the retail industry. The improved convenience of e-commerce could revolutionise consumer price expectations by allowing them to purchase urgently needed or wanted goods online. Overall, therefore, it is clear that the limits of drone technology have not yet been reached, and uptake in the Source: Desktop research and market expert interviews commercial world is only beginning to take off. For drones to interviews int reach their commercial potential, progress in legislation must first be made. Many governments have made commitments to develop law in this area over the next few years: By 2025, we will likely see that it is unusual for construction firms not to be using some form of light drone for surveillance and site inspections, with UAVs also becoming mainstream in both Logistics and Agriculture. As uptake increases, UAVs will likely become both cheaper and more capable, allowing them to make the move from being perceived as military surveillance gadgets to becoming a vital tool that will greatly increase efficiency in a wide range of industries. About White Space White Space is a market analysis consultancy, specialising in new market entry, proposition development support and customer experience optimisation. White Space s multi-disciplinary approach enables us to draw on relevant experience from a broad range of industries. Our years of experience in research and strategy provide a valuable viewpoint on some of the current hot topics in international markets.