Navigant Research Blog

Test Failures Show Drone Delivery Services Are Still Working out Growing Pains

— May 22, 2018

At face value, unmanned aerial vehicles (UAVs), commonly referred to as drones, seem to be an excellent solution for last mile and last meter logistics. In the past view years there have been a number entrants into the drone delivery service (DDS) space; both Amazon and Google have completed proof of concept deliveries using their drones, as has Reno-based Flirtey, to name a few.

In addition to these test deliveries for e-commerce orders, there are some ongoing pilot programs transporting higher value goods (i.e., medical supplies) in an effort to both speed up deliveries and reduce travel times. Startup Matternet is working on establishing automated deliveries between hospitals, and Zipline is delivering blood in Rwanda where traditional delivery methods are time prohibitive.

The Value Add Is There

UAVs seem like a logical fit for many of these deliveries, and they also have the potential to reduce the cost of the most expensive piece of the logistics supply chain. According to research by Honeywell in 2016, last mile logistics make up over 50% of the costs of a delivery process. UAVs can reduce costs by decreasing delivery times, complementing human delivery drivers in some scenarios (such as UAV-integrated delivery vehicles), and removing them in others (like transporting your online order directly from a warehouse to your front door).

Challenges to Overcome

As with all things, the devil is in the details. Deliveries in rural areas are costly for logistics companies, with routes that are often longer and have fewer drop-offs—reducing efficiency. Earlier this month, the Russian Postal Service set out to showcase its proof of concept in Serbia, using a UAV to deliver the mail. This application seems to fit the bill on adding value. The route for this event and the payload were preplanned, and a crowd gathered to watch the future of delivery. However, just seconds after takeoff the drone crashed into a wall and forced onlookers to jump out of the way to avoid the falling vehicle.

Regulators Value DDS, but Not More Than Public Safety

There are many variables that need to be understood and accounted for before we begin to see these applications take hold. These include the following:

  • How DDS will navigate within an urban environment and around infrastructure
  • What safety measures are needed when operating DDS above people
  • How DDS will tackle the intricacies of apartment deliveries
  • How DDS will operate with wind shear and inclement weather
  • How to manage UAV traffic when there are much larger fleets

Test runs and pilot programs that end successfully are great for the industry. The ability of UAVs to safely and reliably carry out tasks will be an indicator for regulators around the world to allow for the technology’s commercial operation. But tests that end in failure—such as the Russian Postal Service’s attempt—are the reason why regulations are important and why they will be slow to change until these technologies are proven and reliable. Companies operating in this space will need to keep their noses to the grindstone in order to show success and win over regulators.

Navigant Research’s recent report, Capturing New Commercial Opportunities with Unmanned Vehicles, provides insight into the growing commercial unmanned vehicle space. It includes details on the regulatory environment, which many UAVs will need to work alongside until governments feel the technology is capable of tackling more complex challenges.

 

The Case for Electrified Delivery Fleets

— May 17, 2018

With the ever-growing global economy comes larger delivery fleets on the road, in the air, and on the seas. Short delivery times are expected by customers, thanks to shipping programs like Amazon Prime, but with more transport comes more pollution. In 2016, transportation made up 28% of US greenhouse gas emissions, and every package delivered to our doorstep represents a slew of emissions scattered throughout the supply chain.

The Emissions Case

To tackle growing emissions from the transportation sector, we will need to do more than electrify just the light duty vehicle segment. Delivery fleets, in particular medium duty vehicle fleets, may offer an optimal solution to curb emissions in the near term. In fact, to reduce emissions, new delivery alternatives like last mile logistics are being piloted to eliminate the need for a delivery truck to make multiple visits before actually delivering a package. Among these are Amazon Key and other home access options. These programs, in addition to electrifying delivery fleets, will aid in emissions reduction.

Due to the current battery size of Class 3-6 all-electric vehicle options (roughly 100 miles in range, for now), delivery fleets that make frequent stops throughout the day are primed for electric adoption. Class 3-6, or medium duty, vehicles range from 10,001 to 26,000 pounds. The electric delivery vehicles could be used during the day and charged at night, with no interruption to their driving patterns. With nighttime charging comes the potential to use wind energy to charge the vehicles, further reducing the emissions from the transportation sector and integrating renewables.

Workhorse All-Electric Walk-in Delivery Van

(Source: Green Car Reports)

The Cost Case

While electrified delivery fleets have many benefits, the lower cost of operation and maintenance over time helps make the economic case for these vehicles. According to one study, the average cost of gasoline over 300,000 miles at $3.00/gallon comes out to $150,000, while driving 300,000 miles on $0.12/kWh electricity would cost only $42,000. Electric delivery fleets require no oil or fuel filter changes and require fewer maintenance hours off the road, meaning the vehicles would be more reliably utilized. These factors help offset the initial heightened purchase price of electric medium duty vehicles (compared to internal combustion engine vehicles) and receive a ROI more quickly.

The Supply Case

Electric medium duty vehicles are slowly entering the US market (with companies such as Workhorse, Chanje, and Motiv), but are more prevalent across Europe and China. Several recent announcements indicate a larger variety of medium duty vehicles in the US market in the next 5 years. For example, in January 2018, Volvo announced it will sell battery electric delivery trucks in North America in 2020, following introduction in Europe next year. Given that supply constraints currently play a role in market actors’ electrification decisions, the increased market activity will likely spur electrification. Stakeholders—most notably utility companies—can also play a role in incentivizing delivery fleet electrification through subsidized vehicle costs, charging infrastructure incentives, or partnering with OEMs to electrify their own fleets. Stakeholder incentivization could help grow the demand and supply sides of the market, leading to more electrified delivery options and fewer transportation sector emissions.

 

How Hyperloops and Other Futuristic Innovations Could Affect Urban Mobility

— May 15, 2018

With limited space on urban streets, cities will likely need to use new technology innovations to make their transportation systems more 3D. This would include the increased utilization of elevated tracks, higher usage of tunneling (beyond traditional metro systems), and flying vehicles. Hyperloops, underground automated pods, and air taxis offer both these possibilities and the potential to transform traditional transportation markets.

Hyperloops

Hyperloops hold significant potential to become the first new mode of public transport in over 100 years, promising drastically shortened intercity travel times, lower costs, and decreased negative environmental impacts. The technology uses electromagnetic propulsion to transport passengers in a capsule through a vacuum tube at speeds of up to 1,200 km/h (745 mph).

Hypothetically, hyperloop technology could transform commuting and even affect real estate prices by enabling workers to live hundreds of miles away from their offices. Nevertheless, Navigant Research does not expect the currently experimental technology to approach mainstream adoption over the next 10 years. The fastest speed achieved by hyperloop pilots thus far is 387 km/h (240 mph), far off from the 1,200 km/h (745 mph) speed needed to transport passengers in the short travel times that are claimed as possible. Additionally, a myriad of technological, safety, regulatory, and business model challenges will have to be overcome for hyperloops to become a viable mass-transport technology option.

In an interesting development, Richard Branson’s Virgin Group announced an investment in Hyperloop One in late 2017 and created a new company called Virgin Hyperloop One. The strategic partnership with Virgin adds experience and credibility to the hyperloop industry. Virgin is well-known as a leading innovator in the transportation industry—primarily in the airline, cruise ship, rail, and commercial space travel industries.

Underground Automated Pods

Elon Musk’s Boring Company is attempting to develop a high speed underground public transport system using automated pods. The pods would travel on electric skates, reaching speeds of 125-150 mph and carrying between 8 and 16 passengers. The Boring Company is proposing a Washington, DC-to-Baltimore Loop, which would involve the construction of parallel, twin underground tunnels (which would eventually extend to New York City).

There are several benefits of using underground tunnels and pods in the mobility context, including the lack of weather impacts and the near unlimited number of layers of tunnels that could be built. However, tunnels are expensive to dig and projects have cost as much as $1 billion per mile. The Boring Company aims to reduce this cost by a factor of 10, which is a necessary first step if the company is to be successful.

Air Taxis

Several companies and cities are aiming to launch flying taxi services within the next 10 years (e.g., Volocopter, Kitty Hawk, and Uber).There are a number of concerns with flying taxis, including but not limited to issues related to poor weather conditions, safety, affordability, technological maturity, and the need to attain regulatory approvals from aviation regulators. It is also important to note that most predictions about the near-term deployment of flying cars have been wildly incorrect thus far. Flying taxi services will likely have a place in the future of urban mobility, though Navigant Research expects unmanned flying vehicles be used for hauling commercial goods in the near-term as that is far simpler than transporting commuters.

Too Early to Tell

Due to continued urbanization, a variety of transformative technologies are needed both to improve the current state of mobility in cities and to manage the influx of additional populations. Hyperloops, underground automated pods, and air taxis are three highly experimental, futuristic innovations that have the potential to deliver on these lofty goals. The progression toward commercial deployment over the next 10 years will provide a much clearer picture around the viability (or lack thereof) for these innovative solutions.

 

Leading City Approaches to Urban Mobility Disruption

— May 3, 2018

Promising mobility solutions are rapidly developing. A variety of solutions—EVs, automated vehicles (AVs), intelligent transportation systems, smart parking systems, last-mile logistics, mass transit innovations, and mobility as a service options (MaaS)—are expected to approach mainstream adoption within the next decade. Together, these technology innovations have the potential to not only address major urban challenges like traffic congestion and air pollution, but also to radically transform mobility in the city.

New Mobility Models under Development

However, the picture is fuzzy on what mobility models will work in cities. No major city has eliminated the plight of traffic congestion, and urban air pollution levels continue to be a problem in most (if not all) countries. Nevertheless, a number of global cities are developing innovative and even radical approaches to urban mobility, which will disrupt transportation models and push the boundaries of traditional transportation policy.

The following table outlines some of the approaches that forward-thinking cities are taking toward reimagining urban mobility, and the key differentiators enabling their success.

Innovative Approaches to Urban Mobility: 2018

(Source: Navigant Research)

These mobility programs will change not only how people move about in cities, but also how cities are designed and managed. Collaborative management from a number of stakeholders (city planners and regulators, transportation companies, utilities, smart city suppliers, and energy companies) is key to unleashing the mobility revolution and moving cities in a positive direction.

An Ongoing Process

The jury is still out on which city programs will be most effective at curbing traffic congestion. As these programs are rolled out, other cities can learn best practices to replicate and explore opportunities to develop new urban mobility models in the coming years.

For more in-depth analysis on these leading city mobility programs, keep an eye out for Navigant Research’s upcoming report, Urban Mobility Innovations.

 

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