China’s largest courier is starting drone deliveries

BI Intelligence

This story was delivered to BI Intelligence Transportation and Logistics Briefing subscribers hours before it appeared on Business Insider. To be the first to know, please click here.

SF Holdings, the parent company of SF Express, China’s largest package carrier, was recently granted a license to operate drones for package deliveries in the country by the Civil Aviation Administration of China (CAAC), The South China Morning Post reports.

The license is the first-ever of its kind granted by the CAAC and paves the way for SF Express to start delivering packages via drone sometime later this year. It’s still unknown where in China the logistics provider will begin delivering parcels via drone, though it’s unlikely it will be within the confines of the country’s largest cities like Shanghai or Beijing.

SF Express’ extensive partners and customers could help it rapidly scale these deliveries in China. The company is the largest delivery partner for Cainiao, the platform that coordinates the delivery of all of Alibaba’s orders among its various logistics partners.

About one-fifth of SF Express’ total package volume is routed through Cainiao. In addition, the company formed a joint venture last year with UPS to deliver parcels for US-based retailers to customers in China, amid a booming cross-border e-commerce market. These agreements are designed to help handle with the booming logistics sector in China — the total number of packages delivered reached 13.9 billion parcels in the second half of 2017 alone, according to CKGSB. This means SF Express could easily become one of the largest last-mile drone delivery operators in the world, even if it kept these operations confined to China, especially if the drones can provide faster and more reliable deliveries.

The regulatory environment is pushing China to the forefront of drone delivery, while similar efforts in the US are only just getting off the ground. China Daily, a state-run newspaper, estimated last year that less than 30% of the country’s airspace was available for use by non-military personnel.

The CAAC, however, appears willing to give domestic firms the freedom to operate within this confined area, despite having very similar drone laws to the US on paper. JD.com, one of the country’s largest online retailers, is currently conducting extensive drone delivery trials in the suburbs of Beijing and several other remote locations of the country, albeit not at the last mile.

In the US, retailers like Amazon, Target, and Walmart, and logistics companies like UPS and FedEx, have been limited to trialing only a few drones in limited settings. However, federal officials say they will likely permit these tests to expand as soon as this summer. And, while China-based firms will likely maintain their lead over US counterparts for the time being, if SF Express’ drone deliveries go smoothly, it could give companies like Amazon more evidence on the safety of last-mile drone deliveries. They could then leverage that evidence in dealing with state and local governments to try and scale up their programs across the US.

Business Insider Intelligence, Business Insider’s premium research service, has compiled a detailed report on drone delivery that:

  • Provides an overview of how drones can transform parcel delivery by automating logistics, particularly for last-mile deliveries.
  • Examines the efforts of several companies across industries that are experimenting with drone delivery.
  • Highlights the major obstacles that remain in making drone delivery mainstream.
  • Provides a timeline for the adoption and scaling of drone delivery services in the US.

Powered by WPeMatico

AdSense

Smart Home