Armed with an array of sensors and mechanical limbs, drones are making possible a future in which companies like Amazon (NASDAQ: AMZN) can implement a futuristic drone-based delivery system where consumers would be able to make an online order, and have a flying robot deliver your package in less than an hour.
Prior to just a few weeks ago, the federal government had no laws in place to control hobbyist drones from flying in public airspace, and new rules came in time to control the soon-to-be-expected rise in commercial drone use. The Federal Aviation Administration's new commercial drone rules allow businesses to use drones under 55 pounds, granted that they are operated by licensed pilots and they fly below 400 feet, during the day and at least 5 miles away from airports.
The FAA stopped just short of including package delivery to be a part of the new rules, but is regardless a monumental step towards the drone delivery vision closer to reality. According to NUAIR Director of Operation Tony Basile, the FAA is just "waiting for technology to come to the forefront so your Amazon deliveries can happen safely and so that those aircraft will automatically avoid each other and not crashing over your house."
Early last year, Alibaba Group Holdings Ltd (NYSE: BABA) already made its first trial drone deliveries in China, while its American e-commerce rival Amazon had yet to start a similar program in the United States. For its first trial deliveries, Asia's largest Internet company partnered with Shanghai YTO Express Logistics Co. to deliver ginger tea packets to 450 Chinese customers who volunteered for the one-time drone tests. Around the same time of the year, the US was actually restricting commercial drones, a major setback for drone use.
In February this year, Amazon reported that it has been testing drones for its ambitious Amazon Prime Air delivery service in other countries without the strict regulations like in the US, such as Canada, the United Kingdom, and the Netherlands.
According to US aviation officials, there could be a projected 7 million small drones in the sky by 2020 of which as many as 2.7 million of them will be used for commercial purposes. While 60% of drone usage currently relates to communications and media such as for film making and commercial photography, new higher-value applications are on their way, as drones have a significant advantage in terms of precision, convenience, and cost over more traditional solutions such as satellites and helicopters.
Leaders across a spectrum of industries are already availing themselves of drone-based data. In the oil industry, drones are making it possible to perform weeks of inspection work in just days. Drones are equipped with mounted sensors that allow them to capture an impressive array of data, paving the way for increased digitalization of industrial processes. Because they are a safer and most cost-effective alternative to performing processes currently performed by people, startups such as Sky Futures, a third-party drone services company that works with oil companies are attracting investors.
Beyond the obvious cost reduction for e-commerce companies that rely on traditional shipping methods, the multiplying possibilities of drone-based data could inspire across-the-board alterations in data gathering strategies, particularly if such changes lead to cost savings, improved safety, and enhanced analytics.