% Church steeples, trains& ships as e-delivery drone charge-points. That
light pole your EV is charging from could also have a e-drone charge-point
landing-pad at the top. %

Logistics need a shake-up
Oct 26th 2017  

(Mr Yang driving his delivery e-trike)

Delivering the goods
Surging demand requires new distribution methods

YANG MING IS standing beside his red electric tricycle in a courtyard in
Beijing. A former factory worker from an industrial town outside the
capital, he and dozens of other men are awaiting the arrival of a lorry. As
it pulls in from JD’s warehouse, the men form an assembly line to unload
boxes. They reload the packages to their tricycles and are off, weaving
through the traffic. JD has about 400 such delivery stations in Beijing
alone. Across the country, 2.5m couriers are at the ready to shuttle
packages to their final destinations. When he first started several years
ago Mr Yang made about 80 deliveries a day. Now the number is closer to 130
and still rising.

To a consumer, e-commerce’s rapid delivery seems like magic: a few clicks,
and within an hour or two a package can land on your doorstep. Behind this,
however, lies an enormous amount of investment, engineering and hard work as
firms face ever-rising expectations of fast, cheap delivery. Delivery
networks are likely to be strained as the volume of parcels grows. That is
spurring new experiments in logistics, some mundane (picking up parcels in
stores) and some apparently mad (Amazon patents for underwater warehouses).

In emerging markets, e-commerce has relied on an army of delivery men with
relatively low wages, such as Mr Yang. In America, points out Christian
Wetherbee of Citi, a bank, the United States Postal Service has subsidised
the rise of e-commerce by systematically underpricing the cost of parcel
deliveries. Amazon has been a main beneficiary, sorting goods by zip code in
big warehouses, then delivering them to post offices to handle the last mile
of delivery.

Both these things look set to change. In America, the postal service owes
$34bn in defaulted worker benefits. Mail volumes are declining, which means
fewer deliveries per stop, and thus even lower efficiency and more financial
duress. If the post office introduces reforms, as some politicians are now
asking, parcel delivery will become more costly. Labour costs are rising,
too. That is no surprise in Japan, where the broader labour market is tight.
But even in China, a shortage may loom: swelling parcel volumes will require
4m express delivery staff by 2020, according to Goldman Sachs. In September,
BEST Inc, a logistics firm backed by Alibaba, had a disappointing initial
public offering in New York, in part because investors were anxious about
labour costs. Pressures on e-commerce companies to deliver cheaply will only
rise, yet customers are thinly spread, making it less efficient to deliver
to them than to offices or shops.

Another challenge is sorting out how to deliver packages across
international borders. DHL, which with FedEx and UPS forms a triumvirate of
global parcel firms, estimates that 15% of all e-commerce sales already move
from one country to another. By 2020 it expects that share to exceed 20% as
customers seek lower prices and a broader selection. The big carriers are
keen to capture that business. In 2014 FedEx bought a company called Bongo
that specialises in cross-border deliveries, to help customers with duties
and protect them from fraud.

E-commerce firms are testing innovations that might help. Cainiao, the
logistics network in which Alibaba now owns a majority stake, has built
bonded warehouses where foreign manufacturers can store goods, duty-free,
within China’s borders, ready to be shipped to consumers. Alibaba wants to
build free-trade zones around the world to help small businesses with
customs clearance, warehousing and financing.

Automation may lower costs. In one of JD’s huge warehouses outside Shanghai,
men still operate forklifts, but by the end of the year robots will take
over. Amazon’s robots already bring packages to warehouse staff. The next
frontier of warehouse automation is for robots to pick individual items and
put them in bags or boxes. More than 90% of such work is still done by hand.
Amazon holds a regular robotics contest for automating the process. Robotic
pickers may be more broadly deployed as technology becomes cheaper and
labour more expensive.

Lowering delivery costs is tricky. What has been achieved so far does help,
though it can seem unexciting. With the aid of machine learning, demand is
predicted on the basis of past shopping patterns, weather and other inputs;
that information is then used to decide which goods should be stored where.
Amazon has opened small warehouses where it keeps popular products, so they
can be dispatched quickly to impatient shoppers. Companies are also trying
to concentrate deliveries by sending goods to central pickup points rather
than to customers’ homes.

Retailers have long used “click and collect” models, though the ease of
collecting online orders varies greatly from one shop to another. Now some
stores are becoming hubs for online orders from third parties. From November
FedEx will have package-pickup counters in about 8,000 Walgreens pharmacies
across America. In Japan, both Rakuten, Japan’s leading e-commerce firm, and
Amazon deliver packages to convenience stores.

Look, no hands

The most enticing ideas in logistics involve unmanned delivery. Driverless
delivery trucks may one day help, and Amazon has patents for flying
warehouses and drone-charging stations atop church steeples. But all such
new methods have drawn scepticism. Many drones carry only one parcel, then
must recharge. Asked about technological changes that might bring down
costs, FedEx’s Mr Smith says, “We don’t see them on the horizon for the
last-mile delivery at present.”

Once again, things are moving faster in China. Cainiao has developed a
waist-high robot called Little G to undertake the final leg of delivery. JD
is testing something similar in universities. Both companies expect to
dispatch autonomous trucks within the next three years. Wan Lin, president
of Cainiao, doubts the economics of drone delivery, but JD is forging ahead.
In four Chinese provinces, drones fly on fixed routes to predetermined
landing spots. A worker then carries the parcels for the last stretch of the
journey. JD plans to expand to more provinces and offer more services. One
of the drones being tested can carry up to a tonne.

As this experimentation continues, once again the largest players are the
most likely to win. They have the cash to pour into new technologies and the
volume of sales to reap the benefits from big investments. If America’s
postal service were to raise its charges, Mr Wetherbee reckons, Amazon
might, perversely, be the one to gain. Driven by higher charges, independent
sellers that once used the postal service might turn to Amazon to handle
their distribution. It has more bargaining power with logistics firms like
FedEx and UPS and has recently expanded its network of delivery partners,
using both regional firms and crowdsourced couriers. So Amazon would become
even mightier.
[© The Economist Newspaper]

Amazon delivery drones may dock on trains and ships, patent shows
Aug 8, 2017 - And how can we forget the wacky flying warehouse idea,
essentially a blimp ... street lights and the top of church steeples as
docking stations for its drones, allowing the flying machines to stop off
for a battery charge to allow it ...
Amazon wants to turn street lights and church steeples into drone ...
Jul 21, 2016 - Amazon appears to have a grand plan for its Prime Air drone
delivery service. A recently awarded patent suggests it's looking to turn
the top of street lights, cell towers, and even church steeples into docking
stations for its flying machine. ... The stations would serve as charging
points for the drones ...
Amazon Patent Lets Drones Perch On Streetlight Recharging Stations ...
Jul 20, 2016 - To make delivery drones work, the drones will either need to
fly only short ... such as cell towers, church steeples, office buildings,
parking decks, radio ... to turn buzzing warehouse robots into functional
mechanical postmen.

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