gE Blog Series: Innovation in Logistics Technology Part 3 - Challenges of Using Drones

Research conducted by Goldman Sachs predicts that the global commercial drone market is expected to grow to $20.6 billion USD and the compound annual growth rate is supposed to grow by 41% from 2016-2021. In North America alone, the industry is forecast to have 1.4 million commercial drones in use by 2025. 

Rick Rys of ARC recently conducted research on drones and its impact on supply chain and manufacturing applications. He found that some of the largest areas for drone use are in the agriculture, mining, and media industries. In regards to supply chain management and logistics, drones can be used to cost effectively locate factories and warehouses for companies, as drones are well-equipped for land and building assessment and inspection.

Technologically speaking, advancements are being made continuously in autonomous piloting which will benefit the usage of drones in the near future. However, before drones become mainstream in supply chain and logistics, a regulatory framework must be created to outline parameters of how drones can be used. The United Kingdom already has already outlined guidelines for drone usage, such as requiring drones to be flown in direct sight of the pilot and away from congested areas, aircrafts and airports. In the United States, the FAA has yet to outline a framework to regulate drone use.

Before the use of drones becomes a mainstream practice, there are a few major challenges that need to be addressed. Insurance costs could be a challenge, as merchandise and the drones themselves can be worth a lot of money. Initially, insurance premiums are likely to be high, and costs would likely be passed on to customers, resulting in more expensive deliveries and less mainstream use.

Weather conditions are also a challenge as drones must be able to operate in high winds and rain, and drones inability to function in all weather conditions would limit the spread of mainstream usage. Cybersecurity is another large concern that has to be addressed, because drones have a wireless connection to the operations center, which may leave it vulnerable for hackers to exploit.