Emerging Technologies

Here’s how drone delivery will change the face of global logistics

A drone demonstrates delivery capabilities from the top of a UPS truck during testing in Lithia, Florida, U.S. February 20, 2017. REUTERS/Scott Audette - RC19E3A71430

By using drones to deliver goods, even far-flung places become instantly accessible. Image: REUTERS/Scott Audette

Jon Liao
Chief Strategy Officer, JD.com
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This article is part of: World Economic Forum Annual Meeting

The power of technology to bring positive change is well documented and well understood across the planet. However, when its benefits are distributed unequally across different strata of society, technology creates barriers, dividing peoples and inhibiting social development and economic growth. This so-called “digital divide” is something we at JD.com, a Chinese e-commerce company, and the World Economic Forum are striving to narrow.

In our experience, we have seen how the right technology, employed in the right way, can instead create bridges. A recent example is commercial drone delivery.

By using drones to deliver goods, even the most far-flung, hard to reach places in remote and rural areas become instantly accessible and connected.

Speedy and efficient alternatives to using automobiles, trucks, and trains to traverse treacherous terrain, drones can get to these places in minutes. We see drones as part of a larger smart logistics initiative, bringing people, places and goods closer together, faster and more conveniently.

Whether it’s an emergency situation, where minutes shaved can mean lives spared, to simply being able to speed necessities and goods to people who need them, drones make impractical routes practical.

Further, with the cost of deliveries in some countries’ rural areas estimated to be five times greater than in urban areas, using drones at scale can help equalize economic opportunity and access to affordable consumer goods between regions by bringing down the cost of rural logistics.

We recently had the opportunity to again witness the profound impact that this technology can have on people’s lives. On January 8, after working together alongside local government officials for more than half a year, JD.com in collaboration with the World Economic Forum’s Centre for the Fourth Industrial Revolution (C4IR) successfully completed the first ever government-approved drone delivery flight in Indonesian history.

This test delivery to the Mis Nural Falah Leles elementary school in Jagabita Village, Parung Panjang, Indonesia, opened the door to the possibilities the technology holds. Students who watched as the drone brought backpacks for their school excitedly asked when they could start getting packages delivered to their homes this way.

Timothy Reuter, Head of Drones and Tomorrow’s Airspace at the World Economic Forum, says: “These tests are an opportunity for Indonesia to become a leader in the Southeast Asia region by leveraging drone delivery to improve access to vital medical, humanitarian, and commercial goods in remote areas.”

JD.com was an early mover in e-commerce in Southeast Asia. Recognizing the potential of the market there, JD saw many characteristics similar to the developing Chinese market of the last decade, including a rapidly growing rate of mobile and internet penetration, the lack of nationwide logistics infrastructure, a relatively weak bricks-and-mortar retail system, and price disparities across different areas.

The company formed a joint venture with a local partner to launch an e-commerce business in Indonesia in 2016. Since then, that business has grown to become a formidable player in the market, selling more than one million units of stock (SKUs) and serving more than 20 million consumers across the republic.

Of course, one enormous challenge that is unique to Indonesia is its topography. Being spread out across more than 17,000 islands, the country poses significant challenges for efficient last-mile logistics.

Putting drones into operation for e-commerce deliveries and other logistics-related services can help give Indonesians access to unprecedented efficiency and reliability of services. It will also play a role in making same-day and next-day delivery a reality across the country. This, in turn, will raise the bar for customer service throughout the country.

We believe, however, that this is just the beginning. Drone delivery has the potential to completely change the face of global logistics.

As this pilot drone flight in Indonesia shows, when the private sector, local governments, and groups such as the Forum’s C4IR, collaborate effectively, barriers fall and bridges are created.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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