Fast, free delivery has become table stakes for e-commerce success, but it comes at a price.
Even before the COVID-19 pandemic began driving the boom in e-commerce, logistics-service providers were looking at options for automating home deliveries. But with e-commerce sales in Canada jumping by almost 21 per cent in 2020 and spending hitting $52.04-billion, according to retail-research firm eMarketer, the pressure is on to make the last mile – as the logistics industry calls home deliveries – more efficient.
It’s a complex challenge. Couriers have to make deliveries to multiple residential addresses in multiunit buildings or to single-family homes in congested urban areas. The parcels come in a variety of non-uniform sizes, and they need to be delivered quickly, all over the map.
In a recent survey conducted by Soti, a Mississauga-based mobility-software provider, 78 per cent of Canadian transport and logistics companies agreed that juggling all these variables makes the last mile the most expensive – and inefficient – part of the supply chain.
At the moment, last-mile deliveries are mostly made by familiar courier companies and their drivers. Trucks from Purolator, United Parcel Service, FedEx, DHL and countless smaller, local companies fan out across cities and towns every day ensuring the 1.1 billion parcels shipped in this country every year (according to Pitney Bowes research) reach their destination.
An increase in e-commerce sales spurred by the pandemic has meant delivery services are expanding their capacity. But it is difficult to recruit drivers, while urban congestion slows deliveries and makes it hard to find legal places to park.
Many companies have been looking to automation as a solution. In theory, autonomous vehicles could deliver packages to residential addresses more efficiently and at a lower cost than the human-driver-and-truck model in use now. Consulting firm McKinsey & Co. suggests that autonomous deliveries could save between 10 and 40 per cent of delivery costs.
But the friendly robot rolling – or walking – up to your doorstep and ringing the bell is still the stuff of science fiction. Likewise, a fully autonomous delivery van cruising the streets is still years away. So far, autonomous deliveries are very much experimental, although some startups are making headway.
In Toronto, robotics firm Tiny Mile is working with Uber Eats and local restaurants to deliver takeout. Its pint-sized, four-wheeled Geoffrey units roll along sidewalks in the Leslieville and Corktown neighbourhoods, dispatching food to hungry condo-dwellers.
But don’t be fooled; these vehicles are not autonomous. Omar Elawi, Tiny Mile’s account manager of partnerships, explains the units are more like remote-control cars than robots and are driven by human pilots who may be sitting in bed in their pyjamas. Using on-board cameras and GPS, the driver navigates to the destination, confirms the identity of the recipient by using cameras to check ID, then presses a button to open the payload doors.
“The technology right now isn’t really where it needs to be for it to be fully autonomous,” Elawi says. However, using the cute, pink Geoffrey robots does save on delivery costs, and their visibility and novelty make them a marketing tool, “since the robot attracts so many clicks and hits.”
It will still be years before we see truly autonomous vehicles on the roads. “Autonomous vehicles are already well deployed, with high safety levels, in factories and warehouses,” says Ash Sharma, senior research director at market-research firm Interact Analysis, in an e-mail. “But deploying them around the public and more dynamic and unpredictable environments, like streets and sidewalks, requires much more due diligence, risk assessment and compliance. This will be a major technical hurdle.”
Since fully autonomous vehicles aren’t road-ready, some are looking to the skies as a solution. Drones have been tested and proven for deliveries all over the world. In the United States, Amazon was the most recent company to receive approval from the Federal Aviation Administration to develop a fleet of delivery drones, joining UPS and Wing, a subsidiary of Alphabet, the parent company of Google. All three remain limited to small-scale pilot projects designed to demonstrate that autonomous drones can operate safely.
Closer to home, Vaughan, Ont.-based Drone Delivery Canada (DDC) is working with Transport Canada to break down the logistical and regulatory hurdles standing in the way of airborne home deliveries. The biggest challenge is that drones are not currently allowed to fly over people, said Michael Zahra, DDC’s CEO.
“As the risk profile goes down in terms of failure rates and these sort of things, then they relax the regulations. It’s sort of an iterative process. It’s very much a crawl, walk, run approach,” he said.
Drone delivery is coming, he asserts. Their use “started off as remote, and then rural and then suburban,” he says, adding the regulations are definitely “evolving and relaxing.”
Zahra expects the first use of e-commerce delivery drones will be in rural areas. “People [will] maybe have to drive one kilometre to pick up their package instead of driving 50 kilometres to the Walmart or Home Depot,” he says. “I think it’s a couple of years away before you see high-density, residential, non-emergency-health-care delivery.”
He said that while pizza deliveries by drone are not yet in the cards, DDC has been working on projects with Peel Region outside of Toronto to deliver a defibrillator in the event someone has a heart attack.
“I think that business-to-consumer deliveries will start with health care,” he said. “That’s more interesting to society, more interesting to the regulator. When people see that it’s bringing a benefit to themselves and then to their neighbours, I don’t think drones are going to be an issue.”