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Daily Drone Deliveries Surpass 2,000 Globally

Grandiose promises of drone deliveries have been around for years, but the recent surge of commercial and civil drone activity may spark a wider adoption.

I first addressed the state of commercial drone delivery last year.

According to a recent report by McKinsey & Co., there have been over 660,000 drone deliveries to global consumers in the last three years. As of early 2022, more than 2,000 drone deliveries occur each day worldwide. McKinsey projects global deliveries for 2022 will be close to 1.5 million, up from under half a million in 2021.

Here is a list of recent updates from companies advancing drone deliveries.

FedEx

Photo of an Elroy Air drone in flight.Photo of an Elroy Air drone in flight.

FedEx Express and Elroy Air

FedEx Express, a subsidiary of FedEx Corp., is teaming up with California-based Elroy Air, which is building an autonomous vertical take-off and landing aerial cargo system. FedEx Express will test Elroy Air’s Chaparral drones within FedEx’s middle-mile logistics operations, moving shipments between sortation locations autonomously.

The Chaparral aircraft can pick up 300-500 pounds of cargo autonomously and deliver it up to 300 miles by air.

FedEx and Elroy Air have been working together since January 2020 and will continue their collaboration to pursue certifications and begin flight testing in 2023.

Wing

Screenshot of Wing home page.Screenshot of Wing home page.

Wing

Alphabet subsidiary Wing launched its first commercial drone delivery service in a U.S. metro area on April 7 in the Dallas-Fort Worth Metroplex to several thousand suburban homes.  The drones fly health and wellness products from Walgreens directly to customers’ homes, ice cream from Blue Bell Creameries, prescription pet medications from Easyvet, and first-aid kits from Texas Health.

In March 2022, Wing completed 200,000 all-time commercial deliveries across its global markets. In 2021, Wing completed just over 100,000 drone deliveries in Australia. Recently, it had its busiest week ever, with more than 1,000 global deliveries in a single day (one every 25 seconds).

Walmart

Photo of Walmart employees loading a drone.Photo of Walmart employees loading a drone.

Walmart and DroneUp

Walmart and DroneUp, a global drone technology and services provider, have announced commercial drone delivery operations at three stores in Northwest Arkansas, operating from 8:00 a.m. ­to 8:00 p.m., seven days per week, to deliver items to eligible Walmart customers by air in as little as 30 minutes.

“When we invested in DroneUp earlier this year, we envisioned a drone delivery operation across multiple stores,” said Tom Ward, senior vice president of last mile at Walmart U.S. “Opening our first hub within months of our initial concept showcases DroneUp’s ability to execute drone delivery operations safely and with speed.”

Domino’s

Photo of a SkyDrop drone in flight.Photo of a SkyDrop drone in flight.

SkyDrop

Domino’s and SkyDrop recently signed a deal to launch the second stage of their commercial drone delivery partnership in New Zealand. The companies plan to conduct a trial of drone delivery services from a Domino’s store in New Zealand to customers’ homes, expected to commence this year. SkyDrop or its designee will operate the test. SkyDrop’s advanced drones can conduct speedier, cheaper, and greener deliveries versus traditional methods.

Domino’s and SkyDrop partnered in 2016 to launch the first stage of drone delivery in New Zealand, delivering pizza from Domino’s Whangaparaoa store in Auckland. SkyDrop has since advanced its technology, increasing the payload of its drones to 3.5 kg (7.7 lbs) and delivery altitude up to 60 meters (197 ft). The company has incorporated a parachute system for safety and expanded production of its aircraft system in the U.S. in conjunction with the Federal Aviation Administration certification process. It also received certification from New Zealand’s Civil Aviation Authority.

Amazon Prime Air

Screenshot of Amazon Prime Air web page.Screenshot of Amazon Prime Air web page.

Amazon Prime Air

Amazon has been testing Prime Air drone deliveries in a few rural areas of Oregon and California in the last two years. According to Business Insider, Amazon plans to expand the testing to 1,300 shoppers this year. Customers can choose from around 3,000 items weighing under 5 pounds. Amazon will offer drone services in 32 locations by 2025, delivering 1 million packages annually, free of charge to Prime customers. Ultimately, Amazon plans to operate 145 drone launchpads, flying 250 at one time and sending 500 million parcels a year by drone.

Amazon’s drone efforts have suffered setbacks, including recent crashes and missed deadlines. However, Prime Air has committed to join Amazon’s sub-same day delivery by 2024.

UPS Flight Forward

Photo of a UPS drone preparing for takeoff. Photo of a UPS drone preparing for takeoff.

UPS Flight Forward

Last year, UPS Flight Forward began making Covid-19 vaccine deliveries via drone for Atrium Health Wake Forest Baptist medical center in Winston-Salem, North Carolina, using packaging from Cold Chain Technology developed for drones. UPS’s drone airline received first-of-its-kind approval from the FAA to carry alkaline and lithium batteries to power temperature monitoring devices required by the U.S. Centers for Disease Control and Prevention for Covid-19 vaccine transport. UPS Flight Forward worked with Cold Chain to design a custom, drone-sized case to maintain the temperature at 2 to 8 degrees Celsius.

In 2020, UPS teamed up with CVS Pharmacy to deliver prescription medicines by drone to retirement community residents in Florida. The service used Matternet’s M2 drones from three CVS locations.

Flytrex

Screenshot from Flytrex home page.Screenshot from Flytrex home page.

Flytrex

Flytrex, an Israel-based drone-deliveries startup, completed a funding round for $40 million at the end of 2021, led by BRM Group, with participation from SoftBank-backed OurCrowd and Lukasz Gadowski, founder and chairman of Delivery Hero. To date, Flytex has raised a total of $60 million.

The company is working with Walmart, Chili’s, and other businesses in its North Carolina test area. “We estimate that we’ll have national approval by the first half of next year,” said Yariv Bash, Flytrex’s co-founder and CEO, in an interview. “We are in the process with the FAA, which we started more than a year ago.”

Others

Photo of a Meituan drone.Photo of a Meituan drone.

Meituan

Meituan, a large online shopping, entertainment, and delivery platform in China, has been running a pilot program delivering food to Shenzhen, a city of nearly 20 million. The program is available to just seven neighborhoods and a select number of merchants, and the drones deliver to designated streetside kiosks. Over the past two years, Meituan has flown 19,000 meals to 8,000 customers.

Manna runs a drone delivery program in Galway, Ireland, with authorization to take it across the European Union. Upon reaching a customer’s home, a drone will scan the area with lidar and radar to find a safe spot, descend, drop off the product, and fly off for its next pick-up. Manna runs 2,000 to 3,000 flights per day with fully autonomous drones at 50 miles per hour.

Abu Dhabi Department of Health announced that the Emirate of Abu Dhabi is adopting advanced drones to distribute and transfer medical supplies within the healthcare sector. The project collaborates between the DoH, the General Civil Aviation Authority, SkyGo (a drone provider), and Matternet, the logistics service. Drones deliver medicine, blood units, vaccines, and samples between laboratories, pharmacies, and healthcare facilities around the city.

Materials behind Sustainable Mailers, Boxes

Compostable, biodegradable mailers and boxes are among 2022’s top environmental fulfillment trends. Consumers and governments expect ecommerce businesses to help lower carbon emissions and move toward sustainability. Online sellers are responding. Many are changing their operations.

It is, however, important to understand packaging’s component materials since not everything recyclable or biodegradable is equally helpful.

Screenshot of Noissue compostable mailerScreenshot of Noissue compostable mailer

Noissue is one of several packaging suppliers offering compostable ecommerce mailers. This example is made from two biodegradable materials: PLA and PBAT.

The Terms

Four terms play a role in environmental packing material.

  • Recyclable. A material that can be broken down and reused, often of lower quality.
  • Biodegradable. Material that will break down naturally without causing environmental harm.
  • Compostable. Material that will break down naturally and provide nutrient-rich soil or humus.
  • Sustainable. Material sourced from renewable or highly-efficient processes.

The Streams

Next, it is helpful to understand where ecommerce packaging tends to end up.

  • Landfills. Engineered and managed solid waste facilities. Landfills in developed countries are typically well regulated and efficient. Local government agencies often operate landfills, but for-profit companies do it, too.
  • Recycling operations. Manufacturing plants that rely on used materials as a resource. Some municipalities run recycling facilities. Private, for-profit companies often process materials for resale.
  • Oceans and seas. Some waste is dumped offshore. Regulations and requirements differ among nations.

Some observers believe it is better to keep packing materials out of landfills. But biodegradable materials, for example, are less recyclable than traditional plastics and decompose naturally in a landfill.

Polymer Mailers; Cardboard Boxes

Polymer mailers and cardboard boxes are among the most common forms of ecommerce packaging.

Those materials are recyclable. Placing these plastics and cardboard in a proper recycling bin will likely result in new mailers, boxes, or similar.

However, a poly mailer or cardboard box degrades every time it is recycled — the fibers in cardboard become shorter. Thus a box cannot become quality paper, but cardboard from recycled paper is common and much more efficient than using virgin materials.

Recycling requires energy, chemicals, and water. Hence there’s a cost to the environment each time we recycle. Nonetheless, using recycled products is one way for ecommerce merchants to foster sustainability.

Some shoppers won’t recycle and will instead send discarded mailers and boxes to the landfill. While landfills are safe, some of these materials can take a few hundred years to break down.

Biodegradable Plastics

Relatively new biodegradable plastics are often touted as a better alternative to recyclable polymers for ecommerce mailers or even product packaging.

Microbes naturally break down biodegradable plastics over time, converting the material into water, carbon dioxide, and biomass.

There are at least three categories of biodegradable plastics: biodegradable petroleum-based plastics, biopolymers (often called bioplastics), and hybrid plastics that combine the two.

Polybutylene adipate terephthalate (PBAT), made from petroleum, is a biodegradable plastic used in some ecommerce mailers. PBAT is different from bioplastic. For example, some bioplastics are derived from bacteria during the manufacturing process.

Other bioplastics such as polylactic acid (PLA) result from fermentation using plants like corn or sugar beets. PLA is a popular bioplastic because it does not contribute to greenhouse gas emissions and is compostable.

Again, biodegradable material breaks down naturally and does not harm the environment, while compostable material produces humus that may be beneficial. Thus, all compostables are biodegradable, but not all biodegradables are compostable.

PLA then is perhaps a better option than a biopolymer that is only biodegradable.

Ecommerce companies that choose biodegradable plastic mailers may also want to understand the components. A PLA-based mailer will probably help reduce carbon emissions in some small way, while other materials derived from petrochemicals might not.

In short, ecommerce uses enormous volumes of packing and shipping material. Shifting those materials to eco-friendly alternatives requires an understanding of the underlying contents.

Take a Side in the Future of the USPS

In the last 15 years, the United States Postal Service has lost around $90 billion. It has often failed to meet delivery expectations. And yet, the USPS is vital for many ecommerce companies.

By law, the USPS must deliver to every address in the United States six days per week. This makes the USPS a common and often good choice for last-mile delivery specifically and ecommerce generally.

Thus many ecommerce operations use USPS services.

In fact, in 2020 the USPS delivered 7.3 billion packages in the United States. By comparison, United Parcel Service (UPS) delivered 6.3 billion packages and documents worldwide — to 120 nations — in 2020, according to the company’s reports.

Given its six-day delivery schedule, the USPS delivers roughly 3.2 million more daily packages than UPS. Hence the USPS is important for package delivery.

Problems

Don’t forget those losses. The USPS has experienced billion-dollar losses for 15 years in a row. Fiscal 2021, which ended September 30, saw a $4.9 billion net loss.

In an odd way, that $4.9 billion loss is good considering that USPS had a $9.2 billion net loss in fiscal 2020.

Some opponents have argued that these losses indicate that the USPS should either be shuttered or privatized.

A private USPS would likely shift to profitability rather quickly. This could happen by shedding some of its most onerous problems. Let’s consider a few of those.

Prepaid health benefits. For 10 of the years that the USPS experienced billion-dollar losses, it was prepaying approximately $5 billion annually in retiree health benefits because of a legislative requirement. Before that, the agency had earned a modest profit of roughly $9 billion from fiscal 2003 to 2006. Private companies would not likely produce losses to pre-fund health care.

Employee pay. The median annual wage for postal workers was $51,080 in May 2020, according to the U.S. Bureau of Labor Statistics. The median annual wage for UPS workers in 2020 was $44,254, according to the company’s 2020 annual report. If the USPS were private, it could lower its wages to match the industry and save billions.

Price caps. The USPS cannot raise rates without permission. The organization essentially needs an act of Congress to boost postage and package rates. Plus, it must adhere to unrealistic first-class-mail standards without the ability to raise prices in step with costs. A private USPS would almost certainly increase postage rates for first-class mail or eliminate the service altogether to focus on more profitable offerings.

Comprehensive delivery. The USPS delivers to every address in the United States. A private USPS would presumably not serve many rural addresses, requiring those folks to come to a central hub to pick up packages and mail.

Modernization. Lastly, the USPS has borrowing limits. It cannot seek out loans for investment in new equipment, nor can it seek outside equity.

So yes, a private USPS — or a shuttered USPS replaced by an army of private companies — could become profitable. But is that better?

An Undecided Future

In its 10-year “Delivering for America” plan, unveiled earlier this year, the USPS proposed changes that, if successful, would lead to small annual profits.

Cover of the "Delivering for America" USPS plan in early 2021 Cover of the "Delivering for America" USPS plan in early 2021

In early 2021, the USPS released a 10-year plan to overhaul the organization and make it self-sustaining.

The plan addresses all of the problems described above, plus other issues around employee retention, logistics, and infrastructure.

For example, the plan changes service standards for some mail classes so the USPS can move those items with trucks (which the USPS owns) rather than via contracted air services.

The plan also includes processing improvements that could boost package handling capacity by 4.5 million boxes daily by the end of 2022. Moving billions of additional packages would take some pressure off of shipping during peak holiday periods.

Capacity would continue to grow over the next decade.

A financially viable and increasingly capable USPS might be very good for ecommerce businesses, especially small and mid-sized companies not able to build last-mile fleets.

There is, however, no guarantee that Congress will accept the plan. Both the U.S. House and Senate had postal reform bills in committee at the time of writing. But there were certainly disagreements.

Some legislators did not want a change in mail standards. And President Biden’s November 19 nominees to the USPS Board of Governors have led some to think that Postmaster General Louis DeJoy could soon be out of a job.

Take a Side

Ecommerce owners and managers may want to take a side. The USPS’s future is being debated. This mainstay of ecommerce delivery could soon be on its way to improved capabilities or not.

It seems too important for ecommerce businesses, particularly SMBs, to sit and watch.

Is Last-mile Delivery Ripe for Disruption?

Competition, profit-taking, and emerging technologies may contribute to rapid and disruptive changes in last-mile package delivery worldwide.

For online sellers, the “last mile” describes the final leg of a product’s journey to a customer. The last mile is also the most expensive part of that journey, constituting as much as 50% of the total shipping cost.

The Last Mile

Consider the trip a package might take from a warehouse to a front porch.

  • Transport to the carrier. The carrier picks up a truckload of orders from the shipper’s warehouse, or the shipper drops the orders off. In either case, hundreds of packages are traveling together.
  • Move through the carrier’s network. Using a combination of trucks and airplanes, the carrier moves the order from the departure city to a regional facility close to the customer. This too is done in bulk, taking advantage of economies of scale.
  • Deliver to the customer. The order goes from the regional facility to the customer’s door. While many packages might share the ride to a neighborhood, the scale is much smaller. Labor and fuel are much more expensive relative to the number of packages.

Competition

Chinese businesses are among the best at ecommerce package delivery. Companies such as the Alibaba Group have used efficient software integrations, low-cost workforces, and hundreds of logistics partners to ship orders globally.

For example, Cainiao Smart Logistics Network Limited, an Alibaba subsidiary, uses its close integration with Chinese customs officials to clear orders for international shipping in an hour or less.

Earlier this year, the company announced that its consumer marketplaces, AliExpress and Tmall, will soon offer free, 72-hour shipping from its facilities in China to almost 190 countries.

The further AliExpress, Tmall, and other Chinese ecommerce businesses expand, the more they compete with Western ecommerce powerhouses such as Amazon, Walmart, and Germany’s Otto Group.

Each of these will need to keep costs low along the entire supply chain. The global competition could pressure last-mile delivery, as massive ecommerce companies (and hundreds of regional and small businesses) all seek to offer free and fast shipping. Alibaba, Amazon, and the rest are presumably doing everything possible to reduce last-mile shipping costs.

Profit Taking

While ecommerce competition is increasing globally, package carriers — established and emerging — are looking for ways to increase profit.

FedEx, for example, is raising rates for many of its services by an average of 5.9% in 2022. UPS will likely follow.

Profit is also motivating Walmart to enter the last-mile delivery business. The company is said to be looking to diversify revenue. In August 2021, Walmart announced a white-label, last-mile delivery service called Walmart GoLocal.

This service, based out of Walmart’s 4,700 retail locations, will deliver locally for other retailers. For example, a regional chain could sell an item online and have a GoLocal driver pick it up in an unmarked van. The shipment then arrives at the customer’s doorstep within a few hours. The Home Depot has already announced a partnership with Walmart GoLocal.

Finally, a discussion of last-mile delivery and profit-seeking should also include services such as Doordash, Uber, Postmates, the Front Door Collective, and Walmart’s Spark, which utilizes gig drivers.

With so many companies addressing last-mile delivery, change is almost a given.

Technology

If global ecommerce competition and a burgeoning local-carrier industry are not enough to disrupt last-mile delivery, the addition of autonomous delivery vehicles and drones could do it.

Alibaba, Amazon, Walmart, and dozens of drone and autonomous, electric vehicle companies such as Nuro, Kiwibot, and Starship Technologies are all working to reduce last-mile delivery costs with driving and flying robots.

Alibaba’s fleet of 10,000 autonomous, electric delivery vehicles has been in service for three years. Each robot can carry approximately 50 packages at a time and cover 60 miles on a single charge. At full capacity, each delivers about 500 packages per day. Collectively, they have made more than 1 million deliveries by September 2021.

Photo of Alibaba's electric, autonomous delivery vehicles.Photo of Alibaba's electric, autonomous delivery vehicles.

Each Alibaba delivery robot can carry approximately 50 packages at a time and cover 60 miles on a single charge. At full capacity, each delivers about 500 packages per day. Image: Alibaba.

It is unlikely that all of these bots will be successful. Regardless, our sidewalks and class G airspace could someday resemble a science fiction film with streams of buzzing and humming robots swarming to and fro.

Thus, if even a few of these services are widely accepted, ecommerce delivery will change. What seems wild now might be the norm before we know it.

Getting Started with In-house Fulfillment

Many emerging ecommerce businesses start in someone’s garage or kitchen. They store, pack, and ship from a home base and control all the activities.  But even established sellers sometimes opt for fulfilling in-house.

The benefits include:

  • Quality control for packing, presentation, shipping, surprises.
  • Elevated customer experiences for speed, communication, support.
  • Branding and materials for customized packaging.
  • Better control over inventory levels, avoiding stock-outs.
  • No barriers between you and the customer.

In-house fulfillment is best suited for one or more of the following:

  • Startups.
  • Order volumes of less than 20 per day.
  • Customized orders or unique customer requirements.
  • New product lines and suppliers.
  • Alternative picking and packaging processes.
  • Local customers.
  • Existing capacity (warehouse and employees).
  • Adequate funding to invest in technology.

What’s Involved?

Order processing includes picking the item(s), quality inspection, packaging and labeling, and dispatching. Managing inventory means receiving and recording the goods, monitoring stock levels, and otherwise organizing and accounting for it all. Failure to manage inventory means stock-outs, damaged goods, and waste. Moreover, the cost of managing inventory does not end with renting space and hiring staff. It also includes administrative, technology, and overhead, such as insurance.

Expansion involves:

  • Locating and securing suitable warehouse space. Consider starting with a secure storage unit or space in an existing facility. Try to allow for flexibility if growth is faster or slower than anticipated
  • Employ and train staff.
  • Research and source equipment and software for packing and labeling and, potentially, for automation.

Automation of routine tasks expedites and synchronizes the order fulfillment process. Select a software provider for only the functions that you need. Look for software that:

  • Loads new orders automatically from your ecommerce platform but also allows for manual order entry and editing.
  • Tracks inventory movements in and out and alerts for low stock levels.
  • Integrates with your existing software — accounting, customer management, ecommerce.
  • Processes product returns and credit notes
  • Runs reports on demand
  • Tracks historical volume to anticipate staffing needs and stock on hand.

Costs

There are four main cost centers for in-house fulfillment: warehousing, labor, packaging materials, and shipping. Shipping will likely be outsourced unless deliveries are local with your own transport.

Here is a hypothetical framework of how to estimate potential fulfillment costs.

By estimating the average fulfillment cost per order ($18.80 in our hypothetical example), merchants can compare to outsourced providers and decide on the best option for their business. There is no standard pricing for third-party fulfillment, but costs will likely include a monthly management fee plus charges for:

  • Receiving of inbound inventory, per hour of labor.
  • Storage, usually either by pallet or bin, per week or month.
  • Picking, packing, and labeling (per item).
  • Special services, including returns handling.

There may also be an on-boarding fee. Remember to add shipping when comparing the total cost per order. An outsourced provider could likely offer lower shipping costs due to volume discounts it receives from carriers.

3 Ways to Reduce Shipping Costs

Lowering shipping costs is a surefire way to improve profits. Same-day delivery, free shipping, standard transit, click-and-collect — all are candidates for cost reductions.

3 Tips to Reduce Shipping Costs

Negotiate rates with shippers. There is always room to negotiate on price, even for small volumes. Gain a clear understanding of how weight and size impact rates. Flat-rate shipping is an option that can save money — the same size box ships at the same flat rate every time, regardless of weight. Explore the options for various shipping speeds.

Benchmark rates you are offered against FedEx SmartPost and UPS SurePost rates. These services use USPS to manage the “last-mile” deliveries. Consider migrating to USPS for your entire shipment.

Minimize packaging.

  • Size and weight. Know the exact size and weight of each of your products. Measure, weigh, and document dimensions and weights for all items — from heavy-large to small-light. Focusing on dimensions and weights can lower your shipping rates. In general, the less a package weighs, the less it costs to ship.
  • DIM factor. Dimensional or “DIM” weight is a formula carriers use to determine the cost to ship a package based on its volume. DIM pricing allows carriers to incorporate package size into their pricing structure.

ShippingEasy, a software provider, has a handy calculator for the dimensional weight of a package. Compare it to the actual weight of a package to see if you’ll pay more. DIM pricing mostly affects large and lightweight products as well as fragile items. To keep costs down, pack in the smallest box possible with lightweight filler.

Screenshot of ShippingEasy's DIM weight calculator pageScreenshot of ShippingEasy's DIM weight calculator page

Carriers apply a package’s dimensional weight when setting prices. This example DIM weight calculator is from ShippingEasy.

  • Packaging materials. Minimize your product packaging. Use the lightest and smallest possible carton for your items. This lowers weight and volume and also reduces filler. Look for lightweight, protective materials such as air pillows and bubble wrap and use the minimum needed to protect the items.

For smaller, lightweight, fragile products, use a padded poly mailer or returnable plastic bag. Compared to boxes, bags are weather-resistant, cheaper, quicker to pack, and inexpensive to ship. Plus, polybags are brandable, much like cardboard packaging.

Buying packaging materials in bulk to gain discounts makes sense when you are clear on future requirements. UPS, FedEx, and USPS offer free samples as well as free branded boxes and envelopes when you sign up for their services.

Consolidating orders into fewer boxes is another way to reduce shipping costs.

  • Recycle and reuse. Strip off labels from suppliers and repurpose the packing materials for shipping your own items. It saves money and fosters sustainability.

Outsourcing shipping. Contracting with a specialist ecommerce fulfillment service provider can reduce shipping costs. A third-party fulfillment company often provides lower rates because of its overall shipping volume. Many run multiple facilities, which could be closer to your customers, reducing transit times and fees.

Third-party providers offer custom solutions that suit your requirements, including money-saving packaging schemes for seemingly every product type. The providers can also solve staffing demands from seasonal peaks and fluctuating demand.

Last-mile Delivery Attracts New Services, Providers

With the holiday shopping season approaching, retailers and carriers are rolling out new delivery services. Smaller third-party providers are also entering the market, as last-mile delivery remains the most troublesome part of the package handling process.

Inadequate Capacity

Demand for package delivery during the 2021 holiday season is projected to exceed capacity by about 5 million parcels per day, according to UPS CEO Carol Tomé during the company’s Q2 earnings call. National and regional carriers are already at capacity.

Relying on USPS for last-mile delivery is becoming increasingly precarious. USPS is deliberately slowing down mail and package delivery and is suffering from a labor shortage in many areas. Additionally, USPS has asked the U.S. Postal Regulatory Commission to approve a rate increase of $0.25 to $5.00 per package — depending on the product and weight — from October 3 through December 26 for both individuals and businesses.

FedEx shifted all of its SmartPost last-mile parcels away from USPS into its own ground network at the beginning of 2021. UPS’s SurePost program continues to rely on USPS, but the rate increase and the possibility of UPS customers not receiving holiday packages in time may alter that reliance. UPS is already diverting some packages from SurePost to its own drivers.

Amazon is now shipping two-thirds of its packages directly to customers, according to supply chain consultant MWPVL International, up from one-half in 2019.

New Last-mile Provider

The last-mile predicament offers opportunities for small, agile third parties. Earlier this month a new provider emerged. Front Door Collective offers franchises to independent delivery companies. FDC provides uniforms, branded leased vans, and operational technology. The company says it can reach 90% of residences and businesses in the U.S. and Canada and has attracted over 100 small delivery providers. Most of them started in Amazon’s Delivery Service Partner program.

Screenshot from home page of Front Door CollectiveScreenshot from home page of Front Door Collective

Front Door Collective, a new last-mile provider, offers franchises to independent delivery companies. FDC provides uniforms, branded leased vans, and operational technology.

According to Front Door Collective, these small companies believe they can do better financially outside of Amazon’s DSP program. They will have ownership in the umbrella company and better growth opportunities. Amazon does not restrict DSPs from delivering for other companies, but it can limit a DSP’s growth by restricting the number of routes or trucks it operates.

Front Door Collective hopes to expand its network to 300 franchisees by the end of 2021. The company claims it can deliver over 1 million packages per day and offer same-day and next-day service. Most of the companies that have joined FDC employ up to 120 drivers running from 20 to 60 routes daily.

The leadership of FDC has plenty of logistics expertise. Co-founder and CEO Dan Bourgault worked at Instacart and now participates in the Amazon DSP program. Penelope Register-Shaw, who worked for Amazon Logistics and helped launch its DSP program as well as Walmart’s last-mile program, is FDC’s chief strategy officer. Other executives come from the Amazon DSP program, FedEx, Instacart, and the U.S. military. The company believes it will soon compete with both FedEx and UPS, according to Business Insider.

FDC will also compete with Shipt, DoorDash, Uber, and Instacart. According to the company, many retailers that need items retrieved from their stores or warehouses for consumer deliveries have shown interest in its service.

The FDC has committed to sustainability and has partnered with manufacturer Canoo to furnish electric vehicles for its delivery drivers. FDC has agreed to purchase 10,000 Canoo vans by 2024, with the rollout starting in the second half of 2023.

Other Services

UPS is testing same-day delivery to compete with Amazon and FedEx, which offer same-day delivery in select markets. UPS said it might go outside its driver network, using third parties.

This week Walmart introduced a program to offer delivery services to other U.S. businesses. Called Walmart GoLocal, the service will utilize Walmart’s Spark network of third-party drivers to pick up items at merchants’ stores and deliver them to customers. Drivers are paid per delivery and work in more than 500 U.S. cities. Walmart will act as a white label provider, meaning that the merchants’ branding will remain intact.

Smart Lockers Are Upending Parcel Delivery

The growth in ecommerce has fueled the demand for sophisticated delivery options.

Consumers are not always at home or at work to accept packages. Many seek contactless alternatives. Parcel pick-up facilities are increasingly common in malls, gas stations, transport hubs, and large retail stores. A driver can deliver multiple parcels to a secure location where recipients can collect their parcels at any time.

Pick-up facilities:

  • Lessen the burdens of door-to-door delivery.
  • Eliminate theft from so-called “porch pirates.”
  • Save fuel and maintenance expenses.
  • Reduce traffic and CO2 emissions.

In the U.S., FedEx, Amazon, UPS, DHL, and USPS together offer over 70,000 access points — drop boxes, carrier shipping centers, and third-party retail stores.

But smart lockers are driving much of the innovation in parcel delivery.

Smart Lockers

Smart lockers are similar to traditional mailboxes but with electronic access, security cameras, and cloud-based software. Online shoppers select lockers as the delivery method during the checkout and then receive access instructions — usually a QR or SMS code — to open the locker electronically.

Smartmile smart locker in the Netherlands. Source: LogmoreSmartmile smart locker in the Netherlands. Source: Logmore

Netherlands-based Smartmile provides smart lockers for delivery carriers and merchants. Image: Logmore.

“Parcel lockers are becoming popular because of the convenience,” says Tessa English, director, industrial and logistics, at Jones Lang LaSalle, a global real estate services provider. “Consumers have more control over when they pick up their shopping, rather than having to wait for deliveries or risk parcels being left in the wrong place.”

Global Rollout

Singapore, at just 281 square miles, will have 1,000 smart locker stations by the end of 2021. China has over 800,000.

DHL has 340,000 lockers in Germany, accessible by 90% of the population, and more than 3,700 in Spain and Portugal.

Across Europe, retailers have partnered with logistics firms for delivery to lockers. Decathlon, the world’s largest sports retailer with 1,500 stores, recently signed deals with Cleveron and Cubee (part of Belgium’s Bpost, the national postal service) to install parcel lockers.

Other providers are emerging. Netherlands-based Smartmile offers a network of lockers that sync with retailers and carriers. Customers choose their preferred delivery option at checkout and then collect their items via a text message code from their selected parcel machine. Smartmile’s CEO and co-founder Aku Happo said, “Our goal is to offer customers an easy and sustainable way to receive, return and ship all of their parcels from one location. Parcel lockers offer a contactless and convenient way to do it and are preferred by customers.”

DSV, a Denmark-based global logistics company, has installed 400 smart locker banks in South Africa. Customers are notified by SMS and email when parcels are ready for collection and can access GPS maps for directions.

Even Smarter

Autonomous ground vehicles equipped with parcel lockers will likely become commonplace. AGVs can deliver parcels without human intervention. AGVs loaded with parcels could park in designated delivery districts and otherwise function like stationary lockers. AGVs could reduce the high rental cost of fixed lockers and even provide Sunday delivery.

Refrigerated lockers for food orders are coming. New residential developments will likely include a block of lockers accessible by all residents. The lockers will resemble postal mailboxes, just bigger, more secure, and made for shopping.

Warehouse Automation Starts with Picking, Sorting, Packaging

Your fulfillment warehouse is growing fast. More orders are arriving in increasingly varied dimensions and quantities. Systems and processes are struggling.

Sound familiar?

You may be considering additional employees and space. Both are expensive. An alternative is improving productivity by automating some manual tasks.

The Case for Automation

Improving efficiencies and reducing the cost of human resources are the main reasons to automate.

Speedy movement of goods means lower management costs, improved revenue, and satisfied customers. Thus automation can start with materials handling, such as picking, sorting, and packaging. More than half of employees at a typical distribution center are involved with those functions.

Picking. Mobile robotic “shuttle” carts can automate the picking process. They travel the depth of racks to pick up or deposit pallets and can store and retrieve stock totes, trays, or cases.

Most shuttle systems are adaptive and scalable, making it possible to expand incrementally by adding additional aisles. Modern mobile carts greatly increase speed, storage density, accuracy, and throughput in ecommerce warehouses. Fully automated pallet shuttle systems using cranes can manage all types of storage and retrieval.

Here’s an example. Klingspor, a U.S. manufacturer of high-quality abrasive products, was quickly outgrowing its manufacturing and distribution center in North Carolina. The planned facility expansion was an ideal time to automate it.

Working with an equipment supplier, Swisslog, Klingspor deployed 16 automated guided vehicles supporting 962 storage racks, two pick stations, and one replenishment station — all using Swisslog’s CarryPick system, which integrated with the client’s warehouse management software. The setup has increased productivity and eased the demands of employees, who are now welcome automation.

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Sorting. Pocket sortation systems are not new, but they can streamline high-volume ecommerce facilities. They are especially suited to apparel, accessories, and most general merchandise.

The idea is based on a hanging garment sorter and adding a pocket to carry non-hanging goods. The system can sort and sequence pockets containing the exact order items delivered to the packing station in the desired order. It works well for orders of multiple items. The pockets and hanging garments can be mixed to serve apparel retailers with both garments and flat accessories.

Decathlon, a leading European sportswear company, needed a high-volume, compact sorting system as ecommerce sales increased.  The company chose a pocket sortation system from Düerkopp that extends across two halls and three floors.  The system can accommodate in pockets non-fashion items such as small rucksacks and camping articles.

Image of Düerkopp's EcoPocket pocket sorting systemImage of Düerkopp's EcoPocket pocket sorting system

Pocket sortation systems, such as this example from Düerkopp, can accommodate hanging garments and non-hanging goods.

Packaging. The manual process of packaging items for dispatch can be assisted by automatically applying labels and dropping the bags into a container. This semi-automated method can be replaced by a fully automated system when volumes demand it. Automated Packaging Systems and others offer inline solutions that include consumables such as environmentally friendly bags-on-a-roll.

Other technologies automate the boxing of items and the erection and closure of cartons. Machines can cut a box to size and automatically lid it. For example, WestRock’s BoxSizer is a smart packaging machine that automatically downsizes multiple footprint boxes, reducing packaging and dimensional weight, which saves labor, materials, and transportation costs. Highly fragile and high-value products can benefit from machines that scan the item in three dimensions and then build packaging around it!

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Sustainable Packaging Is a Competitive Advantage

Consumers concerned about waste in landfills and oceans are demanding sustainable product packaging. Environmentally responsible packaging can be just as cost-effective as conventional methods but may require a change in thinking.

Packaging is sustainable if it meets eight criteria, according (PDF) to the Sustainable Packaging Coalition:

  • Beneficial, safe, healthy for individuals and communities throughout its lifecycle.
  • Meets market criteria for performance and cost.
  • Sourced, manufactured, transported, and recycled using renewable energy.
  • Optimizes the use of renewable or recycled source materials.
  • Manufactured using clean production technologies and best practices.
  • Made from materials healthy throughout the lifecycle.
  • Physically designed to optimize materials and energy.
  • Effectively recovered and utilized in biological or industrial closed-loop cycles.

Why Sustainable Packaging?

Sustainable packaging can help your business reduce costs. The need to store materials is lessened if packages are designed and manufactured to fit your products. The same goes for shipping: Smaller parcels mean less space, leading to lower logistics expenses. And sustainable packaging can lead to loyal customers.

To implement:

Look at your current packaging. Can you use a smaller container, bag, or box and less filler? Overpackaging is a major complaint of consumers. Streamline your packaging and pallet designs using software from Esko’s Cape Systems, Tops Pro, or similar. All can help create optimal packaging sizes and shapes for your products.

Screenshot of Tops Pro software page from Tops SoftwareScreenshot of Tops Pro software page from Tops Software

Using Tops Software can optimize product packaging, saving materials and transportation needs.

Reuse and recycle packaging materials. Select packaging that uses recycled materials. Recycled cardboard and new paperboard (made from wood pulp) are lightweight. Both are easy to cut and form for making boxes. Bubble wrap made from corrugated paper can replace the plastic version. Consider cartons made from bamboo and sugarcane as well as containers made from recycled plastics.

Ritual, the multivitamin company, uses 100% recycled materials for all bottles. In 2020 Ritual recycled an amount of plastic equivalent to roughly 3 million water bottles. “We’re able to virtually ‘erase’ the shipping footprint from our warehouse to your doorstep via carbon offsetting,” states the company’s website.

Consider compostable mailers and plant-based packaging. Sustainable packaging from biological sources uses cornstarch, mushrooms — you name it. The T-Shirt Mill, an Iowa-based screen printer, ships orders in 100% compostable mailers made from wheat, straw, and other biomaterials. Jute and cotton make excellent reusable bags to deliver apparel and home accessories, for example.

SupplyCompass, a U.K.-based provider of sustainable supply-chain goods and software, states, “Our bio-based polybags have a shelf-life of 12 months and are 100 percent home compostable, disappearing in 6 months when disposed of in correct composting conditions.” Some packaging is even plantable — wrapping materials are embedded with seeds for planting at home.

Move away from plastics. Single-use virgin plastics can take up to 1,000 years to biodegrade. That is not sustainable. A much better option is biodegradable plastic, which breaks down from heat or light. However, it still uses petroleum, which makes it non-compostable. Air pillows made from recycled materials can protect delicate items and come in a variety of sizes. Sealed Air, a provider, encourages consumers to recycle its packing pillows at 18,000 retail store drop-off locations across the U.S.

Suppliers

There are many suppliers of recycled and biodegradable packaging. Look for providers that use raw materials from equally committed sources and otherwise seek to minimize their impact on the environment.

Ask for evidence of a potential supplier’s claims. Confirming those claims is important as communications to your customers must be true. Work with your chosen supplier to create unique solutions for your products.

TempGuard, a Sealed Air brand, provides 100% recyclable packaging for shipping temperature-sensitive goods. The product is constructed from heavy-duty craft paper with inner padding for superior insulating properties. Sunbasket, a San Francisco-based meal kit provider, uses TempGuard for its halibut and shrimp packaging. Adopting TempGuard has lowered Sunbasket’s shipping temperatures while reducing carton dimensions by almost 25%. The reduction enables 30% more boxes per shipment, cutting Sunbasket’s carbon footprint in distribution.

Screenshot of TempGuard from Sealed AirScreenshot of TempGuard from Sealed Air

TempGuard from Sealed Air provides 100% recyclable packaging for shipping temperature-sensitive goods, such as meal kits.

Emerging suppliers are doing more than provide the packaging. Many manage the entire logistics process, including returns. LimeLoop, for example, offers durable shipping pouches from recycled billboard wraps that can be reused as many as 2,000 times. Co-founder Ashley Etling says it is “essential we reimagine the packaging experience” for an ecommerce economy. Merchants ship orders in LimeLoop’s reusable packaging; the customer then returns the empty packaging via USPS to reuse.

Many consumers will pay more for sustainable packaging. Although Fiona Salter at Tiny Box Company, a U.K.-based sustainable packaging provider, says the costs are affordable. “Recycled packaging doesn’t have to be expensive, quite the opposite,” she said. Her company’s small craft boxes start at just £0.28.

Taking the first steps to sustainable packaging can seem daunting. Start slowly. Order samples within your budget to test against damage. Use with a few customers to establish practicality and ease of disposal. Evaluate the results, tweak as needed, and proceed.