Ups Drone Service Delivery
The United Parcel Service is the world’s biggest package delivery company. The organization also offers superior supply chain management solutions to a wide range of local and international clients. The company is based in Sandy Springs, Georgia. The logistics company delivers more than 15 million packages daily to approximately 6 million customers in over 220 countries around the world.
The large package delivery company also has its own air cargo delivery service as well as its own airline. The airline and air cargo delivery service are both located in Louisville, Kentucky. The acquisitions are meant to hasten the transportation of packages from their origins to their intended destinations. American citizens refer to the company as ‘Brown’ owing to the brown uniforms worn by its employees as well as the brown delivery trucks.
The company’s activities are divided into three main segments that include U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package involves the time-dictated delivery of letters, packages, and documents across the United States.
The international package encompasses the delivery of packages to more than 220 countries throughout the world. The shipments include those that are wholly outside the United States as well as those that originate in the United States or are distributed within its territory. The delivery of packages within this segment is also time-dictated.
The Supply Chain & Freight segment includes the company’s contract logistics and forwarding activities, and UPS freight among other related activities. UPS Freight provides less than truckload, and truckload services to consumers in North Africa. The company provides its logistics services to more than 176 countries. The activities include designing supply chains for the international clients, as well as executing and managing the said designs. In addition, the company also focuses on customs brokerage, freight forwarding, and distribution and consultancy services.
The company intends to develop and deploy a drone delivery system to increase the efficiency of package delivery. Research indicates that the use of drone technology can revolutionize the transportation industry across the world. Many industries have adopted the drone technology and it seems like a very promising technology for all the stakeholders.
The initiation of the drone project at the company has been made necessary by increasing customer demands, as well as environmental protection regulations. Technological advances have also necessitated the company to invest in such technology to remain ahead of its competitors. Such a system would make it quicker to deliver the packages to the intended customers as well as have enormous benefits for the environment. Being at the top of the fray when it comes to adopting drone technology will guarantee the company a favorable placement in the minds of the customers.
Customers demand for faster and more reliable delivery of their packages. Faster package delivery is especially important in this day and age of e-commerce and online shopping. Package delivery through air, rail, and road transport is bound to face delays and cause major customers to become very irate and possibly take their business elsewhere. For instance, according to Risen (2013), UPS usually has a problem delivering packages during holiday seasons because of the high volume of packages that need to be delivered. The volume of air packages during the holidays often surpasses the capacity of the company’s network. The problem is exacerbated when there is poor weather such as heavy snow or rainfall.
When such delays occur, the company’s competitors such as Amazon sweep in and take advantage of the situation. Amazon has offered rebates in the past to UPS customers whose packages have not arrived on time. Such actions can severely undercut the company’s market share. Heavy last minute online shopping during the holidays has also stretched the company’s delivery limit in the United States.
A drone delivery system will help curb delays in the delivery of the packages to customers both domestically and internationally. Drones will help customers receive their packages faster and without delays. Customers who order online probably want the package to be delivered quickly. Regular transportation is bound to be full of delays and this may annoy the customers. The drone service will guarantee that the packages arrive timely to their destinations.
Furthermore, the drone services will help the company deliver products to rural areas or far to reach locations. Research indicates that rural customers buy online three times more than customers who dwell in metropolitan residences (Ferrier, 2016). For several years, the rural folks have been alienated because of their geographical distance from the metropolitan areas. The company will benefit greatly from utilizing drones as they are more capable of reaching the rural areas. Expansion into these areas will increase the company’s market share and revenue base.
The drone delivery system will ensure that the customers’ packages reach their destinations faster than any other available transportation routes currently at the company’s disposal. Drones are less susceptible to experience delays due to weather problems or traffic congestions like vehicles and aircrafts. They will thus be able to deliver the packages to the intended customers on time all the time.
The drone system will also be cost effective for the company’s package delivery services. The company will spend less money on fueling its vehicles to deliver customer packages. Currently, the company incurs a lot of fueling costs as its vehicles are dispersed across the country. The company also has to fuel its planes to deliver the packages to their intended destinations. There are also the associated costs of maintaining and repairing the vehicles and the airplanes.
Such high costs are greatly reduced with the adoption of the drone technology systems due to a decreased dependence on fuel. Drones are battery powered thereby eradicating the need to fuel them. The significant reduction in fuel expenses will be a trade off with the cost of maintaining the drones.
Furthermore, the company could capitalize on the environmental advantages accrued from using the drone delivery systems. Research indicates that using drones for package delivery could help protect the environment. The drones are more energy efficient and emit less than the hundreds of trucks that traverse the country on any given day.
With drone package delivery, the company’s trucks will be travelling fewer miles and carrying less weight (Treacy 2013). The result will be a decrease in the maintenance costs of these vehicles. Profitability for the company will increase as the expenses for maintenance gradually decrease. Increased profits for the company will help the company invest more in other ventures that will take it to the top.
The regulatory atmosphere surrounding drones is not yet as developed as the company would hope. FAA has not yet set up a regulatory framework that deals with the privacy issues of the use of drones in the package delivery industry. In fact, there are hardly any strong regulations concerning the use of drone technology in the industry that the company operates in. Furthermore, the FAA has banned all commercial uses of drones in the country with only a few exceptions (Moon, 2016). A lack of strong regulatory guidelines might lead to abuse of the technology as well as copyright infringement issues. Stringent regulations would ensure a healthy and fair competitive environment for the company.
Deploying the technology will also be a very expensive investment. The drones are in short supply due to how relatively new they are. Very few companies are manufacturing the drones for commercial purposes. As such, the acquisition of the drones will be an expensive venture especially because the company will need to acquire many drones to serve the company’s intended destinations. Purchase of the drones might set the company back millions in dollars especially if the financial benefits are not realized within the short term.
The technology is relatively new meaning there are still many ways to use the technology that have not yet been uncovered. The company is a pioneer in the drone package delivery meaning that it is at the top of the fray. Being the pioneer makes it advantageous for the company as it will put it in prime position to take full advantage of the infant technology not only in package delivery but also in logistics and provision of supply chain solutions.
Customer perception of the company might increase because of the company being the first to adopt a new technology. Customers are loyal to companies that are always looking for ways to increase their satisfaction with the services being provided. The clients will realize that the company is looking out for their best interests because it is adopting technology to quicken delivery of their goods. Such a move will increase customer awareness of the company ensuring that the company’s market share continues to increase. A spike in the company’s market share will pull up its return on investment on the drones.
One of the greatest threats of deploying the drone delivery system is job security for the UPS workers. The drone delivery system is unmanned and requires little human intervention. Workers may resist the deployment of the drone delivery system fearing that their jobs would be taken away by the new system. Customer perception of the company can also change if the customers believe that the drone delivery system is affecting the job security of thousands of UPS workers. The public is very sensitive about job security in the United States, especially when people believe that robots are taking away their jobs. The customers can boycott the company’s services as a way of protesting for potential job losses.
Another threat to the company stemming from the deployment of the drone delivery systems is the privacy and safety concerns from the public about the system. The public is concerned about the prospect of drones buzzing above them, their houses, and their children. Some people are scared that the drones could crash into their property when they malfunction. Furthermore, there is always the possibility that the drones will be used for nefarious activities such as government spying under the guise of package delivery. Customers concern for their privacy and safety may result in them not contracting the services of UPS and its drones.
Some members of the public have gone as far as declaring that they would shoot down the drones when they see them. Damage to the drones can cost the company millions of dollars especially when so many drones are the target of angry members of the public.
However, the Federal Aviation Administration has set up guidelines that can alleviate some of the concerns that the public may have regarding the safety and privacy of the drone delivery systems. The FAA dictates that every commercial drone has to fly above 500 feet and that they cannot travel more than 100mph. The drones are also not allowed to fly above pedestrians in the streets and that they should always remain in the operator’s line of sight. The FAA has taken care of the safety issues but the organization has not taken care of the privacy problems, which are a threat to the company.
The company is facing a lot of competition mainly from Amazon, FedEx, Australia Post, and Flirtey. The organizations are traditional UPS competitors and together they compete for the package delivery market on all fronts. One such front is the drone delivery system that UPS aims to deploy in order to increase customer satisfaction. All of these companies are developing drone delivery systems for their own use making them extremely competitive to the UPS.
Australia Post is the newest package and mail delivery company to join the list of organizations that are investing drone delivery. The company is one of the main competitors of UPS in Australia. Integrating drone delivery systems will make the Australia Post an even bigger competitor and cause a re-adjustment of market shares in the country.
Australia Post’s new drone system has sirens, lights, and parachutes that alert people when the drones get too close. The drone also has a video system to allow the operators to identify hazards in the landing environment (Ferrier, 2015). Furthermore, the company will require that the client specifically agree to get his parcels through drones to avoid privacy concerns with the clients. From this information, it is clear that Australia Post has both privacy and safety issues taken care of unlike UPS.
Amazon is also developing its Prime Air delivery system and believes that the project will be fully functional by 2017. According to the company, its drones will be able to deliver shoppers’ goods within 30 minutes. If Amazon can implement the system more effectively than UPS, then the company can eat into UPS’s market share in the United States.
The target market includes an ever-increasing number of customers who require their packages to be delivered on their doorstep in less than an hour tops. These individuals do most of their shopping online and require that their packages arrive as early as possible. Some of the consumers in this market are entrepreneurs who require source material delivered on time in order to complete their manufacturing processes and sell their products.
In addition, a significant number of the individuals in the target market are corporate men and women who do not have the luxury of waiting for days for their packages to arrive. They can afford to pay extra so that their packages can arrive earlier than when using other cargo systems.
The constituents of the target market have a well-paying job and a small number of responsibilities. The higher the salary and the less the responsibilities, the less reluctant that the individual will be when it comes to paying more for quicker package service delivery. Lesser responsibilities imply that the consumer has very few dependents. Having few dependents will ensure that the individual will spend more money shopping online and buying items that need to be shipped within the shortest time possible.
The UPS drone delivery system is a new and innovative technology that guarantees the fastest delivery time for all parcels anywhere in the United States. The drones will ensure that the parcels are delivered in perfect condition by the unmanned drones.
Ferrier, S. (2016, Feb 15). Australia Post to trial drone parcel delivery of online shopping. ABC News. Retrieved on 17/4/2016 from http://www.abc.net.au/news/2016-04-15/australia-post-to-trial-drone-parcel-delivery-of-online-shopping/7331170
Moon, M. (2016, Mar 25). Nevada gets first FAA-approved urban drone delivery. Engadget. Retrieved on 17/4/2016 from http://www.engadget.com/2016/03/25/nevada-gets-first-faa-approved-urban-drone-drone-delivery/
Risen, T. (2013 Dec 26). UPS Gifts Delayed by Snow, Online Orders. U.S. News & World Report. Retrieved on 17/4/2016 from http://www.usnews.com/news/articles/2013/12/26/ups-gifts-delayed-by-snow-online-orders
Treacy, M. (2013, Dec 11). Amazon Drones: a Look at the Pros and Cons. Treehugger. Retrieved on 17/4/2016 from http://www.treehugger.com/gadgets/amazon-drones.html#14608865168151&action=collapse_widget&id=0&data=