Today’s pickup: Drone deliveries for good and profit; bad day to bring beer

Source: PWC

Good day,

Technology is a double edged sword. While it has the power to bring about positive change, it can create economic and cultural barriers when its benefits are unequally distributed. One way to bridge this so-called digital divide is to expand the commercial use of drones for last-mile deliveries, writes Jon Liao, chief strategy officer of Chinese logistics and e-commerce company Drones can instantly access and connect even the most remote and rural areas, Liao wrote in a paper for the World Economic Forum. “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,” he wrote. JD is no stranger to drones. It began trial runs with customers in June 2016. Today, it operates more than 100 drone routes in several Chinese provinces. It uses 7 types of drone models, including those big enough to handle mini-containers. Last month, JD completed the first-ever government-approved drone delivery in Indonesia, which with a land mass spread out across more than 17,000 islands is the prototype of topography that poses significant challenges for efficient last-mile logistics. The test delivery of backpacks to an elementary school in Jagabita Village, Parung Panjang, opened the door to the technology’s possibilities, Liao wrote. “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,” he said.

Did You Know?:

The global middle-class population has tripled to 5.4 billion since 2010. World population grew to 8.3 billion from 6.9 billion in that span. (Source: OECD)


“The alternative to China is not the United States.”

=Economist Donald Ratajczak on the prospects of factories and jobs returning en masse to the U.S.

In other news:

Two billionaires want to restore glory of U.S. passenger trains

Wes Edens and Richard Branson are behind the IPO of Virgin Trains U.S.A. Its Florida plan is admirable, but the financial and business challenges are huge. (Bloomberg)

Of deep freezes and sacrilege

MIlwaukee without beer? It happened during last week’s brutal cold wave when several local distributors canceled runs because of concerns over worker safety and fears the product would freeze en route. (Milwaukee Journal-Sentinel)

Uber adds public transit to its app

The ride-sharing pioneer goes public (in more ways than one) starting in Denver. (The Verge)

More rails means less carbon

Eight charts which show how global transport emissions could peak in the 2030s if railways are “aggressively” expanded. (CarbonBrief)

Delivery trade groups to merge

The Express Delivery and Logistics Association, a trade group that represents air cargo and package delivery firms, has agreed to merge with the Customized Logistics & Delivery Association, the groups said. (Transport Topics)

Final Thoughts:

At a monthly run rate of $50 billion, America’s trade deficit with China is unsustainable. Narrowing it will take more than Trumpian browbeating and pain being inflicted on American businesses and consumers by import tariffs, which could be going higher if no trade deal is struck by March 1. It takes a balanced U.S. infrastructure that can move U.S. exports to sea and air gateways as efficiently as today’s system moves imports. The problem isn’t with U.S. producers. It’s with the long-standing imbalance of infrastructure and equipment. The U.S. logistics system is built around imports. Containers entering the U.S. are typically delivered and offloaded in densely populated urban areas. However, the empty boxes are positioned far away from the goods-producing regions, which are generally in more rural, less-populated areas. Moving empty containers for loading and the subsequent trip to US ports and airports is a costly proposition. It has also been a struggle for the network to position originating containers in places that they need to be. The expansion of the inland distribution model (see last Monday’s pickup) will generate significant bang for the buck if the facilities are located in regions where the exports come out of. Without a balanced infrastructure, the U.S. will have trouble fulfilling requests from China–or any other country–for export business. This can also cause friction with U.S. government officials, who may wonder why they went through the trouble to get China to open its markets only to have U.S. firms say they can’t meet the demand.

Hammer down everyone!

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.