The phenomena of e-commerce is an incredible boon for consumers: customers can now quickly and easily find, research, purchase and use products in record time, with some areas of the U.S. already getting used to same-day and same-hour delivery. With online retailers and food delivery services propagating across the country, it seems we are coming closer to becoming a literal instant gratification economy. But these technological advancements have a price, and that price can be counted in infrastructure.
Noel Massie, a UPS district president in charge of a territory that includes southern California, southern Nevada, western Arizona and Hawaii, notes that two major shortcomings in U.S. infrastructure will clog up the roads necessary for a smooth transition to quick delivery. First, he argues that national investment in infrastructure is too low, with the U.S. backlog on repairs and improvements reaching $3.6 trillion. Second, he argues that budgets are often too focused on megaprojects that are perfect for ribbon-cutting ceremonies but not especially helpful for actual transportation. By restructuring how the U.S. appropriates funds for roads is critical in ensuring that the shift to a digital economy can be realized.
Instead of looking to solutions on the ground, a number of companies are looking to the skies. Drones are often listed at the forefront when speaking of this revolution: Google, Walmart and Amazon are all testing home-delivery drones, and a number of other companies are working on agricultural equivalents. On April 1, a government-sponsored committee recommended standards that would help clear the way for commercial drone flights over populated areas.
The standards would reverse the FAA's current regulations that prohibit most commercial drone flights. The standards would create four classes of drones. The first category would allow drones of less than a half-pound to fly unrestricted over crowds. The other three categories (those more likely to be involved in delivery) would have to fly at least 20 feet over the heads of people and land 10 feet from people, among other restrictions linked to the populations the drones would be serving. The recommendations (or the press surrounding them) seemed to spur some action: a few days later, the FAA noted it was working quickly to draft regulations that would permit drones to fly over people and crowds.
However, not everyone is sold on drones being the answer. A more pedestrian solution could be found in robots, which could share bike lanes and sidewalks to deliver items directly to customers' doors. Robots have a number of built-in advantages compared to drones: they could work within a relatively-established regulatory framework, they are inherently less dangerous as current top speeds reach 4.5 mph, and could carry heavier loads than drones.
It's not clear how the future will shake out. If I had to guess, a constantly-evolving blend of truck, drone and robotic deliveries will be weaved together to create the delivery system of the U.S. in coming years depending on the population being served. That being said, it's critical for the problem to be solved if retailers want to continue investing in the digital economy.
In The Food Institute's recent webinar "Achieving a self-sustaining business model: Top 3 trends companies need to think about post-COVID-19," Greg Wank, CPA, CGMA, partner and leader of Anchin's food and beverage group, as well as David Eben founder and CEO of Carrington Farms, discussed how to have a more successful business while burning less capital and attaining self-sustainability. The following summarizes the salient points highlighted during the webinar.read more
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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