Last-Mile AV and Drones Market Size (2023 – 2030)

According to the latest analysis by Virtue Market Research, in 2022, the Global Last-Mile AV and Drones Market was valued at $8.66 billion, and is projected to reach a market size of $61.24 billion by 2030. Over the forecast period of 2023-2030, market is projected to grow at a CAGR of 27.7%. Expansion of E-commerce, increasing demand for fast last-mile delivery services and technological advancements, and incorporation of advanced sense and avoid systems in aerial delivery drones are majorly driving the market growth.

Industry Overview:

Last Mile AV and Drones consist of autonomous vehicles used in delivering products or services to customers’ doorstep without human intervention. It ensures the delivery of a product within a stipulated time without hampering the market image of the company utilizing such services. A delivery drone can be used for the transportation of food, medical supplies, packages, and other goods. The development of aerial delivery drones which can function smoothly in geographically challenging areas can be an efficient means to deliver packages. AVs and drones are capable of delivering in remote areas at a faster pace than traditional delivery channels. This creates numerous opportunities for the expansion and growth of the last-mile AV and drones market. The introduction of newer last-mile options such as parcel lockers, curbside pickup, and delivery subscriptions have accelerated last-mile delivery services across different regions.

The last-mile AV and drones market is currently in its infancy stage with huge potential as major companies like Amazon, Google LLC, and Deutsche Post DHL Group have been investing in the development and deployment of delivery drones in their fleet. Many operators are conducting their drone delivery test flights and receiving approvals from governing bodies regarding the usage of delivery drones. Many countries across the globe are easing the regulations to support drone operations in their airspace owing to increased demand for drone delivery. This is likely to accelerate the growth of drone procurements to offer new delivery routes for remote areas. The increased investment in the development of beyond visual range of sight capabilities (BVLOS) would enable companies to cover far greater distances. Such developments are anticipated to fuel the last-mile AV and Drones Market in the coming years.

COVID-19 IMPACT ON LAST-MILE AV AND DRONES MARKET

The COVID-19 outbreak significantly affected the transport and logistics sectors. The COVID-19 pandemic has created short-term disruptions along with long-term structural changes due to which the e-commerce sector is witnessing sluggish growth in groceries and home care categories. The pandemic increased the adoption of online services as customers’ preference for online shipping of essentials has increased. This has enabled suppliers to innovate drone delivery services that can deliver goods without any human involvement.

The COVID-19 pandemic increased drone deployments for the delivery of a wide range of medical products, cargo, and parcels due to covid restrictions which emphasized contactless deliveries. In China, UAE, Spain, South Korea, and other countries, drones were used for aerial spraying of disinfectants in public outdoor spaces to contain the spread of the coronavirus. In the US, many companies conducted drone delivery trials during the pandemic, usually operating with tightly limited waivers for flight beyond visual line of sight issued by the FAA. According to a UNICEF report, eighteen countries developed drone delivery and transportation services during the COVID-19 pandemic, including Canada and the US. Three countries in sub-Saharan Africa, specifically Rwanda, Ghana, and Malawi, used drones to deliver COVID-19 supplies, regular medical commodities, and medical samples since the pandemic began last March. UNICEF highlighted the benefits of drones that can offer exceptional speed of delivery, limited physical contact, the reduced risk of transmission, and an extended transportation network as the new technology’s most important assets. In the pandemic era, drone delivery programs promise the potential of using flying robots as a delivery mechanism.

MARKET DRIVERS:

Expansion of E-commerce and increasing demand for fast last-mile delivery services

Expansion of the e-commerce industry has increased the online shopping trend which requires better and more efficient delivery services to the customer. Various delivery services have been adopted by the key market players which propel the growth of the autonomous last-mile delivery services. In recent years, the e-commerce industry has witnessed tremendous growth in various regions across the world. It provides a wide range of products, expected delivery time, and various shipping options including tracking, easy returns, and other facilities which are driving the e-commerce industry.  Drones and AVs can be used for delivery in far-flung, remote areas, and address challenges such as congestion in urban areas and severe labor shortage. All such aspects are anticipated to drive market growth in the coming years.

Technological advancements and incorporation of advanced sense and avoid systems in aerial delivery drones can augment the market growth

The rapid increase in the usage of sense and avoid systems in aerial delivery drones owing to enhanced safety and beyond visual line of sight, features are boosting the market growth. The sense and avoid system consists of radar, LiDAR, cameras, and other systems to detect and avoid obstacles successfully. In a cooperative sense and avoid system, drones can utilize formerly intended systems for manned aviation, for instance, traffic collision and avoidance systems (TCAS) and automatic dependent surveillance-broadcast which broadcast occasionally and identify, position, receive, and offer information.

MARKET RESTRAINTS:

The lack of regulations to enable drone delivery operations at scale and safety and security issues related to the use of aerial delivery drones is likely to restraint the market growth

The lack of regulations to enable drone delivery operations at scale is the main challenge with commercial unmanned aerial system applications. Currently, most national aviation authorities lack a proper regulatory framework to allow drone delivery to operate at scale. Aerial delivery drones are autonomous in operation and are prone to hacking flight control systems such as GPS spoofing. The regulatory, safety and security challenges associated with aerial delivery drones are likely to limit the market growth.

The risk of operational malfunction in populated areas can be a challenge to the last-mile AV and drones market

With thousands of components and millions of lines of software, any element failure can cause the entire system to fail, and result in discontinuity of controlled flight or complete loss of the delivery vehicle. Failures can occur due to different reasons including defects related to components or assembly. Operators need to demonstrate to regulators the reliable performance of delivery drones similar to that required for commercial aircraft before drones are permitted to fly over populated areas and pose any kind of risk to the public or infrastructure.

LAST-MILE AV AND DRONES  MARKET REPORT COVERAGE:

This research report on the Global Last-Mile AV and Drones Market has been segmented and sub-segmented based on solution, range, application, and region.

Last-Mile AV and Drones Market – By Solution

• Hardware
• Software
• Services

Based on Solution, the Last-Mile AV and Drones Market is segmented into Hardware, Software, and Services. The Software segment is estimated to register a high growth rate during the forecast period. Drone Software is exclusively used to control flight operations, perform data analytics, and mission planning & management. The ground control stations operate unmanned aerial vehicles by transmitting radio signals to the drones. The Hardware segment is anticipated to hold a significant market share during the forecast period. The demand for propulsion systems is growing significantly owing to the use of hybrid-electric propulsion systems that can reduce fuel consumption in delivery drones, which is likely to propel the segment growth.

Last-Mile AV and Drones Market – By Range

• Long Range (>20 km)
• Short Range (<20 km)

Based on Range, the Last-Mile AV and Drones Market is segmented into Long Range (>20 km) and Short Range (<20 km). Currently, the Short Range segment is leading the market growth as the market is in the introduction phase thus, autonomous drone manufacturers have introduced short-range delivery drones. Various developments to carry out different testing and regulatory frameworks offer potential opportunities to foster the growth of the long-range delivery drones market during the forecast period. The high adoption rate of drone delivery in e-business and retail ventures for speedy and savvy delivery of packages and parcels to significant distance areas is driving the market growth.

Last-Mile AV and Drones Market – By Application

• Logistics
• Food & Beverage
• Healthcare & Pharmaceutical
• Retail
• Others

Based on Application, the Last-Mile AV and Drones Market is segmented into Logistics, Food & Beverage, Healthcare & Pharmaceutical, Retail, and Others. The Retail and Logistics segments dominate the last-mile AV and drones market currently and are anticipated to continue their dominance over the forecast period. This is attributed to increased demand for drone deliveries from e-commerce providers, postal companies, shore-to-ship drone operations, last-mile delivery companies, and retailers for parcels and packages. Major e-commerce companies along with local postal authorities are collaborating with local governments to launch drone delivery services. This will minimize their efforts to deliver parcels or packages to remote places, mountainous areas, as well as cities. In April 2021, the maritime and Port Authority of Singapore began a program to use drones in the transportation of supplies, documents, and parts to vessels in its harbor to integrate advanced drone technologies for marine applications.

Last-Mile AV and Drones Market - By Region:

• North America
• Europe
• Asia-Pacific
• Rest of the World

Geographically, the North American Last-Mile AV and Drones Market is leading globally and is projected to hold the largest market share during the forecast period. The key factors contributing to this growth are growing government spending on the up-gradation of drones and autonomous vehicles, continuous innovations related to infrastructure development, and increasing e-commerce sales in this region.

The European Last-Mile AV and Drones Market are anticipated to witness significant growth during the forecast period. This is attributed to the development of different autonomous last-mile delivery solutions in the region.

The Last-Mile AV and Drones Market in the Asia Pacific is anticipated to grow at the highest CAGR during the forecast period. This growth is attributed to the increasing support for commercial drone operations and changing regulations. China is the largest drone delivery market owing to the presence of major e-commerce companies using drone operations like Alibaba Group and JD.com. The Chinese government has issued a new specification for express delivery services by unmanned aircraft in effect from January 2021. The Indian government is working to develop drone corridors for promoting cargo delivery services. Companies have been robustly developing robot delivery services owing to such developments in the APAC region.

The Last-Mile AV and Drones Markets in the Middle East, Latin America, and Africa are projected to witness significant growth during the forecast period. Three countries in Sub-Saharan Africa, namely Rwanda, Ghana, and Malawi adapted drone operations to respond to the increased demand for medical commodities and COVID-19 supplies.

Major Key Players in the Market

Companies like 

1. Amazon
2. Google LLC
3. DJI
4. Zipline
5. Airbus S.A.S.
6. Deutsche Post AG
7. Flytrex
8. Starship Technologies
9. United Parcel Service of America Inc.

Are playing a pivotal role in the Global Last-Mile AV and Drones Market. The emergence of logistics, food delivery, and healthcare sectors into the drone market has increased competition among delivery drone manufacturers. The companies are engaged in increasing their fleet of drones and beginning operations with new regulatory approvals. The market is likely to become more competitive with various sectors eyeing the potential benefits of drone delivery.

NOTABLE HAPPENINGS IN THE GLOBAL LAST-MILE AV AND DRONES MARKET IN THE RECENT PAST:

Partnership- In April 2021, ANA Holdings Inc. entered into a partnership with Wingcopter to increase the deployment of drone delivery of vital pharmaceuticals and other consumer products to Japan’s remote islands and mountainous regions.

Product Approval- In May 2021, Flytrex was approved by FAA for drone delivery, which allows the company to expand retail goods drone delivery services in North Carolina (US). In December 2021, Flytrex received approval to expand its delivery radius to one nautical mile across its operating stations in North Carolina.

Partnership- In July 2021, Drone Delivery Canada Corp. announced that it has signed a commercial, definitive agreement, with the University of British Columbia to deploy DDC's patented drone delivery solution at the Stellat'en First Nation for UBC's 'Remote Communities Drone Transportation Initiative program.

Product Launch- In October 2021, Walgreens, the second-largest pharmacy store chain in the US, began test flying packages by drones to residents in Texas cities in partnership with Google’s drone-making affiliate, Wing. Walgreens will use Wing's drones to deliver over-the-counter medications, food and beverage products, and other health and wellness products to eligible residents of Christiansburg, Virginia.

Product Launch- In November 2021, Drone Delivery Canada announced the successful test of its next-generation Sparrow unmanned aerial system. The drone was tested for communications with flyte management system, avionics system configuration, onboard sensors, next-generation smart battery system, and propulsion system.

Partnership- In May 2020, Zipline announced its partnership with Novant Health to ferry small items like masks, gloves, and gowns weighing less than four pounds making trips of approximately 20 to 30 miles between a medical center and a supply storage location,