STRATEGIC ANALYSIS FOR A TRUCK-DRONE HYBRID MODEL IN LAST MILE DELIVERY

Abstract

The delivery sector, already on an upward trend prior to the Covid-19 pandemic, experienced a significant boost in demand for its services during the pandemic. However, the most expensive aspect for companies in this domain is the 'last mile' delivery costs, which can account for up to 45% of total logistics expenses. In light of this, our paper presents a study aiming to leverage this market trend to reduce company costs. We propose a hybrid model combining trucks and drones for last-mile delivery and conduct a market analysis for a company interested in developing this model. Drone deliveries are anticipated to grow at an annual rate of approximately 45%, outpacing the overall sector. This market outlook presents a compelling opportunity for entrepreneurs: the market is nascent, with a noticeable upward trend in both demand and investment. The truck-drone hybrid model, being up to 70% faster and 60% less expensive compared to traditional methods, offers dual benefits: enhanced customer satisfaction with lower expenditure, and reduced operational costs for companies while improving service quality. Despite pending regulatory challenges, the prevailing trend in technology advancements and major retailers' interest suggests a favorable outlook for legal approvals. As a novel technology, it naturally encounters some skepticism. Furthermore, drone usage has positive environmental implications, whether through alternative energy sources or traffic reduction, aligning well with the current ESG-driven market trends.