Australian listed company Elsight frontrunner in drone delivery upswing

Yoav Amitai, Chief Executive Officer at Elsight

Look up in the sky! Is it a bird, a plane, pizza or pho? It could be all of the above and more as drone delivery of KFC, Roll’d and Coles takes flight in Australia, and Domino’s looks to restart its air-drop service in New Zealand. As Australia follows the evolving global trend, there’s likely to be a smorgasbord of other options on the drone delivery menu, with an Aussie-listed company already a forerunner in the more advanced US drone delivery sector.

As businesses battle over last mile delivery, major players in retail, food and healthcare around the world are turning to the convenience and cost efficiencies of drones. While drones have been around since the mid-1800s, COVID-19 and the subsequent rapid take-up of online shopping has accelerated their lift-off into the daily lives of people across the globe.

Other tailwinds for drones include greater consumer demand for speedy delivery, plus mounting concerns about the financial and environmental costs of road transport.

What is the drone delivery industry growth rate?

The drone transportation and logistics market is projected to reach $49.2bn by 2028, from $14.8bn in 2021. That’s a compound annual growth rate (CAGR) of 18.4% during 2022-28, according to MarketsandMarkets analysis. In Australia’s still nascent drone delivery sector, KFC is partnering with Wing (a subsidiary of Google owner Alphabet) to air-drop fried chicken in the Brisbane suburb of Logan in a trial, with Wing hoping to expand to more suburbs soon.

In Canberra, Roll’d Vietnamese food chain’s drone delivery service is becoming a favourite. Also in the national capital, supermarket giant Coles is collaborating with Wing so customers can get 250 grocery items delivered by drone in a pilot program that started in March.

Woolworths puts a lot of its efforts into luring away Coles’ clients, it’s highly possible that Woolies will follow Coles’ lead. Domino’s is again investigating drone delivery in NZ after lifting the payload capacity to 3.5kg and expanding production. This latest initiative follows the roll-out of the world’s first pizza delivery by drone from one of its New Zealand outlets in 2016.

Global airdrop of food, goods and medicine

Major Chinese firms such as Alibaba and JD.com have been using drones to deliver items to customers in hard-to-reach rural areas since before 2017. They’re also used, for example, by leading Indian food delivery company Zomato. Also in India the World Economic Forum’s Medicine in the Sky initiative is delivering vaccines and medicine to remote areas by drone.

Doctors Without Borders has tested them to help tackle tuberculosis in Papua New Guinea and Ebola in Liberia, the Vaccine Alliance GAVI has used them to deliver vaccines in regions without infrastructure necessary for conventional delivery, while Drone Delivery Canada last month received approval to air-drop medicines to remote First Nations communities.

Drone race heats up in US

As Amazon refines Prime Air, a drone delivery system it says will get packages to clients in 30 minutes or less, Wing is collaborating with Walgreens to enable participants in a pilot program to order health and wellness products. However it’s Walmart that’s become the frontrunner by teaming up with Virginia-based drone startup DroneUp. The retail behemoth has already started to deliver items to eligible Walmart customers by air in as little as 30 minutes.

Last month Walmart announced it was scaling up its Delivery on the Fly service with DroneUp into six states, making it the US’ first large-scale drone delivery program. This means as many as 4 million households will be able to get supplies from Walmart delivered by drones by the end of the year as Americans rely on the convenience of air-drops for everyday items.

While early pilot projects delivered households lots of COVID-19 test kits, Walmart says its top delivery item is now Hamburger Helper. The charge is only US$3.99 per delivery, with a weight limit of up to 10lb (4.5kg). Testament to how seriously the 4,700 retailer takes drone delivery and DroneUp’s expertise is the equity stake it acquired in DroneUp earlier this year.

The Australian connection in coming revolution

Providing backbone connectivity technology to its customer DroneUp is Australian listed company Elsight through its Halo technology. As a key enabler of DroneUp’s service offerings, Halo delivers what it calls “connection confidence” from Line of Sight (LOS) to (Beyond Visual Line of Sight (BVLOS). This applies not just for retail deliveries in the US, but for wide-raging products in any environment, for any drone/unmanned aerial vehicle (UAV) use case.

What are Elsight’s thoughts on the industry?

Elsight Chief Executive Officer Yoav Amitai says the Delivery on the Fly expansion marks an exciting step forward in drone technology. “If you look at the speed with which Walmart rolled out its technology just a few months after investing in DroneUp, and has now scaled up that service, it shows how efficient and market-ready the solution is,” Amitai says.

“It’s a nascent industry that’s still evolving and the tech is not yet even close to its full potential in terms of how it can change daily lives for people around the world. Once regulators start to clear all the bottlenecks, the take-up of drones will really accelerate.”

Elsight collaborator DroneUp is as an official representative on the US Federal Aviation Administration’s (FAA) Beyond Visual Line of Sight (BVLOS) Aviation Rule Making Committee (ARC). “I think that is two years or so away, and then we will see a revolution, as we did when the internet expanded from defence to commercial and personal use,” Amitai says.