In China, the era of automation we’ve all been promised by science fiction films is already underway. Not only is the country investing heavily in autonomous vehicles like cars — it’s also turning its eyes to the skies.
In a recent survey, UBS found that the airline industry could save up to $35 billion by deploying pilotless planes. The technology may be particularly useful for the shipping industry, as packages are immune to risk-averseness.
“Unlike passengers, cargo is not concerned with the status of its pilots [human or autonomous],” notes UBS. “For this reason, pilotless cargo aircraft may happen more swiftly than for passengers. In addition, we believe that the 24-hour nature of much of cargo flights [often taking off or landing in the late and early hours] may be well-suited to artificial pilots — with the problems of sleeping hours less of an issue.”
Autonomous cargo delivery represents a potential investment opportunity in the booming Chinese economy, which has long had a stronghold on manufacturing and e-commerce and boasts a thriving automobile industry. The Made in China 2025 initiative, too, promises to reinforce the country’s commitment to homegrown manufacturing. This may further open doors for e-commerce platforms, and in turn for autonomous cargo delivery, to take flight.
Below, we explore how these sky-high hopes may become reality.
The race for control of the drone delivery industry
Pilotless vehicles that deliver packages are more than just a hypothetical concept. Chinese companies like S.F. Holding are already experimenting with unmanned cargo deliveries via drone. In 2017, the Chinese government issued permission for S.F. Holding and e-commerce giant JD.com to begin sending packages by drone in rural parts of the country.
Autonomous cargo delivery would have a significant impact upon China’s rural areas — some 590 million people
S.F. Holding is also reportedly looking into long-range pilotless cargo aircraft, capable of carrying bulk shipments between warehouses. The company has devised a concept for an entire freight network including piloted aircraft, unmanned aircraft, and end-use drones. S.F. expects this network could provide delivery services to the whole country in just 36 hours.
Autonomous cargo delivery would have a significant impact upon the country’s rural areas — some 590 million people, many of which are difficult to reach via roads. This untapped market is one of the final frontiers for new economic opportunity China. Reaching it would open untold doors for investors. It would also bring an unprecedented level of access to goods to one of the world’s largest nations — and perhaps ultimately, to the rest of the planet.
“Drones flying one or two tons of goods on regional routes could bring down transportation costs in underdeveloped areas to a level similar to ground transportation on truck routes,” Li Dongqi, a group vice president responsible for drone operations at S.F., recently told Bloomberg.
Competition in the automation arena is heating up. JD.com’s e-commerce competitor Alibaba recently joined forces with Beihang Unmanned Aircraft System to make inroads in the drone delivery industry. The fruits of this partnership are already evident: One model of drone being developed by the duo is capable of carrying a ton of goods more than 1,500 kilometers. The milestone makes Alibaba and its logistics division, Cainiao, a contender in the race to successfully deploy a fleet of autonomous cargo drones.
China is a particularly advantageous market for experiments with autonomous cargo systems. The country is home to both global leadership in digital innovation and millions of eager consumers. In addition, China has shown greater regulatory openness to drone delivery for commercial purposes than other governmental bodies around the world have, including ones in the United States.
As for pilotless planes that carry human cargo, the greatest hurdle will likely be a mental one for consumers. Though automatic flight control and autopilot features have come a long way in the last century, the UBS report found that people balk at the idea of boarding a completely pilotless flight — at least for now.
But with such a hefty financial incentive on the line, it’s possible that pilotless — or at least, more highly automated — commercial aircraft may take to the skies sooner than people think.
Head of EMEA Industrials Research and Managing Director at UBS Celine Fornaro calls 2022 or 2023 a “realistic” date for flights with just one pilot — instead of the current staffing procedure of two or three.
“You could have single-pilot operations for cargo planes and passenger planes, particularly on long-haul, sooner than you expect,” she said.
Regardless of if — or when, perhaps — unmanned commercial flights become commonplace, there is little doubt that China’s automation industry represents an area ripe for investment opportunity. Some may say that the sky is the limit.
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