everyday economics and drone regulation and Amazon drone deliveries

Drones That Can Deliver Your Pizza…and More

by Elaine Schwartz    •    Dec 3, 2013    •    1054 Views

Long before Jeff Bezos told Charlie Rose that drones would be delivering our Amazon packages, Dominos was showing how they could transport pizza.

And here is the Amazon “Prime Air” version of a drone delivery:

The drone delivery initiative, though, might be led by Chinese firms like SF Express that have fewer regulatory constraints than US businesses. During July, a Shanghai bakery did several drone cake deliveries but was told to stop because they did not have the appropriate permissions from the police and civil aviation authorities. Their vehicles were able to lift up to 6.6 pounds and fly as high as 328 feet. Not quite precise, they could deliver within 2 meters of their target.

As for some down-to earth analysis about when Amazon can start its deliveries, the first hurdle is the FAA. Saying drones lack “detect, sense and avoid” technology, the FAA will start to consider rules for unmanned aerial vehicles in 2015. I wonder also how they will control theft and hijackers and rain.

Of course, whether from a drone or a bicycle, the actual delivery issue is speed. Online retailers want to create instant gratification by getting packages to their customers immediately. And then, as one tech analyst explained, “If you can get goods to people in a near-instantaneous fashion, it removes any need to go to the store.”

Or maybe we are really talking about creative destruction and Joseph Schumpeter. When drones take over deliveries, the demise of FedEx, UPS and the USPS cannot be far behind.

Sources and Resources: After 60 Minutes, countless articles on drones appeared but I especially enjoyed the LA Times discussion and, as always, recommend Quartz’s insights. As for Schumpeter, econlib has a good summary of creative destruction. And here, econlife has more on drones.

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