Amazon Drone service is expanding its development operations in Cambridge, opening another 60,000-square-foot site in addition to its facility at Castle Hill, Tech Crunch reports.
Amazon said the existing Castle Hill facility would be primarily used for drone-related research and development, after the new facility opens this fall. Meanwhile, teams working on projects related to Amazon devices — like the Kindle and Echo — will be moved to the new facility.
Although Amazon has hinted at plans to bring Prime Air to the US, its increased investment in the UK suggests otherwise. Amazon would face significant challenges in bringing its drone delivery program to the US right now. The Prime Air delivery program uses autonomous drones, conflicting with Federal Aviation Administration (FAA) regulations that require drones to be within sight of pilots. And even if regulations allowed Amazon to employ a drone program in the US — the FAA currently has a 2018 deadline to authorize commercial drone delivery — the company would face the high costs of enabling its US fulfillment centers for the tech.
Testing these drones in the UK will allow it to develop and scale an effective program that can be quickly built out in the US once the FAA allows for drone delivery, giving Amazon a huge advantage.
The parcel delivery industry — a segment of the shipping sector that deals with the transportation of packages to consumers — is booming thanks to e-commerce growth, and players outside the industry want a piece of the pie.
BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on the future of shipping that looks at efforts by Amazon, Alibaba, and Walmart to handle more of their own shipping and concludes that big retailers are well positioned to disrupt the parcel industry.
Here are some of the key points from the report:
Transportation and logistics could be the next billion dollar opportunity for e-commerce companies. The global shipping market, including ocean, air, and truck freight, is a $2.1 trillion market, according to World Bank, Boeing, and Golden Valley Co.
There is much at stake for legacy shipping companies, which have seen a boom in parcel delivery as e-commerce spending has risen. Twenty different partners currently share the duties of shipping Amazon’s 600 million packages a year, with FedEx, USPS, and UPS moving the most.
Amazon, Alibaba, and Walmart have so far focused on building out their last-mile delivery and logistics services but are increasingly going after the middle- and first-mile of the shipping chain.
Amazon has already made major moves across each stage of the shipping journey. It launched same-day delivery service, which it handles through its own fleet of carriers, cutting out any third-party shippers. The company also recently began establishing shipping routes between China and North America.
Walmart’s interest in expanding its transportation and logistics operations is almost purely related to cost-savings. It’s begun leasing shipping containers to transport manufactured goods from China and is making greater use of lockers and in-store pickup options to cut down on delivery costs.
Alibaba has begun leasing containers on ships, similar to Amazon’s Dragon Boat initiative. This means that Alibaba Logistics can now facilitate first-mile shipping for third-party merchants on its marketplace.
In full, the report:
Sizes the market for the shipping industry.
Explains how the industry operates in broad terms.
Suggests why major e-commerce retailers should disrupt the space.
Outlines the shipping initiatives of Amazon, Walmart, and Alibaba.
Concludes how these moves might impact traditional carriers.
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