Drones May Make Delivery Cheaper in the Future, For Now UPS Eyes Price Hikes

By: Zack Duvall

UPS executives made two announcements to investors and consumers Tuesday at an annual investors event the company holds. The first announcement executives made was that the company has started to implement, and develop technology to make drone delivery not only viable for the company, but fully part of its operating strategy.

However, the company’s Chief Financial Officer, Richard Peretz’s, second announcement made clear the very real possibility that this new investment, along with rising costs to deliver packages to e-commerce customers, were putting pressure on the company to raise prices for services across the board.

“We always have to be diligent abut getting the right return. Particularly cost wise.” Peretz told investors at Tuesday’s event.

The announcements come just one day after the company had successfully tested package delivery by a drone on Monday. A drone was successfully launched from the rooftop of a UPS vehicle and made a delivery autonomously, while the driver continued on the scheduled route.

John Dodero, VP of industrial engineering for UPS, had stated before the launch that it was “a test into new technology” for the company.

Peretz, and other UPS executives, also said that this wasn’t the first time the company has looked in to implementing drone technology, but was the start of the company’s actual testing of and investment into the technology.

UPS Chief executive, David Abney, also told investors that the recent American election, while not responsible for the potential hike in shipping rates, was also at the center of what the company was focused on and watching for developments. Referring to President Trump’s tough stance on companies outsourcing jobs, and countries “taking advantage” of America in numerous trade deals.

He described the relationship and supply chain between Mexico and America as “critical”.

When asked about his input on the validity or impact of a potential renegotiation of NAFTA Abney said:

“NAFTA is a little bit outdated. It’s not reflective of 21st century agreements.”

While the most immediate use for drones within the company would be for home delivery, UPS executives said that the company was also looking into potentially using drones to improve inventory control, and to inspect planes and vehicles within hangars and warehouses.

The company made clear no official timeline for how or when the technology would be rolled out, mainly because the Federal government is still developing and debating regulations related to drone usage.

 

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