Autonomous Last Mile Delivery Market Size, Share & Trends Analysis Report By Platform (Ground Delivery Vehicles, Aerial Delivery Drones), By Solution (Hardware, Software), By Range, By End-use, By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global autonomous last mile delivery market size was valued at USD 10.7 million in 2019. It is expected to expand at a compound annual growth rate (CAGR) of 32.4% from 2020 to 2027. The increasing demand for cost-effective and faster delivery services along with the growing e-commerce sector has augmented market growth. Moreover, rapid technological developments and a strong startup ecosystem in the robotics space are expected to drive market growth over the forecast period.

Last mile delivery is one of the most expensive parts of the logistics ecosystem, often representing more than 50% of the overall cost. The logistics and e-commerce companies are grappling with ways to become more efficient in delivering goods and keeping their cost as low as possible. As a result, many logistics companies emphasize the development of innovative solutions to reduce the cost and automate last mile delivery by utilizing mobile robots, drones, and autonomous vehicle technology.

Factors such as technological developments, robotics venture funding, and rising applications of drones in the commercial sector are expected to contribute to the market growth significantly. A drone is an effective way to deliver smaller and lighter packages and could replace traditional delivery vehicles that are currently used. Considering the growing development of drone delivery and its future demand, the Federal Aviation Administration (FAA) has issued regulations for the use of commercial drones for deliveries. Recently, in October 2019, United Parcel Service, Inc. (UPS), a leading logistics company, received an FAA approval to operate a fleet of drones in selected areas of the U.S. Similarly, Amazon.com, Inc. received an FAA approval for its Prime Air drone delivery services. FedEx Corporation, in collaboration with Wing Aviation LLC, an Alphabet company, launched its trial project of drone delivery in Christiansburg, Virginia. This trend is expected to gain momentum in the coming years, thus boosting the growth of the autonomous last mile delivery market.

Consumer expectations are rapidly changing. Consumers are now willing to pay more for premium delivery, owing to which same day or next day delivery has become a norm in the e-commerce industry. E-commerce giants such as Amazon.com, Inc., and Alibaba have invested multi-billion dollars in their respective supply chains, aimed at promising faster deliveries. Amazon has been at the global forefront in reducing delivery times with the standard two-day deliveries for Prime members. In Q4-2019, the company invested over USD 1 billion in its one-day delivery initiative, which is expected to replace the two-day Amazon prime membership program. This initiative has enforced competitors to respond similarly, initiating one-day delivery programs. Walmart and Target Corporation launched their same-day delivery programs for various locations.

The lack of infrastructure to support autonomous delivery services and stringent regulations are expected to impede the market growth. These challenges can be overcome by building custom infrastructure such as sidewalks and charging units to conduct safe and convenient deliveries. Regional data centers need to be in place for effective communication and operations of the robots. These data centers facilitate edge computing and deep learning technologies, which enable low-latency data transfer and reliable operations of the robots. A reliable framework and advanced air-traffic management system for drone deliveries need to be put in place for hassle-free drone operations.

The current COVID-19 crisis has put a spotlight on autonomous robot deliveries. Amidst the pandemic, the industry has realized the benefits of contactless delivery services such as ordering food and essentials while staying away from busy shops and restaurants and following social distancing norms. The demand for contactless delivery services is increasing, which has led many restaurants, shops, and food joints to associate with the pilot projects of delivering food and groceries through autonomous robots.

Amidst the lockdown, autonomous delivery vans designed by Shenzhen Yiqing Innovation Technology Co., Ltd. (Unity Drive Innovation) were used to deliver food in Shenzhen, Suzhou Zibo cities. These autonomous vans are used to deliver essentials, vegetables, and spraying chemicals to disinfect public areas. Chinese e-commerce giant JD.com, Inc. also used its L4 autonomous driving solution to provide medical supplies in Wuhan's hospital. It was observed that the company’s autonomous robot had delivered more than 2.36 million medical and epidemic prevention supplies, including medical gloves, disinfectants, masks, and other products to major hospitals in Huanggang, Wuhan, and other places in Hubei province. Post-COVID, the industry is expected to follow the same trends as the reliance on convenient technologies is now increasing for easing day-to-day life.

Autonomous Last Mile Delivery Market Trends 

The rising e-commerce sector has led the consumer preferences towards the center of attention in the parcel delivery market. Leading e-commerce players and various food & grocery delivery startups have identified last-mile services as a key differentiator in the market. The perceived quality of delivery services and a variety of delivery options are the major deciding factors for online customers and directly impact the e-commerce business. Online shopping companies are working towards providing greater customer experiences, especially improving delivery times. Moreover, the customers are also willing to pay additional charges (up to Euro 3, RMB 20, or USD 3 depending upon the region) for the same day or instant delivery. As a result, the demand for independent and self-directed technologies in delivery services is increasing rapidly.

The companies are emphasizing on just-in-time delivery than the long-haul delivery system. The distributors are also transitioning from the single warehouse location to urban fulfillment centers to deliver the same day's orders. To keep up the pace of increasing last-mile delivery demand, logistics companies are investing in smaller vans and trucks, which can support shorter and more frequent deliveries. The developments in shipping vehicles and a top-notch way to dispatch packages are fueling the growth of the autonomous delivery market. In the coming years, autonomous vehicles such as delivery bots and drones are presumed to be key areas of a focus for logistics companies.

The last phase of product delivery from warehouses or distribution hubs to end customers’ accounts for approximately 28% of the overall product cost in most supply chains. Increased product delivery costs are frequently caused by traffic congestion in urban areas, product delivery to far-flung and remote regions, inaccurate or incorrect address details, difficult-to-find destinations, and severe labor shortages. Depending on the vehicle and platform, automatic delivery could be transformative for the retail business, reducing delivery costs by 805 to 90% compared to human delivery. 

Platform Insights

The ground delivery vehicles platform segment held the largest market share of over 85% in 2019. It is expected to register a CAGR of over 30% over the forecast period. The segment is further bifurcated into delivery bots and self-driving vans and trucks. The ground delivery robots are expected to address several key challenges that are faced in the trucking industry, such as productivity and driver shortage. In the U.S., the driver shortage is estimated to reach 160k persons by 2028. Besides, the continuously rising labor wages are becoming a critical factor in implementing autonomous delivery robots. In 2019, Domino's Pizza, Inc. partnered with Nuro, a U.S.-based robotics company, to deliver pizzas in selected areas of Houston. The continuous developments in self-driving vans and trucks are further expected to drive the segment growth over the forecast period.

Aerial delivery drones are expected to witness robust growth over the forecast period. Drones are an effective means for parcel delivery as they avoid traffic congestion and unnecessary roadblocks and reduce carbon footprints. The segment is further divided into fixed-wing, rotary blades, and hybrid types. The rotary blades segment dominated the market in 2019 and is expected to continue its dominance over the forecast period. These drones can be used in small and confined places with no special requirement for take-off and landing. Hybrid drones are expected to witness remarkable growth over the forecast period on account of increased power, range, and payload size as compared to their other counterparts. 

Solution Insights

The software segment held the largest market share of over 60% in 2019. Based on solutions the market is segmented into software, hardware, and service. The service segment is expected to witness a strong CAGR of 36.0% over the forecast period. Companies working in the autonomous last mile delivery ecosystem are adopting the Robot-as-a-Service (RaaS) model. These companies usually charge a minimum amount for the delivery of goods. Starship Technologies charged around USD 1.5 to USD 2 per delivery at Purdue University, U.S. A similar model is followed by Wing Aviation LLC and Refraction AI companies. The RaaS model allows small and medium sector companies to lease robots without making a considerable investment. As a result, SMEs are expected to adopt this business model in the forthcoming years.

The hardware segment accounted for a significant market share in 2019. Robot hardware consists of sensors, LiDAR, cameras, batteries, propulsion systems, and radars, among others. The development of the Internet of Things (IoT) in robots and reduced prices of sensors, LiDAR, and cameras are expected to influence the market growth positively. Furthermore, the development of drone charging stations is expected to drive the demand for hardware components. The software segment is expected to exhibit a steady growth rate on account of the fleet management and asset tracking software development.

Range Insights

The short-range (<20 kilometers) segment held the largest revenue share of over 90% in 2019. The autonomous delivery market is in the nascent stage and various testing projects are being run for short distances. These projects are generally limited to a specific area of the city or university campuses covering limited distances. Security concerns and lack of public awareness further limit the usage of robots for long distances. As a result, the segment is expected to dominate the market over the forecast period.

The long-range (>20 kilometers) segment is estimated to register the highest CAGR over the forecast period. The segment's growth can be attributed to the rising demand for quick and cost-effective parcel delivery over long distances. The development of autonomous cars and cargo flights is expected to accelerate market growth over the forecast period. Recently, Xwing Inc., a U.S.-based aviation startup, has successfully tested autonomous cargo flight using the classic Cessna plane. The company is now working on the development of an autonomous cargo flight for a 500-mile range.  

End-use Insights

The Food and Beverages (F&B) segment dominated the market with a revenue share of over 85% in 2019. The F&B sector is revolutionizing its way of serving customers to remain sustainable in the competitive market. Food delivery robots have already started delivering foods in selected cities and university campuses. These robots are specially designed for the F&B industry with different compartments for hot and cold food items. Companies such as Boxbot, Kiwi Campus (Kiwibot), and Wing Aviation LLC have partnered with various local restaurants and food joints for deliveries across the U.S., the U.K., and Australia.

The retail sector is expected to register the highest CAGR of over 38% over the forecast period. Increasing e-commerce growth is expected to demand a strong logistics and distribution network. Customers are willing to pay additional charges for instant delivery services, which disrupt the industry's supply chain model. Technology is becoming a significant enabler for shortening the delivery time by providing alternative delivery methods such as drones and automated delivery vans. As a result, e-commerce companies such as Alibaba Group, JD.com, and Amazon have turned to advanced technologies to improve efficiency and reduce last-mile delivery costs.

Regional Insights

Asia Pacific to undergo substantial growth; India has maximum growth potential

North America captured the largest market share of over 62% in 2019. This can be attributed to the continuous development in autonomous delivery robots, which has resulted in numerous pilot projects in the region. Starship Technologies, a U.S.-based robotics company, has started delivering food through robots in several universities, including Purdue University, the University of Pittsburgh, George Mason University, and the University of Wisconsin-Madison. The company is expected to start its service for groceries and medicines in other parts of the U.S. Amazon.com, Inc. is keenly involved in the development of autonomous delivery robots. In August 2019, the company launched Scout, a last-mile delivery robot in Southern California. Moreover, continuous efforts are being made by retail giants such as The Kroger Co. and Walmart to shorten the delivery period, which is expected to fuel the demand for the development of next-generation delivery robots.

Europe is expected to emerge as a prominent region in the forthcoming years. Strategically planned cities such as Copenhagen and Paris and well-laid roads simplify the robot operation in crowded places. The pilot projects in this region face relatively fewer challenges as compared to those in the North American countries. Furthermore, developments such as Nokia’s autonomous delivery robot in Paris-Sarclay campus, Starship Technologies food delivery robots in Milton Keynes, U.K., and Emqopter’s drone delivery are expected to fuel the regional market growth.

The Middle East and Africa region is poised to exhibit notable growth in autonomous robot deliveries. African countries such as Rwanda, Malawi, and Tanzania have established themselves as drone testbeds. According to UNICEF, drones can play a vital role in delivering emergency medical supplies, vaccines, and other essentials in Africa's remote areas where transportation is a major concern. UNICEF is also exploring the potential usage of drones for delivering books and educational materials to Africa's rural schools. In 2017, UNICEF and the Government of Malawi jointly launched an air corridor to test the use of drones for delivery and surveillance applications. In 2016, Zipline, a San Francisco-based startup, delivered blood supplies to the remote hospitals and clinics in Kigali, Rwanda. In 2018, the company started its delivery drone services in Tanzania to deliver medical supplies such as blood samples, medicines, and snake antivenom. Besides, The Dubai Future Accelerator and Roads & Transportation Authority (RTA) of Dubai are planning to start drone delivery trials in the coming years.

Furthermore, there has been an increase in spending by major firms to promote start-up companies that are launching parcel service platforms. As a result, this is expected to significantly contribute to the growth of autonomous last-mile delivery in the region. Organizations have created partnerships and collaborations with other organizations to provide self-driving vehicles for parcel delivery in order to meet the conveyance of orders. For example, in April 2020, Pony.ai, the Los Angeles-based autonomous vehicle manufacturer partnered with Yamibuy.com, an e-commerce firm to launch an autonomous delivery facility for clients in Irvine, California.

The European market also accounted for a significant revenue share in 2020 and is expected to reach USD 17.6 million by 2028, with a projected CAGR of 31.1% over the next seven years. Europe is the second largest market for worldwide autonomous last mile delivery owing to rising technical innovation and the most established e-commerce region. Top companies have been focusing on the development of aerial delivery drones that can deliver goods and services in difficult-to-reach places. This minimizes the need for humans to transport goods and services to remote locations as it can be carried out by aerial delivery drones. 

Key Companies & Market Share Insights

Starship Technologies; Nuro; Wing Aviation LLC; Alibaba; Amazon.com, Inc.; and TeleRetail are some of the key companies in the market. These companies are actively working on the development of autonomous delivery services. Many are now in the semi-commercial prototyping phase. Since late 2016, startups have raised over USD 500 million in funding to enable autonomous trucks and vans. Major automotive firms are also leaping the development of next-generation vehicles. At the 2019 Consumer Electric Show (CES) in Las Vegas, Daimler Trucks announced significant investment plans of USD 570 million to bring automated trucks that can be used for logistics operations. These developments are expected to provide substantial traction to autonomous delivery services. 

The market is fragmented with several startups and tech giants that are actively working on technology developments. Startups are positioning themselves as robot-as-a-service type businesses. Along with the hardware, these companies are working on building fleet management and route optimization software. As logistics companies lack technological expertise, they are expected to outsource the autonomous last mile delivery to these technology companies. However, logistics companies with internal technology capability such as Amazon are less likely to engage with the service model. These e-commerce companies are developing their autonomous delivery robots and are expected to acquire technology startups to remain competitive in the market. Some of the prominent players in the global autonomous last mile delivery market include:

• Alibaba

• Amazon.com, Inc.

• Drone Delivery Canada

• Flytrex

• JD.com

• Kiwi Campus (Kiwibot)

• Nuro

• Refraction AI

• Robby Technologies

• Shenzhen Yiqing Innovation Technology Co., Ltd.

• Starship Technologies

• TeleRetail

• Udelv Inc.

• Unsupervised AI

• Wing Aviation LLC

Autonomous Last Mile Delivery Market Report Scope

Global Autonomous Last Mile Delivery Market Segmentation

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2027. For this study, Grand View Research has segmented the global autonomous last mile delivery market report based on platform, solution, range, end-use, and region:

• Platform Outlook (Revenue, USD Million, 2017 - 2027)

  • Ground Delivery Vehicles

    • Delivery Bots

    • Self-driving Vans & Trucks

  • Aerial Delivery Drones

    • Fixed-Wing

    • Rotary-Wing

    • Hybrid

• Solution Outlook (Revenue, USD Million, 2017 - 2027)

  • Hardware

  • Software

  • Service

• Range Outlook (Revenue, USD Million, 2017 - 2027)

  • Short Range (<20 Kilometers)

  • Long Range (>20 Kilometers)

• End-use Outlook (Revenue, USD Million, 2017 - 2027)

  • Food & Beverages

  • Retail

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2027)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East and Africa