Is the Low-Altitude Economy Arriving with a Delivery Cost of Approximately 1.14 RMB (USD0.16) per Parcel?
With a per-parcel delivery cost reaching about 1.14 RMB, drones are emerging as a groundbreaking application in the logistics sector. While most trends fade quickly, the low-altitude economy - centered on reducing transportation costs - is fundamentally different. In the face of time, cost, and efficiency demands, human lifestyles will inevitably expand from the two-dimensional ground to the three-dimensional sky. The establishment of order and economic interests in this new airspace must be built from scratch, signaling a trillion-yuan development opportunity.
By the end of 2023, China had over 19,000 drone operating enterprises, an annual output value of 152 billion RMB, 1.267 million registered drones, and more than 1,000 mass-produced drone models. This indicates that drone delivery, as the first step in the low-altitude economy, is poised for small-scale implementation in 2024.
1. Is the Low-Altitude Economy Here?
In recent years, numerous unmanned delivery vehicle companies have showcased their achievements in deploying drones across the country, with some companies operating fleets of over a thousand units. Industry leaders such as SF Express, JD.com, Meituan, and DJI have not only launched logistics drone products but also achieved small-scale operations.
According to Meituan data, in 2022, its drones completed 120,000 food delivery orders within designated areas. As of now, Meituan drones have been deployed in multiple cities, including Shenzhen and Shanghai, operating in commercial districts, scenic spots, and residential areas, with a cumulative total of nearly 170,000 deliveries and close to 20,000 types of deliverable products.
Over 40 million Meituan users order food delivery more than 100 times annually, demonstrating high frequency and diverse demand. Last year alone, 60 million users ordered more than 20 different types of dishes. Similarly, in the Greater Bay Area, SF Express’s Wing drone delivery service handles 20,000 orders daily, achieving cross-city logistics with an average delivery time of just three hours.
Government support is also robust. By the end of May 2024, 29 provincial-level regions had included "low-altitude economy" in their government work reports, highlighting strong commitment to its development.
However, in the current drone market, much attention is focused on eVTOL (electric Vertical Take-Off and Landing) aircraft, which are still in early development with undefined technical pathways and at least three years away from practical deployment. For leading drone companies, eVTOL represents a direction but not the entirety of the trillion-yuan industry. The low-altitude economy currently lacks mature, high-frequency application scenarios, which eVTOL cannot yet provide.
While "low-altitude + tourism" attracts buzz, the cargo market is more appealing to internet companies. Though less glamorous, freight offers high certainty and potential. According to ZTO Research Institute, using drones for "last-mile + branch line" logistics can reduce comprehensive operating costs for logistics companies by over 30%.
For example, considering the lifecycle cost of an electric hexacopter drone, the total operating cost is 85,800 RMB, delivering 75,000 parcels, resulting in a per-parcel cost of approximately 1.14 RMB - lower than traditional logistics models. Given the impact of regional and environmental factors on delivery services, drones in the "low-altitude + cargo" sector are likely to be deployed earlier than eVTOL.
Drone technology is making continuous breakthroughs in rural areas, opening up possibilities for future expansion of (express delivery) services to underserved regions. Companies like SF Express, JD.com, and Amazon are leading the exploration of drone logistics in remote rural areas.
2. Drone Maturity Requires an Entire Ecosystem
From an objective perspective, given the efforts of numerous companies in building low-altitude infrastructure and networks, automated drone delivery is set to become a critical future business for transportation-dependent companies like SF Express, Meituan, and JD.com. According to data from the China Commercial Industry Research Institute, logistics drones are experiencing a growth rate of 238%.
However, even though some companies have achieved small-scale application of drone delivery, true scalability still faces significant challenges.
First, the ecosystem for drone delivery is far more complex than simply moving from production to end-use. Similar to how aircraft manufacturers build planes and airlines operate them for profit, the low-altitude economy requires a clear division of labor. While Didi Chuxing, a leader in ground transportation, operates with a light-asset model (not owning vehicles), the maintenance and operational threshold for aircraft are higher, demanding greater asset and operational capabilities from operators.
Therefore, establishing low-altitude transportation requires not a single operator bearing all the risks but a collaborative effort across a complete ecosystem.
Second, from takeoff to delivery, drone delivery is not yet fully automated and still requires manual support. Current drone delivery often involves tying packages to drones + end-point airdrops, meaning both takeoff and delivery stages need substantial human intervention.
Additionally, drone delivery is susceptible to extreme weather conditions. Rain, strong winds, and snow currently hinder drone flights, posing a significant operational challenge.
Furthermore, operational management involves building transportation networks and obtaining detailed flight information, such as navigating dense streets, avoiding power lines, managing inter-drone collision avoidance, and precise parcel drop-off into lockers.
It is worth noting that drones with a 10-kilometer range are already in a fiercely competitive market. Companies like SF Express, Meituan, DJI, XAG, and other aircraft manufacturers have mature multi-rotor models for this range.
The Shenzhen UAV Industry Association predicts that the drone market will reach 160 billion RMB in 2024, with the logistics drone segment accounting for about 30 billion RMB.
However, despite the reduced cost of drone delivery, the current infrastructure and maturity of drone technology cannot meet the daily demand of nearly 500 million parcels in the short term.