For residents of Kosuge, an idyllic village nestled in a valley deep in the mountains of Yamanashi Prefecture, fast food is a luxury. There aren’t any convenience stores or supermarkets in the tiny community, let alone a McDonald’s.
So when Aeronext Inc. celebrated its 100th on-demand drone delivery in Kosuge in July, the startup treated villagers to fast food chain Yoshinoya Co.’s signature gyūdon beef bowls — steamed rice topped with thinly sliced beef and simmered onions. Amid a small crowd of curious onlookers, hot meals prepared in a Yoshinoya kitchen car were hauled onto spider-like drones that took off in regular intervals to several drop-off stations dotted around the village.
For those who got to savor the dish, it was a taste of the city delivered by air, and a glimpse of a future in which these flying devices could become an essential part of rural life.
“Shopping is turning into a major issue for a growing number of remote communities suffering from depopulation,” says Keisuke Toji, CEO of Aeronext, a Tokyo-based drone firm that has been conducting test flights in Kosuge since late last year.
“Sure, people can order goods via e-commerce services such as Amazon, but there’s a chronic shortage of truck drivers in the nation while the amount of cargo they carry continues to grow,” he says. “There may come a time when residents of these villages won’t be able to receive parcels every day. Our approach is to solve this problem using drones.”
With nearly half of its population of 700 aged 65 or older, Kosuge — situated around two hours from Tokyo by car — is a microcosm of the demographic challenges facing rural Japan. Young workers are lacking and economic opportunities are limited. Meanwhile, the shrinking population has seen the number of shops dwindle, making it increasingly difficult for older villagers to buy food, medicine and other necessities.
“We’re worried what could happen as our population ages beyond the ability to drive,” says Tetsuo Mochizuki, a Kosuge village official. There are only two small mom-and-pop grocery stores and one practicing physician in Kosuge. That means those who own cars often drive 40 to 60 minutes to supermarkets and hospitals in neighboring Otsuki and Ome cities.
“And there’s also the danger of us being isolated during natural disasters that seem to be increasing in frequency due to climate change,” Mochizuki says. “In 2014, for example, we were stranded for days after record snowfall blocked roads connecting to our community. We hope drones can become a lifeline in such circumstances.”
Regulatory changes in the air
Kosuge is among a growing pool of municipalities teaming up with drone companies and delivery firms to solve the last-mile logistical conundrum facing hundreds of remote islands and the mountainous regions of the nation’s countryside. With Japan expected to suffer a lack of around 280,000 truck drivers by 2028, these rural destinations fear they could be the first to be deprioritized from delivery routes.
Efforts to create sustainable and profitable drone delivery systems are also accelerating ahead of fiscal 2022, when the government is slated to introduce a streamlined registry for drones alongside a licensing system. This will allow operators to fly drones out of their line of sight in areas where people live or work, based on what the trade ministry calls “level 4” in the final stage in its road map for expanding drone business. The new rules are expected to pave the way for greater commercial use, including deliveries in residential areas.
“At this stage, Japan’s aviation law prohibits drone flights beyond the visual-line-of-sight above populated areas,” says Aeronext’s Toji. “But since Kosuge is situated in the mountains, those restrictions don’t apply. That means it’s a perfect testing ground as we gear up for the new changes.”
Partnering with Aeronext is Seino Holdings Co., a major transportation company that hopes the venture will offer a solution to the tight labor market and booming e-commerce sectors that have been pressuring last-mile operators.
The firms are currently developing in Kosuge a smart-logistics system, called SkyHub, that would combine ground and air transportation options for on-demand deliveries backed by consumer demand forecasts.
Under the plan, products are first stored at a drone depot — essentially a warehouse in the village at which inventory is controlled. Upon taking orders, goods are delivered either by drone to several collection points strategically located in Kosuge, or by ground transportation, depending on the size and weight of the parcel and weather conditions. Seino is also in talks with other transportation companies so they can drop off their packages at the depot instead of delivering parcels door-to-door.
“Rather than having three or four delivery trucks from different operators running around the village, we could consolidate all the parcels at the depot before making the final leg of the delivery,” says Eiichiro Sugai, a spokesman for Seino. “That will cut down on both time and manpower.”
Aeronext has so far developed five flight paths for its drones, and around 10 deliveries are being made each day. Plans are also in motion to begin offering residents pharmaceuticals. And while the project so far is funded by government subsidies, delivery fees will be introduced in the near future to eventually make the system self-supporting.
“We can’t monetize drone deliveries at this point due to both technological and legal limitations,” Toji says. Drones are very vulnerable to changes in weather, while current regulations require a human presence at both takeoff and landing points in populated areas, creating extra labor costs.
“With these things in mind, I expect it will take a few years after next year’s rule change for our envisioned operation to be fully realized,” Toji says. “But we’ve already been contacted by municipalities interested in participating with the project, and our goal is to offer our model to the hundreds of rural communities in Japan.”
The market for drones is rapidly expanding in nations such as the United States as industry behemoths including Amazon, Walmart, UPS and Google step up investments in drone delivery projects.
In Japan, the market size for drone-related businesses in fiscal 2020 grew over fivefold from fiscal 2016 to ¥184.1 billion, according to market research firm Impress Corp. The company projects the figure will soar to ¥646.8 billion by fiscal 2025.
Japan Post Co. is working with domestic commercial drone maker Autonomous Control Systems Laboratory to realize mail deliveries to remote areas by 2023, while transportation giant Yamato Holdings Co. is experimenting with Bell Helicopter Textron Inc. of the U.S. to fly drones that can carry up to 32 kilograms of cargo. Major airlines have also been conducting trial drone deliveries as a means to offer medicine and daily necessities to those living in remote areas while boosting their bottom line hurt by COVID-19-induced travel restrictions.
ANA Holdings Inc., the parent company of All Nippon Airways Co., has been conducting trial drone runs since 2018 in select locations in Japan — including Nagasaki Prefecture’s Goto Islands, where it has carried packages of medical supplies from one island to another. The company has formed a project team that includes pilots and flight mechanics to use their expertise in setting flight routes and preparing operation manuals.
“We are aiming to put our drone logistics service to practical use starting fiscal 2022 when the ban on level 4 is lifted,” says Chiharu Yamaguchi, a spokesperson for ANA Holdings’ drone project. “We plan to build drone distribution networks across the nation in the future to revitalize rural regions having difficulty accessing health care and groceries.”
Once the necessary aviation infrastructure is in place, drone deliveries will have an inherent advantage in Japan, a nation comprising nearly 7,000 islands, of which more than 400 are populated. Many of these island communities face similar demographic dilemmas as mountainous villages such as Kosuge.
Take Awashima, a small island in the Seto Inland Sea around 4½ kilometers northwest of the port of Suda in Mitoyo, Kagawa Prefecture. Roughly 85% of the island’s 170 or so residents are 65 or older, far higher than the national average of 29.1%. There are no vending machines on the island, and only one store selling daily necessities.
And while there’s a ferry connecting the island to the port of Suda in 15 minutes, sailings are canceled during typhoons, and it’s unclear whether the service can be maintained in the future as depopulation curbs resources.
In late August, in order to offer a solution, Kamomeya Inc., a startup based in Kagawa Prefecture, launched a drone delivery service connecting the port of Suda to Awashima.
After receiving orders from residents of the island via phone, fax or order forms that can be dropped off at collection points, products such as cup noodles and chocolate bars from an affiliated convenience store are delivered to the port and loaded onto Kamomeya’s drones, then airlifted to Awashima for a fee of ¥500. The trip takes approximately seven minutes, and an order placed in the morning will be delivered to the island in the afternoon.
“While we’re still working on the system, this model can be applied to other island nations such as Indonesia and the Philippines,” says Masato Ono, CEO of Kamomeya.
Automation is key to reducing labor costs, while the range of products being offered needs to be expanded to cater to consumer demands, Ono says. Kamomeya now makes two drone trips a day but it plans to raise that frequency while upgrading its drones to increase the payload from 1 kg to 5 kg.
“If 24-hour drone deliveries can be realized, it’ll be as if convenience stores opened in these remote islands,” he says.
The sky is the limit
While the sky may be the limit in terms of the potential for drone deliveries, there are several factors that need to be considered in order for multicopters to become a mainstream logistical option in Japan, says Sonoko Yasuhira, an analyst at the Japan Research Institute and an expert on smart mobility and regional transportation.
“In the medium-to-long term, drones have the potential to play a role in logistics, but the government will want to carefully accumulate successful examples following next year’s law revisions,” she says. “I think we would need to give it a few more years, say, until 2025 or so, to see drone deliveries become more widely accepted.”
Yasuhira raises four points she considers essential for the success of drones: legal developments, technological factors, business viability and social acceptability.
While the government is moving ahead with developing necessary legislation for flying drones, there will be more rules and regulations that need to be arranged to specify the purpose of flights, such as whether they are being used to transport freight or deliver goods to disaster sites.
Meanwhile, local transportation operators — not just the major players — need to be involved to make drone deliveries a sustainable and scalable business, while communities where such services could be offered need to be more aware of what drones are capable of. And mobile network coverage, or lack thereof, in mountainous regions and remote islands could also cause issues, Yasuhira says.
“I have doubts as to whether drone deliveries will ultimately be profitable from solely a business standpoint,” Yasuhira says. “But I think there are important social benefits that should be factored in.” For example, aging residents who have limited access to hospitals could have medicine delivered to them rather than waiting until their health deteriorates to receive care, something that will ultimately reduce healthcare costs.
“Municipalities, not just commercial businesses, could invest in drones as a means to provide a safety net for residents.”
While it may take a few more years for drones to realize their full potential, it could become the future of on-demand food.
On Aug. 31 and Sept. 1, telecommunications giant SoftBank Corp. conducted a demonstration using a drone with autonomous navigation capabilities to transport fresh fish from the fishing port of Susami, a small coastal community in southwestern Wakayama Prefecture, to a roadside market 3 km away.
The town’s specialty, fresh skipjack tuna (katsuo) found its way through the air and landed at the destination with centimeter-level accuracy using SoftBank’s high-precision positioning service.
Like Kosuge, Susami, which counts fishing and tourism as its major industries, is grappling with labor shortage as its population grays and has been looking for means to attract tourists.
Under the plan, a mobile order system that customers can use on their smartphones will be introduced at a restaurant in the town’s roadside market. The details of the order will be sent to both the restaurant staff and workers at the fishing port, who will deliver fresh fish that can be served to guests.
“We’ve received requests from fishermen who want to deliver fresh fish directly from their fishing boats to restaurants using drones,” says Atsushi Kimura, deputy manager of SoftBank’s 5G and IOT engineering division who has been involved in the Susami experiment. “That could be served, perhaps with a premium, for customers who want to eat impeccably fresh sashimi.”
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