While many question whether drone deliveries will ever happen in the developed world, Keller Rinaudo is already using autonomous aircraft to deliver medical supplies to remote locations in Africa.
Few people are fortunate enough to combine their job with their passion. Keller Rinaudo is one of them. Rinaudo is CEO and cofounder of Zipline, a company that builds autonomous drones designed for delivering medical supplies to remote parts of the world.
The Harvard University-educated Rinaudo started his career as a software engineer and a professional rock climber. For a time, he built computers out of RNA and DNA to operate in human cells as molecular doctors. Then, he discovered the wonderful world of logistics and the possibilities of using new technologies to deliver medical supplies to all of the world's inhabitants, wherever they may live.
San Francisco, California-based Zipline employs 40 aerospace and software engineers and is funded by an impressive slate of investors, including Sequoia Capital, Google Ventures, Paul Allen, Jerry Yang, and Stanford University. The tech firm builds and operates 40-pound battery-powered drones that look like small airplanes. The drones are catapult-launched and fly to remote destinations to make deliveries by paper parachutes. They then return to the distribution center, where they fly into a large net or are caught by a tailhook and are quicklymade ready for further deliveries. (You can watch a video of a drone delivery on the company's website, www.flyzipline.com.)
NAME: Keller Rinaudo TITLE: Chief Executive Officer and cofounder of Zipline EDUCATION: Artium Baccalaureus (Bachelor of Arts) in economic and biotechnology from Harvard University EXPERIENCE: Chief executive officer of Zipline, where he oversees a team of 100 flight engineers and operators formerly of companies including SpaceX, Boeing, and Google based in the San Francisco Bay area and Rwanda; software engineer; professional rock climber; as a student at Harvard, he built computers out of RNA and DNA that can operate in human cells as molecular doctors RECOGNITION: Published research on RNA and DNA computers in Nature Biotechnology, becoming one of the youngest first authors in the publication's history
Zipline's first major project was partnering with the government of Rwanda to use its drones to make last-mile deliveries of blood to remote transfusing facilities. From its DCs, Zipline currently delivers about 30 percent of the national blood supply of Rwanda. The long-term vision for this project is to be able to swiftly reach each of Rwanda's 11 million citizens with any essential medical product they need, regardless of how remote they are.
Rinaudo recently sat down with CSCMP's Supply Chain Quarterly Editorial Director David Maloney to discuss this ground-breakingventure. The following is an edited version of their conversation. To watch the full interview, go to https://www.supplychainquarterly.com/video.
Q: What made you decide to zero in on health care logistics for Zipline's first drone deliveries?
Health care logistics was a really good place for us to start for a number of reasons. First of all, every delivery is potentially saving a human life. Second, health care products are obviously urgently needed, and logistics is a really important part of making sure that doctors have what they need to treat patients. Plus, the health carelogistics market itself is a huge US$7 billion market, and it's one that, while it functions well in developed countries, really doesn't function well in a lot of other parts of the world. There is a huge opportunity to both push the industry forward and also save lives.
Q: Why was Rwanda chosen?
We wanted to find a country that was small enough that we could get to national scale quickly and had a government that was making active investments in technology and health carefor its citizens. Rwanda really fit that bill. So, in partnership with Rwanda's administrative health [ministry], we've been able to turn Rwanda into the first country to achieve universal health careaccess for all. They have been able to put every single one of their citizens within a 15- to 25-minute delivery of any essential medical product.
Q: Your drones sometimes have to fly over populated areas to reach patients in remote locations. Some people have questioned the safety of drones flying over people. Is that a concern for you as well?
When we're flying, what's important to us is not just saving the life of the person that we're delivering for, but also ensuring that we're safe for the people we're flying over—the people who live in the towns and cities that we fly over on a daily basis. It's really important that these vehicles be able to operate at a similar level of reliability as general aviation aircraft.
Q: Could you describe just how the vehicles fly and make their deliveries?
The user experience of receiving a delivery from Zipline is very simple. Any doctor or health worker can use a cellphone to send a text message to place an order. When the distribution center receives that text, Zipline's team will basically pull the product from stock and load it into one of our aircraft. That aircraft is then launched from the distribution center, and it flies autonomously to the destination's GPS coordinates.
Q: So, no one is controlling it? It is all programmed electronically and by computer?
Exactly. The plane is flying itself using a flight control algorithm. It will descend to about 30 feet off the ground, and then we drop the package using a really simple paper parachute. That enables us to deliver every shipment right into the receiver's "mailbox," which is an area about the size of two parking spaces on the ground. The plane will turn around, come home, and land at the distribution center. It is ready to fly again a few minutes later.
Q: Have you had any complications with your deliveries in Rwanda?
We've made tens of thousands of deliveries, and we've never lost a vehicle. We design redundant systems into every level, whether it's the flight controls, the avionics, or the way the vehicle is mechanically engineered.
Q: And these are delivery vehicles that your company has created?
Yes. We build everything from scratch. We also have a system on board so if the vehicle can't make it back to the distribution center, it can actually use a parachute to bring itself to ground gently. So, this is how we ensure that these vehicles are 100-percent safe for the people they're flying over.
Q: How many types of those deliveries are you making a day in Rwanda?
We just agreed to an expansion of our services in Rwanda and have added a second distribution center. That will allow us to do about 200 deliveries per day countrywide.
Q: Are you looking to expand to other nations with this technology?
Yes, rural health care is a global problem. A lot of other countries are now looking at Rwanda as a role model and figuring out how they can leverage similar technology to improve their own health care systems. So, we will be launching in several other African countries in the next six months.
And here in the United States, we will soon begin making lifesaving medical deliveries in rural North Carolina. We're working through final details with the Federal Aviation Administration, the state of North Carolina, and our partners on the ground. We expect to begin deliveries there beginning in the second quarter of this year.
Q:There's been a lot of talk in the logistics industry about drones being used for deliveries. Can you see a day when that technology will be used on a regular basis for small parcel deliveries, such as e-commerce orders?
Yes. The funny thing is, it is already happening at scale today, just not in the United States. When it comes to e-commerce, we think it's inevitable that this type of technology will have a big impact on how e-commerce orders are delivered, but that's not the first place the technology is going to start. It makes more sense to start focused on lifesaving applications. Then I think after that, you'll see a lot of high-need, urgent applications that might be more industrial applications. And then in the long run, you'll start to see this technology permeate the really big parcel-delivery market that's currently served mainly by UPS and FedEx.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”
With the economy slowing but still growing, and inflation down as the Federal Reserve prepares to lower interest rates, the United States appears to have dodged a recession, according to the National Retail Federation (NRF).
“The U.S. economy is clearly not in a recession nor is it likely to head into a recession in the home stretch of 2024,” NRF Chief Economist Jack Kleinhenz said in a release. “Instead, it appears that the economy is on the cusp of nailing a long-awaited soft landing with a simultaneous cooling of growth and inflation.”
Despite an “eventful August” with initial reports of rising unemployment and a slowdown in manufacturing, more recent data has “calmed fears of a deteriorating U.S. economy,” Kleinhenz said. “Concerns are now focused on the direction of the labor market and the possibility of a job market slowdown, but a recession is far less likely.”
That analysis is based on data in the NRF’s Monthly Economic Review, which said annualized gross domestic product growth for the second quarter has been revised upward to 3% from the original report of 2.8%. And consumer spending, the largest component of GDP, was revised up to 2.9% growth for the quarter from 2.3%.
Compared to its recent high point of 9.1% in July of 2022, inflation is nearly back to normal. Year-over-year growth in the Personal Consumption Expenditures Price Index – the Fed’s preferred measure of inflation – was at 2.5% in July, unchanged from June and only half a percentage point above the Fed’s target of 2%.
The labor market “is not terribly weak” but “is showing signs of tottering,” Kleinhenz said. Only 114,000 jobs were added in July, lower than expected, and the unemployment rate rose to 4.3% from 4.1% in June. Despite the increase, the unemployment rate is still within the normal range, Kleinhenz said.
“Now the guessing game begins on the magnitude and frequency of rate cuts and how far the federal funds rate will be reduced,” Kleinhenz said. “While lowering interest rates would be good news, it takes time for rate reductions to work their way through the various credit channels and the economy as a whole. Consequently, a reduction is not expected to provide an immediate uplift to the economy but would stabilize current conditions.”
Going forward, Kleinhenz said lower rates should benefit households under pressure from loans used to meet daily needs. Lower rates will also make it more affordable to borrow through mortgages, home improvement loans, car loans, and credit cards, encouraging spending and increasing demand for goods and services. Small businesses would also benefit, since lower intertest rates could lower their financing costs on existing loans or allow them to take out new loans to invest in equipment and plants or to hire more workers.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
“Unrelenting labor shortages and wage inflation, accompanied by increasing consumer demand, are driving rapid market adoption of autonomous technologies in manufacturing, warehousing, and logistics,” Seegrid CEO and President Joe Pajer said in a release. “This is particularly true in the area of palletized material flows; areas that are addressed by Seegrid’s autonomous tow tractors and lift trucks. This segment of the market is just now ‘coming into its own,’ and Seegrid is a clear leader.”
According to Pajer, Seegrid’s strength in the sector is due to several new technologies it has released in the past six months. They include: Sliding Scale Autonomy, which provides both flexibility and predictability in autonomous navigation and manipulation; Enhanced Pallet and Payload Detection, which enables reliable recognition and manipulation of a broad range of payloads; and the planned launch of its CR1 autonomous lift truck model later this year.
Seegrid’s CR1 unit offers a 15-foot lift height, 4,000-pound load capacity, and a top speed of 5 mph. In comparison, its existing autonomous lift truck model, the RS1, supports six-foot lift height, 3,500 pound capacity, and the same top speed.
The “series D” investment round was funded by existing lead investors Giant Eagle Incorporated and G2 Venture Partners, as well as smaller investments from other existing shareholders.