Before Amazon Drops Packages On Your House From The Air, Drones May Start To Transform Air Cargo
Alphabet and Amazon have seized the spotlight with their efforts to develop drones that can deliver food and other consumer cravings to our doorsteps, but meanwhile a handful of startups have been quietly making progress toward building longer-range autonomous aircraft that can deliver heavier cargo.
They might make a bigger impact first.
Elroy Air has raised $4.6 million in seed funding from venture investors, the San Francisco-based startup announced Wednesday, giving it a total of $9.2 million to develop a cargo drone that it aims to bring to market in 2020. The aircraft, dubbed the Chaparral, will be able to automatically pick up and release a cargo pod with a capacity of 500 pounds and carry it up to 300 miles.
To start, the company believes the aircraft will fill a need for package delivery companies in the U.S., replacing trucks on rural routes with thin demand and helping out the small air carriers subcontracted by UPS and FedEx that are struggling to sign up enough pilots amid a growing shortage. The founders also think there’s a sizable opportunity to transport disaster relief supplies for governments and NGOs and to serve islands and remote areas around the globe where road networks are sparse.
“We want to be like the Ford F-150 of the sky,” says CEO David Merrill. “We want to make it a trusty flexible platform that can be put to a lot of use cases.”
Merrill, 40, and cofounder and engineering head Clint Cope, 42, met while working at the former consumer drone wunderkind 3D Robotics. When they founded Elroy in 2016, they initially planned to build an electric air taxi, however they came to realize that an unmanned cargo carrier operating at least initially in sparsely populated areas would have a quicker path to market, with fewer safety and certification hurdles, and that it would be less expensive to develop.
Startups like Joby and Lillium have raised in the neighborhood of $100 million to develop urban air taxis. Says Merrill, “We can make substantial inroads in the market and get to the stage of customers and meaningful revenue for much less.”
The Elroy Chaparral will have six electric rotors for vertical takeoff and landing and will transition to winged flight once in the air, with a pusher propeller behind its 29-foot-long rear wing that will be powered by a 100-horsepower gasoline engine. The batteries will recharge in flight. That will make it more capable of quick turnarounds and better suited for use in emerging countries that might not have robust electric grids as well as in disaster areas.
Running off gas will also give the aircraft greater range than the electric air taxi hopefuls.
The company shares a name with the gadget-loving youngest character in the cartoon The Jetsons, though it won’t confirm the connection. It also isn’t publicly disclosing pricing for its aircraft, but it says its operating costs will be a fraction of those of helicopters and small planes. A Cessna Caravan, the workhorse of small air freight carriers, consumes 50 gallons of fuel an hour; the Elroy aircraft will burn 3 to 5, says Merrill.
A Cessna Caravan can carry a maximum of 4,000 pounds, but Merrill says a significant portion of package carriers’ flights aren’t fully loaded and potential customers have indicated that 500 pounds is a “sweet spot.”
Jim Martell, an advisor to Elroy who owns the Salt Lake City-based freight carrier Ameriflight, says that autonomous drones can’t come soon enough for his industry, which is struggling with a pilot shortage. With higher-paying passengers airlines poaching from his 200-strong pilot roster, he says he’s always about 15% understaffed.
“I’m hoping to be their first customer,” says Martell. If Elroy can increase payload capacity to 2,500 pounds he says he could replace 90% of his fleet.
The cargo pod will have interior space of roughly 8 feet by 21 inches wide and 16 inches high, and it’s designed so that 40 can be fit in a standard 20-foot shipping container, allowing for easy transfer to truck and ship. The pods will be loaded by workers, but they’ll be able to stand clear safely as the aircraft automatically picks up the pods and drops them off.
The company pegs the global expedited delivery market at $140 billion a year, of which about $1.5 billion is accounted for by the small aircraft the Chaparral could displace, not to mention the ground transport it could stand in for.
Elroy has flown a subscale model to validate the design and is planning to start flight testing a full-scale prototype in the next few months.
Elroy isn’t the only drone startup pursuing the cargo market. Camarillo, California-based Sabrewing is developing a hybrid-electric VTOL that could carry 2 metric tons of cargo over much longer ranges; it’s aiming to pull off the first flight of an unmanned commercial aircraft across the Pacific, flying a smaller demonstrator drone nonstop from Japan to California in 2020. In 2018, Boeing unveiled a prototype for an electric unmanned multirotor drone that it says will be able to carry 500 pounds.
Kofi Asante, Elroy’s director of strategy and business development, says the company is working on deals with e-commerce companies to expedite deliveries as well as with humanitarian organizations. On the commercial side Elroy intends to sell aircraft to package delivery carriers and to experiment with offering delivery services itself, either as a subcontractor for UPS, FedEx or DHL, or on its own.
Elroy is aiming to launch service first overseas in 2020, but Merrill says he believes based on discussions with the FAA that it will be possible to receive approval to fly a limited set of missions in rural areas of the U.S. by then, most likely through waivers to existing regulations and with a combination of autonomous and remote control.
Merrill says initially the cargo drones will fly routes approved by the FAA and local civil authorities, and under the eye of air traffic controllers. Eventually, once regulations and traffic management is sorted out to enable flights in urban areas, Elroy hopes to expedite deliveries to and from cities as well.
Mark Blair, who retired in 2017 from FedEx after 27 years in air operations, says he’s cheerleading the freight drone startups on but that there are a “jillion” operational challenges they’ll have to solve to earn space in a U.S. market where there are no appreciable holes in service.
“There’s going to have to be incremental advantages from it that are niche driven and with high-value cargo to make it work,” Blair says.
The venture capital firms backing Elroy are Catapult Ventures, Levitate Capital, Lemnos, Precursor Ventures, Haystack, Shasta Ventures, Homebrew, 122West, Amplify Partners, Hemisphere Ventures, the E14 Fund and DiamondStream Partners.