the world and more than 4 trillion dollars worth of goods annually.

But it can take over a month for those goods to sail from Beijing to

New York.

By land, trucks move nearly 71 percent of all freight tonnage in the

United States.

Problem is, there's a shortage of truck drivers in the U.S.

So how do you speed up shipments while keeping personnel low?

The future of shipping looks very much unmanned.

Anything that has high levels of customization, anything that's

unpredictable, that should be done by air.

Many startups believe the answer is autonomous flying cargo drones

that can carry heavy loads and fly long distances.

All around the world, millions of people are benefiting from drones

already, and we're just at the tip of the iceberg.

The global drone logistics and transportation market accounted for

more than 24 million dollars in 2018, and that number is expected to

grow to 1.6

billion dollars in 2027.

These drones could be the disruption needed in a global supply chain

that has been largely unchanged since the 1950's.

Getting large shipments of products across large distances is

difficult. That's why Malcolm McLean created the shipping container

in 1956.

This standardize the shipping industry and allowed shipping to scale

in ways that weren't possible before.

For a typical product that is being shipped from overseas and then

received within the United States, that would involve trucking, ocean

freights, in some cases we're seeing the emergence of more rail being

used as it's becoming a more reliable mode of transportation.

But now, with programs like Amazon's one-day shipping, consumers are

looking for goods to get to them faster.

That means the standard shipping methods – ships and trucks – have to

be re-evaluated.

There is a seemingly insatiable demand for things right away by

consumers and that just keeps growing and people become increasingly

impossible over time.

What it seems like is the supply chains, which are wildly complex, are

built around the timeliness of air freight.

But the cost per item for air freight is significantly more expensive

when compared to sea and ground shipping.

We're at the point where you really need to have those high-value

goods or some kind of an emergency shipment would be an ideal

candidate for air freight because it cost so much.

In the United States in 2016, 11.6

billion tons of goods were shipped via truck, 1.8

billion tons were shipped via train, 740 million tons were shipped

via a cargo ship and only 5 million tons were shipped via airplane.

But using autonomous flying cargo drones to ship goods might bump

that number up.

Air freight is actually a mode of transportation that has increased

dramatically. It's still a small percentage of all freight being

moved, but if you look at the percentage change over the years, air

freight has been growing much more rapidly.

I think a big reason for that is the growth of e-commerce.

If you're living in a small village and you want to ship goods and be

a part of a global economy, often your freight link is by road or

rail and it takes quite some time for your goods to be transmitted

around the world.

So when we bring autonomy and scale into aviation, every community

can be connected with the rest of the world through a airborne

freight link.

And I think that that means massive potential for economic growth in

communities all over the world.

The main challenge is volume.

You just can't lift as much weight into the air as you can floated

along the sea, especially if you're trying to use battery powered

vehicles like many of the smaller drones we see today. Current

battery technology is incredibly heavy. Volans-i, a

drone company that has been working in this space since 2015 created

a hybrid vehicle that uses electric power to take off

vertically, then standard fuel to fly off horizontally.

So, if you build an all-electric vehicle, you have an 85 percent mass

fraction on the batteries.

So that means you can carry 15 percent the rest of the weight in

payload, which doesn't really make sense for cargo delivery.

See, the more volume you carry, the cheaper shipping becomes, even if

that means traveling longer distances.

Going in from Shanghai as an example, to the United States might take

about 28 days by ship, whereas by airplane it'll only take 14 hours.

But still, ships are cheaper.

A medium sized 2,000 pound box from Shenzhen, China to New York can

cost $1,200 by ocean, but it can cost $4,000 by air.

Natilus is working on getting that volume up and the costs down by

using jet fuel powered drones to autonomously fly goods long

distances, like across the ocean.

Natilus is building large-scale unmanned aircraft the size of Boeing

747s to reduce global air freight costs by 50 percent.

It will do this by using a uniquely shaped vehicle designed for cargo,

not passengers, unlike other air freight carriers.

When Boeing and Airbus design airplanes meant for passengers, whatever

falls out is what the freight aircraft looks like and they're not

really optimized on volume.

It also wants to utilize pilots more effectively. Instead

of having two pilots on one single flight, it hopes to use one pilot

managing multiple flights remotely.

There's a huge bottleneck with pilots today, which is limiting the

expansion of air freight as well as passenger freight.

But Natilus is still not ready to get its cargo drones into the air

for deliveries.

Companies like Volans-i have already started making deliveries in

places like the Bahamas, a particularly difficult area for deliveries

because of the large distances between islands.

The company's goal is to alleviate the shipping strains of high need,

expensive shipping, like when a specific part needs replacing on a

production line, and it needs to be replaced quickly since time is

money.

I started Volans-i out of a problem that I saw while working at Tesla.

So imagine the Model 3 assembly line goes down for one hour. That

costs the business hundreds of thousands of dollars, in some cases

millions of dollars.

And at that point, the companies and businesses are motivated to get

that up-time and get the line going again at any cost.

And Volans-i is trying to help with that business and with that

problem.

Other companies are trying to lighten the load of the ever critical

last-mile delivery.

That's the portion of the shipping process that gets the product from

its last warehouse or shipping hub to your door, and trying to hasten

the delivery of medical supplies and samples for testing.

Zipline has been delivering supplies in Rwanda since 2016, Ghana

since April of 2019 and is expanding its service to the U.S.

this year.

UPS has teamed up with drone startup Matternet to quickly ship

medical supplies from a North Carolina hospital to labs for testing.

I think we can use this type of system to massively improve

health care in the country.

So imagine when you have to get that lab result back, how crucial it

is to get it on time.

And with a system like this, we can deliver the samples and then the

results much faster than we can do it with the traditional

transportation methods today.

But news of these delivery drones has been flying around for years.

Prime Air, Amazon's drone delivery system, was teased back in 2013

and it still hasn't rolled out the program, though Amazon recently

announced that it will launch delivery drones within months.

We're building fully electric drones that can fly up to 15 miles and

deliver packages under five pounds to customers in under 30 minutes.

Well, the biggest thing I believe that's pacing the development of the

drone industry is regulation.

FAA regulations are still pretty strict on these autonomous flying

vehicles, and that has created a challenge for these drones.

Competition for airspace is becoming more and more heated as drones

of all sizes take to the air.

There have been some restrictions by the FAA that have restricted the

use of drones for delivery to consumer homes, and, you know, that's

something that needs to be overcome and they're continuing to work

on.

Autonomy brings a whole new set of public concerns, just as we've seen

with self-driving cars, because the public has grown to appreciate

the safety and the assurance of being able to fly from one place to

another. The regulators are hesitant to permit new technologies from

entering the airspace until they are really proven satisfactorily.

Another big concern when it comes to automation is jobs.

As you hear some of the challenges related to drones, that's one of

the things I've heard come up.

There would be this whole workforce needed to be able to manage this

drone network.

But this technology could help alleviate some of the worker shortages

that the shipping industry is facing.

I think what you're seeing today, the airline sector, for example, has

a massive pilot shortage and it's forecasted to only get worse than

the number of people that are going to be traveling by air is

expected to double over the next 15 years.

But customers, shippers and regulators all see the promise in these

autonomous flying vehicles for emergency deliveries, for incredibly

high speed home deliveries and even for large shipments of goods.

So I think that there's great opportunity here with unmanned cargo

aircraft to start proving out some of the technologies in a

lower-risk environment without people on board, and these same

technologies can eventually be introduced to the aircraft that we

will use for flying around cities to and from work.

And I'm really excited about skipping the terrestrial traffic as

well.