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UPS has a new flight path — drone home delivery

Adam Shapiro

United Parcel Service (UPS) subsidiary Flight Forward announced new partnerships that will expand its medical drone deliveries to hospitals and begin home deliveries to CVS pharmacy customers.

Bala Ganesh, UPS’s vice president of advanced technology, said more partnerships are coming. “We have engaged the afterburners,” he said. “Now that we have gotten regulatory approvals you are going to see these announcements flying fast and furious in the near future.”

Google’s Wing, a drone competitor of UPS owned by Alphabet (GOOGL), began delivering medical products to homes last week from a Walgreens in Christiansburg, Virginia. It’s a limited test program that operates within a four-mile radius. Wing has also partnered with FedEx (FDX) for eventual parcel package delivery.

Ganesh said UPS Flight Forward has already flown more than 1,000 revenue generating flights since last March as part of its hospital campus delivery program at WakeMed in Raleigh, NC. UPS just announced the University of Utah Health Network in Salt Lake will soon begin a similar program this quarter.

“We are in the final steps of signing up additional hospitals and will be announcing them in the near future as time goes on,” Ganesh said, adding conversations with as many as 40 hospital systems are underway.

A drone, made by CyPhy Works, stands over the UPS package it carried to Children's Island off the coast of Beverly, Massachusetts, U.S. September 22, 2016, during UPS's demonstration of a drone making a commercial delivery of a package to a remote or difficult-to-access location. Picture taken September 22, 2016. REUTERS/Brian Snyder
A drone, made by CyPhy Works, stands over the UPS package it carried to Children's Island off the coast of Beverly, Massachusetts, U.S. September 22, 2016.

Drone delivery home run test

UPS plans to announce in the coming weeks which locations in the United States will be eligible to receive pharmacy deliveries from CVS.

“What we are doing is laying the foundation for two things, one is moving the final mile from two dimensions to three dimensions and secondly making sure we can serve the customer and the patient at the appropriate time and when both of those happen, we are going to be in more locations serving more customers doing more use cases,” Ganesh said.

CVS Pharmacy President Kevin Hourican was quoted in a UPS press release saying, “We’re always looking to improve convenience for customers through faster lower and more efficient delivery models.” But UPS has not announced pricing or who will pay for the delivery, CVS or the customer.

“I can definitely see a world of ubiquitous UAVs (unmanned aerial vehicle) and drones launching from various locations in the neighborhoods,” Ganesh said.

Ganesh likes to remind people it took more than 20 years for the first 1 million homes to be wired for old-fashioned landline telephones, and just a few years for 1 billion customers to sign up for smartphones.

“That’s the kind of exponential acceleration I am talking about,” Ganesh said as he predicts drone home delivery will move at a fast pace. “And we are in the middle of that and we are leading that,” Ganesh said.

But the FAA continues to restrict residential drone deliveries to test programs like the one Wing is flying in Virginia.

Ganesh said things are being figured out on the fly but that doesn’t mean they aren’t figuring it out. “And we are doing something, building a path that nobody has done through today, nobody,” he said.

Adam Shapiro is co-anchor of Yahoo Finance On the Move.

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