4 Startups Logistics Giants Have Tapped for Sustainable Aviation

  • Logistics giants are looking to use electric aircraft to help meet their sustainability goals.
  • Electric aircraft startups have seen a rush of funding in the last two years as some near takeoff.
  • Amazon, FedEx, and UPS are betting these four startups will be the future of cargo deliveries.

Just as UPS, FedEx, and Amazon are racking up electric van orders, they are also looking to the skies for the emissions reductions they need to meet the sustainability goals they’ve proudly proclaimed. But reducing emissions in the air is going to take a lot longer than on the road.

“I do not think we’re in the first inning. We are in spring training for passenger electric aircraft,” Kristine Liwag, head of Morgan Stanley’s aerospace and defense practice, told Insider.

Battery technology is decades away from replacing ocean-hopping cargo jets, but it is good enough to power small aircraft like electric vertical takeoff and landing vehicles (eVTOLs). This new breed of aircraft can haul up to 1,500 pounds for a few hundred miles, although they’re still waiting on certification from the FAA. Still, the country’s logistics giants have taken notice.

In the last 18 months, FedEx and Amazon have made investments in electric cargo aircraft companies. FedEx, UPS, DHL, and AYR Logistics have all signed purchase agreements for eVTOLs or other types of electric aircraft to use for cargo deliveries. Amazon has invested in multiple companies working to create alternative aircraft fuel.

Investing in eVTOL tech now is a hedge against a series of trends that will demand changes to today’s logistics business, Bala Ganesh, vice president for engineering at UPS, told Insider last year. “There’s hyper urbanization, there’s going to be restrictions of internal combustion vehicles in urban areas, there’s going to be traffic congestion and thereby, maybe even congestion pricing of what can come in or not in the cities,” he said.

Although the partnerships between carriers and aircraft startups are just agreements to one day purchase the aircraft, it is becoming clear to some industry analysts that the eVTOL industry players aimed at logistics may get off the ground before those focused on passenger flights.

“You have a ready customer base that can start deploying these use cases of eVTOLs, versus for passenger, it is necessary to create a new market,” Andres Mendoza Pena, a transportation analyst at global management consulting firm Kearney, told Insider.

A recent string of SPAC deals and ample venture funding have given many eVTOL companies the capital they need to develop their aircraft over the next few years, and work toward getting the necessary certifications to start deliveries, Liwag said.

Experts expect these early models to make a significant impact in parcel networks, particularly in rural areas, according to Ravi Shanker, a transportation analyst at Morgan Stanley. And once these aircraft can carry payloads in excess of 1,000 pounds, they’re likely to attract interest from all kinds of logistics players, including trucking firms, he said.

These are the early deals in what experts expect to be a long journey into more sustainable aviation.

FedEx & Elroy Air

An Elroy Air electric cargo plane flies above an highway and a FedEx warehouse.

FedEx Express plans to test Elroy Air’s Chaparral autonomous air cargo system moving shipments between sortation centers.

FedEx


FedEx Express teamed up with Elroy Air in March, agreeing to test Elroy’s autonomous cargo eVTOL in the “middle mile,” moving shipments between sortation centers.

The San Francisco-based startup says its mission is to “enable same-day shipping to every person on the planet.” It unveiled its Chaparral eVTOL, designed to carry 300 to 500 pounds of cargo over a 300-mile range, at the end of January. The startup was founded in 2016 and has raised $ 56 million so far, according to Crunchbase. According to Elroy Air, the Chaparral can “deposit cargo, pick up another load, and take-off again, all in just a few minutes and without operator interaction.” Test flights are set to kick off in 2023.

UPS & Beta Technologies

Beta Technologies eVTOL UPS

A rendering of Beta Technologies’ eVTOL aircraft.

UPS


UPS said in April 2021 it plans to purchase 10 cargo-carrying eVTOLs from Vermont-based Beta Technologies, through its UPS Flight Forward subsidiary, with the option for up to 140 more. The logistics giant plans to use the eVTOLs at its facilities to reduce time-in-transit, vehicle emissions, and operating costs in small and mid-size markets.

Beta’s eVTOL, called the ALIA, has a 1,400 pound cargo capacity and a 250-mile range, and can fly at up to 170 mph. It can recharge in an hour or less and produces zero operational emissions. The startup was founded in 2017 and has raised $ 886 million, according to Crunchbase.

UPS plans to use Beta’s aircraft for time-sensitive deliveries that would otherwise fly on small fixed-wing aircraft. Replacing Cessnas with eVTOLs, which can take off from almost anywhere and land on UPS facility grounds, means skipping several rounds of loading and unloading and at least one truck trip – not to mention the aircraft emissions.

“The neat thing about a point-to-point aircraft is that you get to omit a lot of those handoff points,” Founder and CEO Kyle Clark told Insider last year.

UPS also reserved Beta’s eVTOL recharging station, which can also be used to charge the company’s fleet of EVs. Beta plans to start delivering the first 10 eVTOLs in 2024.

Amazon & Beta Technologies

Kyle Clark, CEO of

Kyle Clark, CEO of Beta Technologies

Beta Technologies


In 2021, Beta also landed an investment from Amazon’s $ 2 billion Climate Pledge Fund, part of its commitment to reach net-zero carbon emissions by 2040.

“The development of sustainable and decarbonizing technologies will help facilitate the transition to a low-carbon economy and protect the planet for future generations,” Kara Hurst, Amazon’s vice president and head of worldwide sustainability, said in a statement.the investment.

The investment was part of a $ 368 million funding round for Beta, led by Amazon’s Climate Fund and Fidelity, which took the eVTOL startup to unicorn status, according to CNBC. Amazon has not yet agreed to buy any aircraft.

DHL Express & Eviation

An electric plane with DHL branding flies above clouds.

DHL was the first to order 12 electric Alice eCargo planes from Eviation.

Eviation


In August 2021, DHL Express agreed to buy 12 fully electric cargo plans from Arlington, Washington-based startup Eviation. DHL plans to use the aircraft, called the Alice, to create an electric Express network that operates in all environments currently served by piston and turbine aircraft.

“We firmly believe in a future with zero-emission logistics,” John Pearson, CEO of DHL Express, said in a press release. “Therefore, our investments always follow the objective of improving our carbon footprint.”

The Alice cargo plane can carry 2,600 pounds and has a range of just over 500 miles. It takes 30 minutes or less to charge per flight, and can be plugged in during loading and unloading, according to DHL. Because its motors have relatively few moving parts, DHL says the aircraft will reduce maintenance costs.

Eviation was founded in 2015 and acquired by Singapore-based Clermont Group in 2019. It expects to deliver the first Alice aircraft to DHL in 2024. The logistics company is investing nearly $ 7.5 billion by 2030 to reduce its carbon emissions.

Amazon & ZeroAvia

ZeroAvia's world's first hydrogen-electric passenger plane flight

The world’s first hydrogen-electric passenger plane flight.

ZeroAvia



Another beneficiary of Amazon’s Climate Pledge Fund, ZeroAvia is developing a hydrogen-electric propulsion system to be retrofitted into existing fixed-wing aircraft. Based in Hollister, California, the startup plans to have the first commercial hydrogen-electric aircraft ready for operation in 2024, and a 200-plus seat aircraft ready by 2040.

Amazon invested in ZeroAvia in December 2020, saying the startup’s powertrain “has real potential to help decarbonize the aviation sector.” ZeroAvia was founded in 2017 and has raised $ 110 million to date.

AYR Logistics & Elroy Air

Elroy Air

AYR plans to use the Chaparral eVTOLs for delivering food, shelter, medical supplies, vaccines, and equipment to those in need.

Elroy Air



Humanitarian logistics provider AYR Logistics agreed in November 2021 to buy up to 100 Chaparral eVTOLs from Elroy Air.

Stephen Lyons, chief development officer at AYR, said the Chaparral is ideal for operating in remote locations with minimal infrastructure or ground support. The company plans to use the eVTOLs for delivering food, shelter, medical supplies, vaccines, and equipment to those in need.

“Our aircraft need to operate in incredibly challenging and austere conditions, frequently without basic airport infrastructure, so we are very particular about the equipment we use,” AYR CEO Serge Sergeef said in a press release. “For us, these Cargo-UAVs are heralding a new era in logistics and will undoubtedly become the new workhorse for humanitarian agencies.”

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