Dive Brief:

• UPS is working with CyPhy Works to test drones for both routine package delivery and time-critical delivery to remote locations.

• UPS and CyPhy completed their first test flight late last week, the Wall Street Journal reports. The companies staged a mock delivery of urgently needed medicine from Beverly, MA to Children’s Island, which is about three miles off the Atlantic coast and reachable only by air or water.

• The test spotlights CyPhy’s Persistent Aerial Reconnaissance and Communications (PARC) system, a battery-powered drone that flies itself, so very little user training is required, according to UPS. The PARC system also touts durability as well as secure communications that cannot be intercepted or disrupted.

Dive Insight:

The test carried out last week comes almost a year after UPS invested in CyPhy Works while its drone equipment was still in the early development stage. It also comes just a few weeks after the first set of commercial drone regulations from the Federal Aviation Administration, though the FAA still has not outlined plans for further rules that would affect most drone package delivery applications occurring out of the line of sight of a drone operator.

Sufficed to say, UPS likely has a lot of time to test drones and figure out if or when (and how) it wants to craft a broader strategy for using drones in its delivery operations. From reports on last week's test, it sounds like it was the first test of more to come.

As we have noted time and again, UPS is facing some interesting new competitive threats throughout the world, on a global, regional and local level, and most notably from the likes of Amazon. It also is coming face-to-face with new technological innovations and business model evolutions in the delivery ecosystem.

Based on recent conversations with UPS executives, it appears that the company is not rushing to defend itself from these potential threats, but instead is taking a calm, wait-and-see approach that in part involves in investing in new logistics and delivery concepts to study how UPS might be impacted by them in the future — as well as how UPS can leverage these innovations in the future. Its investment earlier this year in same-day delivery operator Deliv is one example of that approach, and its investment in CyPhy is another.

Many companies are now testing drones — Google and 7-Eleven, in addition to Amazon, for starters — but with the snail's pace of regulations and concerns about ensuring safety, it probably will be quite a while before drone delivery becomes a broad commercial reality, at least in the U.S. Still, UPS, instead of sticking its head in the sand, is sticking it up in the air, checking out what drones might be able to do for the company, and keeping pace with other companies that appear to be very ambitious about delivery by drone.