The UAV Services Market: Mirage Or Oasis For EHS Consultancies?

Unmanned aerial vehicles – one category in the emerging drones market – have captured the popular imagination. Whether it is the use of UAVs in sci-fi films, a multitude of innovative usage scenarios such as fishing for bass or promotion of the Amazon Prime Air package delivery service, it’s hard to ignore the rise of UAVs. Excitement about the potential for drones in commercial and industrial markets has caused firms like PwC, who offer UAV consultancy services, to size the addressable market for “drone-powered solutions” in the power and utilities industries alone at a whopping $9.46 billion. In a May 2016 report, PwC sized the addressable market for drone-powered solutions (including services, software and hardware) at $127 billion.

Participants in the UAV market need to take care in interpreting these huge forecast numbers. The $127 billion number from PwC is the assumed size of the global UAV market when all potential customers have invested in all potential usage scenarios for drones i.e. the total addressable market. By comparison, the Verdantix analysis of actual spend on UAV equipment, software and services by commercial, industrial and civil government organizations for 2018 is $631 million in the US and $322 million in Europe. Our recent assessment of some of the leading UAV service providers such as AECOM, Arcadis, ERM, FlyLogix, Golder, HAZON Solutions and Ramboll validates smaller estimates of spending. Here are some of the main insights.

Few UAV service providers have more than 50 employees in a dedicated practice group. Our research has identified approximately 40 UAV consulting / project management firms. Many of these are dedicated players like Aerialtronics, Agribotix, Cyberhawk, MEASURE and PrecisionHawk. Simple maths based on employee numbers points to total revenues for these vendors of less than $200 million in 2018.

The bulk of UAV projects involve mapping, surveying and infrastructure inspections. In fact, mapping and surveying was the only category where more than half of the UAV service providers in our study had delivered 11 or more projects in the last 12 months. In more specialist areas for UAV use, like confined space inspections, site security monitoring and maritime safety, only 2 providers had delivered more than 10 projects.

According to vendors responses in our Smart Innovators report, business models for UAV services are converging on project management, data analysis and advice on regulatory issues and safety. Few UAV service providers are making money by renting out pilots, performing maintenance on equipment or training their clients to fly drones.

How should EHS and engineering consulting firms proceed? Firstly, launch a centre of excellence for UAV services to create marketing buzz and a light organizational structure. Secondly, enhance capabilities by quickly adopting innovations for automated flight planning, drone data analytics, improved battery life and autonomous drone systems. Thirdly, acquire specialist UAV service providers – such as those focused on confined space or maritime security – to achieve critical mass and broaden the portfolio. Whilst this will definitely not be a $127 billion market in 2019, we forecast it will grow by 14% per annum over the next decade to hit $3.1 billion in 2028 in the US. This is much faster growth than the organic 2-3% growth of most EHS and engineering consulting markets. Joining the UAV caravan in search of the oasis makes sense.

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