Abstract for: Unfolding the Life Cycle Cost Dynamics for the Transition from Traditional Express Logistics to UAV-Driven Systems

China’s rapid urbanization and e-commerce growth fuel demand for express logistics, but traditional systems struggle with capacity and costs. Emerging low-altitude airspace logistics systems (LAALS), enabled by drones and eVTOLs, promise faster, flexible delivery, supported by deregulation and market needs. Yet, transitioning involves high costs, tech integration, and regulatory challenges. This study uses system dynamics to model this shift, analyze costs, and optimize LAALS integration into China’s logistics network. System dynamics is uniquely suited to address the nonlinear, feedback-driven complexities of transitioning from TELS to LAALS. The study develops a SD model to capture structural interdependencies between key variables, including cost drivers, capacity dynamics, market penetration, and feedback mechanisms. LAALS face high initial costs but promise long-term savings over TELS via reduced labor and energy use, though ground logistics costs rise temporarily. Transition options include parallel TELS-LAALS development, policy-driven subsidies for faster ROI, or demand-pulled growth in niche markets. Barriers like regulatory delays and public resistance contrast with enablers such as AI integration and battery-swapping, with success hinging on investment thresholds and coordinated reforms. For policymakers, the study highlights the need for phased airspace deregulation and targeted subsidies to incentivize early adopters. For logistics firms, hybrid models balancing TELS and LAALS investments optimize resilience during transition shocks. UAV manufacturers must prioritize cost-reduction innovations, such as modular drone designs, to align with market scalability thresholds.