This made UPS the first major transportation carrier to test out this type of delivery on U.S. soil, CNBC's Morgan Brennan reported on Friday morning's "Squawk Box."
UPS set up a delivery scenario where it needed to deliver an inhaler to a child at day camp on a remote island, Brennan said. The mission was a three-mile or eight-minute journey to Children's Island.
The drone delivery was conducted by Massachusetts-based drone maker CyPhy, in which UPS owns a stake.
"Analysts say drone technology is key as consumers continue to buy more and more online and do so with faster and faster delivery expectations," Morgan pointed out.
While the technology is advanced, the cost is as low as five cents per mile, UPS VP of Engineering John Dodero said in an interview with CNBC.
When UPS rolls out its drone delivery system, it will probably not replace delivery vans completely, noted TechCrunch senior writer Darrell Etherington on the show. Instead, a centralized van would drive slowly through the streets while drones took off from the van to deliver packages to individual doorsteps, he explained.
"But you could see how that would actually maximize efficiency a lot since you wouldn't have to continually stop and get out and then back in," Etherington explained.
The competition in the drone delivery sector is heating up, with Amazon.com (AMZN) testing its Prime Air drones in the U.K., DHL (DPSGY) using its parcel helicopter in Germany, and Alphabet's (GOOGL) Google teaming up with Chipotle (CMG) to deliver burritos at Virginia Tech's campus, she noted.
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TheStreet Ratings team rates UPS as a Buy with a ratings score of A. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that the team rates.
You can view the full analysis from the report here: UPS