Increasing peak season challenges for pharma cold chain

Stephen Taylor Global Key Account Manager, Freight Forwarders
stephen.taylor@envirotainer.com

The pharmaceutical industry has for many years been a prioritized customer for the air freight sector, but the increasing volumes of e-commerce have changed the game, especially at peak season. Now, pharmaceutical companies face the risk of having their products left on the tarmac due to capacity constraints, while handbags and other luxury goods are shipped with higher-yield express delivery instead.

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The result can be lost sales, and the risks are even more pronounced for cold chain transportation of sensitive pharmaceuticals that may degrade in the meantime, or not reach patients in time. For the forwarder, failing to deliver according to schedule could lead to lost clients and loss of reputation. After all, the forwarder is expected to solve logistics problems, not create them.

Increased demands for secure transportation at year-end

For the pharmaceutical industry, the end of the year is the peak time when the companies want to ship as much as possible to have the sales included in their annual reports. They must also ensure full stocks to cover for the holidays. However, many of the companies are not fully aware of the fact that they are not that prioritized any longer but expect to have the same privileged position as before. They also expect their forwarder to be the architecture of secure transportation services and to solve all logistics issues for them, including more challenging situations such as cold chain transportation at year-end.

Cold chain transportation implies a higher risk

The increasing air freight volumes in general and the surge of e-commerce have necessitated forwarders to revise their approach, especially at peak season when air freight rates are much higher than usual. Repeatedly failing to deliver on time will be bad for the company’s reputation, and business may be lost to competitors. It may also increase the financial risks for the forwarder in terms of increased costs for rerouting, with additional challenges such as customs clearance, storage costs, and repackaging. For cold chain transportation, every change is also a risk from a temperature perspective – the more handling, the higher the risk of human errors that may lead to temperature excursions.

In the new landscape of increased freight capacity restraints, forwarders must develop new, innovative strategies and flexible logistics solutions ...

New strategies to secure transportation for pharmaceuticals

How can forwarders help pharmaceutical companies to get their products shipped at all times of the year, at an acceptable cost and acceptable risk? In the new landscape of increased freight capacity restraints, forwarders must develop new, innovative strategies and flexible logistics solutions, not least for cold chain transportation of temperature-sensitive pharmaceuticals.

Trade lane analysis

There are a few different strategies that forwarders can use to secure transportation at peak season. One is to carefully analyze different trade lanes and advise clients on which trade lanes to use to maximize the probability of products being delivered as planned. There may be benefits of temporarily switching to alternative trade lanes. In the case of cold chain transportation, the analysis must also include the choice of cold chain packaging, as well as the quality level of associated services such as ground handling. Such alternative routes may also serve during the year as a natural contingency plan, should the usual routes or airlines not be available.

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Reducing volume

Another strategy is to advise clients on how they can reduce the volume of their shipments, without compromising the quality of the cold chain. A reduced volume will increase the possibility of products being loaded and shipped according to schedule. The choice of packaging can significantly reduce or increase the total volume being shipped. In general, the large amount of insulation materials of passive packaging solutions implies a larger volume per kilogram, whereas active temperature-controlled ULD-containers can lead to much less volume being shipped. In addition, active refrigerated containers have priority over passive packaging, which are loaded together with general cargo by airlines. If cargo must be bumped off it is the general cargo pallet that will be left on the tarmac.

A container that may look expensive because of the rental fee may be a more economical and environmentally friendly solution when looking in depth at all the cost factors along the entire chain.

A Total Landed Cost calculation could be a valuable tool to compare volumes and cost. A container that may look expensive because of the rental fee may be a more economical and environmentally friendly solution when looking in depth at all the cost factors along the entire chain. In addition, the disposal of passive solutions after transport can be a challenge for pharmaceutical companies that are under pressure to reduce their environmental impact.

Becoming a trusted advisor

At first glance, reducing volume may sound like a bad idea for a forwarder, as it could reduce profits in the short term. However, if the forwarder can help clients overcome specific logistical challenges at certain times of the year, the forwarder can still have the same margin per kilogram and will be in a better position to expand the business with existing and new clients. Instead of being the partner that appears to add logistical problems, there are opportunities to be the winner: the trusted advisor or consultant that helps pharmaceutical companies secure transportation through innovative and flexible services that keep the quality of the products intact.

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