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Can sea freight be regarded as quality innovation that can match air freight on equal terms? In the last years, sea freight has surfaced as an option for transport of sensitive pharmaceuticals. Sea freight is by some regarded as a less costly, more reliable and more environmentally friendly choice than air freight. However, in reality the opposite might be just as true – sea freight can be unpredictable, expensive and dirty, evidenced by the new sulphur regulations, IMO 2020, coming into effect January 1st, 2020, forcing the marine sector to reduce sulphur emissions by over 80%. This is what you need to know about sea freight in order to make the right choice of transportation for sensitive pharmaceuticals.
Sea and air freight are facing the same obstacles
Similar to air freight, sea freight can be delayed due to a range of different reasons, the same reasons in fact as air freight – bad weather conditions, strikes, traffic congestion at the harbor, labor strikes and documentation difficulties at customs clearance. Flights usually go according to schedule and in case of delays, shipments can be rerouted or rescheduled to a later flight most commonly the same day. When it comes to sea freight, delays usually count in days. In addition, unlike flights, ships are often off schedule. Switching to sea freight is thus not necessarily a good choice in terms of quality improvement or quality innovation.
All aspects taken together, air freight is usually regarded as more reliable than sea freight. Whether the best choice is sea or air depends on the risk profile of the product. For temperature-sensitive pharmaceuticals, air freight is by far the safer alternative. It is hard to achieve any kind of quality innovation or quality improvement by choosing sea freight for the increasing volumes of new, specialized and sensitive products such as biologicals or biosimilars that are entering the market. For more mature products that are less sensitive it could be an option, depending on the cost for the different alternatives. A total cost analysis could give an indication if it is worth the risk of transporting the products by sea.
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Quality improvement of transport in regard to carbon footprint
When making a straight comparison between air and sea freight, air freight emits more carbon dioxide. However, in reality, the picture is much more complex and it could just as well be the other way around.
Pharmaceutical giant GlaxoSmithKline, GSK has calculated that transportation only made up about 3% of the company’s total carbon emissions in 2016. Likewise, Sanofi has calculated that upstream and downstream transportation constitutes 6.7% of the company’s total emissions of greenhouse gases and Sanofi’s own vehicle fleet for another 1.4%. As transportation only makes up such a small part of the total carbon emissions of the value chain of a pharmaceutical, it becomes clear that the most environmentally friendly option is to ensure a speedy and safe delivery of the products. Should the products become damaged during transport and become unsellable, carbon emissions will increase exponentially as the products have to be discarded and exchanged to new ones. For sensitive pharmaceuticals, air freight is therefore the most environmentally friendly choice as it is the safest alternative.
Should the products become damaged during transport and become unsellable, carbon emissions will increase exponentially as the products have to be discarded and exchanged to new ones.
Also lengthy shipments by sea can make the products unsellable, as many sensitive products have a short shelf life and pharmacies might not be willing to accept products when the remaining shelf life has been shortened substantially due to weeks of transport by sea. Looking at the whole picture, for sensitive pharmaceuticals and/or products with a short shelf life, air freight could in other words have the smallest carbon footprint.
A total cost analysis for better comparison between air and sea
Usually, sea freight is less costly than air freight. For smaller shipments, however, air freight can come out as cheaper. For a thorough comparison, a total cost analysis can be made where all costs involved for each alternative are calculated and compared. There are different measurements for calculating the cost for each transport mode – air, sea and road. As space is limited in an aircraft, goods will be priced according to a specific formula for air transport. For road and sea respectively, the formula looks different. More important when comparing air and sea transport is that for sea freight, when shipping less than a container, the cost is calculated in cubic meters. If your shipment is small, air transport might in fact cost you less. It could also still be more expensive, but with a smaller difference between the two, you might prefer the safest alternative, which, for sensitive products, is air freight.
Another thing that must be taken into account is the cost of capital. As mentioned before, long sea transports are not suitable for products with a short shelf life, especially as sea freight is more prone to delays. A product with four months’ shelf life that is being stuck for weeks on a cargo ship will not be so attractive for pharmacies to stock. In addition, lengthy transports will delay sales, thereby binding up capital that could be put to other use. Thus, whether sea or air is the better choice depends on many factors – the risk profile of the product, shelf life, warehousing at the airport/seaport and cost of goods (capital bound up in transport) among other things. Cost of capital could also be part of a total cost analysis.
Quality improvement and cost reduction by ensuring safe transport
The choice between air and sea freight is often more complicated than one might think. Transporting pharmaceuticals is always a balance between cost and quality. For costs, a total cost analysis could give more insights. Regarding quality improvement and innovation – for the healthcare sector, quality innovation is an ongoing process but for transport, quality innovation rather takes place in other areas such as new technologies for tracking shipments. To summarize, the most cost-efficient transport alternative, and also the most environmentally friendly, is to ensure that products are delivered intact on schedule, as transport make up such a small part of the pharmaceutical value chain.