Since the Covid-19 pandemic, we have seen businesses in all industries adapt their ways of working to remain profitable - and the pharmaceutical industry is no different. Shippers are increasingly enquiring about alternative transport options, like sea or ocean shipping, to reduce the impact of freight costs on their bottom line even with air cargo rates falling.
But can ocean freight be regarded as a transportation method that can match air freight on equal terms? Ocean freight is regarded by some as a less costly, more reliable, and more environmentally friendly choice than air freight. However, in reality the opposite might be just as true – ocean freight can be unpredictable, expensive, and dirty, as evidenced by the recent regulatory changes implemented in January 2023. Here is what you need to know about ocean freight to make the right choice of transportation for your temperature sensitive pharmaceuticals.
Ocean and air freight are facing the same challenges
Like air freight, ocean freight can be delayed due to a range of reasons, the same reasons in fact as air freight – bad weather conditions, strikes, traffic congestion at the port, labor strikes and customs delays. 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 ocean freight, delays are often counted in terms of days, not hours. Recent data shows that while congestion at major ports is slowly reducing, levels haven’t yet returned to pre-pandemic levels.
Recent data shows that while congestion at major ports is slowly reducing, levels haven’t yet returned to pre-pandemic levels
All aspects taken together; air freight is usually regarded as more reliable than ocean freight. Whether the best choice is ocean or air depends on the risk profile of the product. For temperature-sensitive pharmaceuticals, shipping by air freight in an active temperature-controlled solution is by far the safer alternative. It is hard to achieve any kind of quality innovation or quality improvement by choosing ocean 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 ocean.
The reality of the carbon footprint
When making a straight comparison between air and ocean freight, it is easy to say that air freight emits more carbon dioxide. However, in reality, the picture is much more complex.
Pharmaceutical manufacturer Sanofi has previously 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% - with similar stories from many other manufacturers. As current transportation volumes only make 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. Likewise, should the products become damaged during transport and become unusable, carbon emissions will increase exponentially as the products have to be discarded and a new shipment manufactured and sent. For sensitive pharmaceuticals, shipping by air freight in an active temperature-controlled solution is therefore the most environmentally friendly choice as it is the safest alternative.
As many temperature sensitive products have a short shelf life, shipping by ocean becomes an additional challenge as this can be shortened substantially due to potentially weeks of transport. This means that shelf life should always be a major factor in deciding the best transportation method. Looking at the whole picture, for sensitive pharmaceuticals and/or products with a short shelf life, air freight in an active temperature-controlled solution could, in fact have the smallest carbon footprint.
Should products become damaged during transport and become unusable, CO2 emissions will increase exponentially as the products have to be discarded and a new shipment manufactured and sent
New regulations targeting the efficiency and carbon emissions of ships came into effect on January 1, 2023. These regulations have introduced mandatory reductions in carbon emissions for both new and existing ships and will be the next chapter in the green transformation of international shipping.
But similar to greener air freight, these changes come at a cost. Ship owners and operators will need to make investments into more energy-efficient measures and technologies to comply with these new requirements. They may also face new restrictions on their operations, such as limits on speed or the use of older vessels.
A total cost analysis for better comparison between air and ocean
Usually, ocean freight is less costly than air freight. For smaller shipments, however, air freight can work out to be cheaper. For a thorough comparison, a total cost analysis should be made for all costs involved for each alternative and compared. There are different measurements for calculating the cost for each transport mode – air, ocean, and road. As space is limited in an aircraft, goods will be priced according to a specific formula for air transport. For road and ocean respectively, the formula looks different.
You must also consider the cost of capital. As mentioned before, long ocean transports are not suitable for products with a short shelf life, especially as ocean 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 ocean 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.
The right choice depends on many factors – the risk profile of the product, shelf life, warehousing, and cost of goods among other things.
Making a choice
The choice between air and ocean 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. The most cost-efficient transport alternative, and the most environmentally friendly, is to ensure that products are delivered intact and on schedule.