Port strikes would expose airfreight's vulnerability to a 'capacity crisis'
Concern is mounting over the impact of looming US east and Gulf coast port strikes ...
AMZN: APPEAL UPDATEDSV: PRESSURE BUILDS AAPL: OPENAI FUNDING INTERESTCHRW: ANOTHER INSIDER CASHES INHLAG: GRI DISCLOSUREMAERSK: HOVERING AROUND FOUR-MONTH LOWSTSLA: CHINA COMPETITIONDHL: BOLT-ON DEAL TALKAMZN: NEW ZEALAND PROJECTDHL: SURCHARGE RISKKNIN: LEGAL RISKF: 'DEI' HURDLESPLD: RATING UPDATEXOM: DISPOSALS
AMZN: APPEAL UPDATEDSV: PRESSURE BUILDS AAPL: OPENAI FUNDING INTERESTCHRW: ANOTHER INSIDER CASHES INHLAG: GRI DISCLOSUREMAERSK: HOVERING AROUND FOUR-MONTH LOWSTSLA: CHINA COMPETITIONDHL: BOLT-ON DEAL TALKAMZN: NEW ZEALAND PROJECTDHL: SURCHARGE RISKKNIN: LEGAL RISKF: 'DEI' HURDLESPLD: RATING UPDATEXOM: DISPOSALS
The PPE crisis taught – the hard way – both governments and logistics providers as sourcing, pricing and distribution caught everyone offguard.
But those lessons appear to have been learned: companies and governments are now looking at potential arrangements for vaccines, if and when they appear.
DHL today, in partnership with MacKinsey, released a white paper, Delivering Pandemic Resilience, looking at the task in hand – which is a big one, with potential to severely disrupt if badly planned.
First, there are currently some 250 candidates vying to provide a Covid-19 vaccine. They are based on differing platforms, in different countries – and with various likelihoods of success.
Of course, different types of vaccine will require differing temperature, storage and transport requirements – exacerbating planning problems.
Projected timelines for distribution also vary widely. Some, under Emergency Use Authorisation (EUA), are due in some form as early as this month. Russia’s candidate – Sputnik V – will be ready, claim its authorities, for mass use in October, an “unprecedented” timeline, says DHL.
With less examination and testing than normal, it usually requires between five and 20 years to approve such a vaccine, the requirement of each drug will be harder to discover, while earlier forms can be more unstable, leading to even more stringent conditions being imposed.
“Under non-pandemic conditions, sufficient time is devoted to testing and developing vaccine stability, which is key to determining the environmental conditions under which the vaccine can be transported and stored…,” says the DHL paper.
“In the current pandemic, however, researchers are focusing on safety and efficacy, and are seeking EUAs and fast-track approvals for their vaccines to put them to use as quickly as possible.
“When vaccines enter the market for emergency use (potentially as early as Q4), a potential lack of stability data might mean stricter temperature requirements for the vaccine supply chain.”
The requirements could be lifted as more is learned, or additional manufacturing steps are added to boost stability. As DHL notes: “Health authorities, producers and logistics providers would strongly prefer to begin large-scale transport and distribution under the conditions prevalent in pharmaceutical supply chains today (2-8°C or even higher) as long as stability is not compromised.”
Even at prevalent temperature ranges, however, logistics will be a challenge. The sheer volume needed will involve scalable manufacturing and manageable distribution.
It is widely expected that over longer distances vaccines will be moved by air, with DHL predicting 200,000 pallet movements on 15,000 flights, for two years’ worth of coverage.
DHL noted: “In downstream distribution, accommodating the stringent temperature requirements will be even more challenging, though for a different reason.
“First, the sheer number of shipments – imagine almost 15m cooling boxes in an exemplary supply chain – paired with the required volume of cooling bricks or dry ice. Dry ice production does not seem to be a bottleneck for vaccine distribution. But even under aggressive assumptions, both the availability of suitable packaging as well as the maximum-allowed quantities of dry ice in air cargo transport could potentially limit shipment possibilities in certain cases if the preparations are not made in time.”
And, as any pharmaceutical shipper knows, consistency will be crucial.
“Ensuring consistent temperature management (in a way that avoids damage to the precious shipments throughout the last-mile network) is much more complex for some 50 boxes/parcels than it is for one pallet shipper.
“Third, the physical handling of ultra-deep-frozen shipments requires special equipment (such as gloves) and processes to avoid injury. This means that a large number of couriers and consignees need to be informed or even trained.”
And then there is geographic reach. While about 25 countries have advanced logistics systems, and are home to about one-third of the world’s population, “large parts of Africa, South America and Asia could not be readily supplied at scale, due to lack of cold chain logistics capacity suitable for life science products.
“Governments and NGOs would need to implement special measures to ensure vaccine distribution. Capacity would have to be increased and scaled in order to reach the global population,” said DHL.
As with PPE, different countries have been affected at different times, and ‘hot spots’ will appear in an ad hoc way, confounding forecasting demand. But DHL said there were ways to help identify demand beforehand, such as developing monitoring systems for infection rates.
Governments should also create a safety stock of supplies in advance – and pre-negotiate prices to reduce volatility and improve supply chain reliability, one of the big failings of the PPE peak.
The rush of PPE earlier in the year was helpful in outlining some of the many challenges at hand, noted DHL, citing Customs clearance as one example.
“Amid the Covid crisis, governments responded by relaxing custom clearance procedures (to varying degrees) in order to accelerate distribution to end users. As a result, things like supplier certification and product quality were not adequately verified. With less experienced and reliable actors suddenly appearing on the market in this “gold rush” environment, it was quite common to find large amounts of product that was insufficient in terms of quality, or even counterfeit.”
DHL also noted that warehouses, not designed for medical products, were nevertheless used, sometimes resulting in damaged supplies.
“Moreover, products shipped on a push-based approach from various suppliers lacked standardisation in terms of stock-keeping unit (SKU) formats and shipment information, which also led to inefficient warehousing operations. Second, limited real-time transparency on warehouse stock levels significantly limited options for orchestrating an effective last-mile delivery network. This also made it difficult to make reliable promises to end users and created friction in planning processes.”
Frank Appel, chief executive of DHL, added: “Vaccines are in development, but their ability to end this pandemic depends on an effective supply chain that can connect diverse production locations to the public.
“The Covid-19 pandemic will eventually be behind us. However, the question is not if but when the next large-scale health crisis will come around. By acting now – with informed planning, teamwork and effective partnerships – we can put ourselves in a better position than ever before.”
You can download the DHL white paper here.
Next: Vaccines and the air freight conundrum
Comment on this article
Warren Willey
September 04, 2020 at 11:46 amIt’s great that scientists are trying to make a vaccine against coronavirus. Maybe the American vaccine will save the world. However, it is very important to make sure that it is safe. Many people are allergic to many drugs and their components. Therefore, it is important to create a universal vaccine that will not cause an allergic reaction. Unfortunately, it takes years of experimentation and testing to create such a vaccine :(. I say this as a doctor.
In addition, morbidity statistics around the world need to be monitored at all times to avoid deterioration.