News / Integrators splash out on expansion in lucrative healthcare logistics

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The integrated express carriers are gunning for a larger slice of the healthcare logistics pie, with multi-billion-dollar investments and acquisitions in a market forecast to grow more than 9% a year through 2032.

UPS is on a shopping spree in the sector: on 26 April the integrator announced the takeover of Andlauer Healthcare Group, a Canadian specialty logistics firm, for $1.6bn. The company runs a network of 31 temperature-controlled facilities across Canada and operates healthcare transport services in the US through two trucking subsidiaries, Skelton USA and TF Boyle Transportation.

Kate Gutmann, UPS EVP and president international, healthcare and supply chain solutions, left no doubt that the acquisition was but a step in the integrator’s expansion in healthcare.

“This acquisition marks another important step in our declaration to be the number-one complex healthcare logistics and premium international logistics provider in the world,” she declared in the announcement of the deal.

In January, UPS completed the acquisition of Germany-based Frigo-Trans and sister company Biotech & Pharma Logistics, which offers temperature-controlled and time-critical healthcare transport services.

Meanwhile, in March DHL agreed to buy US pharma logistics firm Cryopdp, which provides shipping, storage and packaging services for pharmaceutical and biotech companies. According to one report, the integrator is paying a three-digit-million-euro sum.

And last month DHL revealed plans to invest $2bn in the life sciences and healthcare logistics sector through 2030. For the most part, the money will be spent on expanding cold storage capacity, setting up pharma hubs and acquiring more temperature-controlled vehicles to support critical medical shipments like clinical trials, gene therapies and vaccines.

About 40% of the investment, $860m, is earmarked for North America, while Asia Pacific and Europe-Middle East-Africa will receive 25% each, the remaining 10% planned for Latin America.

DHL is consolidating its healthcare logistics services under a new brand, DHL Health Logistics, to simplify operations for pharmaceutical, biopharma and medical customers.

In a separate move DHL last month announced an expansion of its next-day Medical Express service to Latin America with a lane that links Brazil and the US. The service facilitates transport of samples from South America and Puerto Rico to labs in the US in less than 30 hours from the time of patient draw. Dedicated customer service teams and all operational bac-office systems are integrated via the integrator’s WMX clinical trial platform.

Part of DHL’s investment expansion will focus on the rollout of new technology to give healthcare firms full visibility of their shipments.

Meanwhile, FedEx chief customer officer Brie Carere recently emphasised the importance of the FedEx Surround platform for real-time visibility in securing new healthcare business.

During an earnings call, she announced nearly $400m in new annualised revenue in the healthcare segment. In fiscal 2024, FedEx garnered over $500m in healthcare agreements involving customised procedures for critical shipments.

While the healthcare sector has seen pressure on margins, it is still significantly more lucrative than the parcel segment, where the integrators have engaged in a seemingly endless routine of surcharges to counter the impact of discounts offered to retain or attract customers.

Moreover, growth prospects in healthcare logistics look promising. According to a study from SNS Insider, the market was valued at $88.04bn in 2023 and is forecast to reach $192.81bn by 2032, showing CAGR of 9.07%. The US market is expected to grow from $26.66bn in 2023 to $57.05bn, growing at a compound annual rate of 8.79%.

For the integrators this promises ample room for growth: FedEx ended fiscal 2024 with about $9bn of revenue in healthcare logistics; UPS reported $10.5bn last year and aims for $20bn by 2026; DHL saw over €5bn ($5.41bn) from its Life Sciences and Healthcare unit last year and hopes that its $2bn investment will help generate an extra $5bn in revenue by 2030.