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Pharmaceutical shippers have urged airlines to become more reliable, in a good-natured discussion at the Life Science and Pharmaceuticals conference this morning in London.

Global category leader for AstraZeneca, Julian Wann, said that by the end of next year the pharma company would be sending 70% of its volumes by sea, while this year it was 44%.

Mr Wann admitted that with air freight 78% more expensive per kilo than sea, it was partly a price-related decision – but he argued that the complexity of the air cargo supply chain meant that in some cases air freight was less secure and had higher risks.

“It’s not all about price – it’s about getting there,” he said. “The value is in having the right product at the right place at the right time – and the highest percentage of our problems come from air freight.”

Of all the ‘excursions’ – ie, when shipments are not treated correctly – 80% occurred in air freight, 1% on ocean and 18% by road, he said.

“There are gaps on the tarmac at the airport. And security is a problem – products get stolen at airports, and if they get into the wrong hands, people can die – and they are our products. Security is massive for us. If it goes wrong, relying on insurance is not really the point.”

AstraZeneca last year changed the way it organises its supply chain, he said, to focus on the issues of velocity, visibility and variability. “Price is not the driving factor. Ocean gives us reliability that we didn’t have before.

“Velocity doesn’t mean let’s fly it everywhere. If we become more efficient we can plan sea freight. There is no damage, and it helps us drive velocity.

“It’s important for the air freight industry to understand that flying is not always quicker,” he argued, noting that excursions could hold up the process.

“We will always require air freight, but we want guarantees that for the additional cost, it will work.”

He also called for closer co-operation with airlines.

“This is an opportunity for the airline industry to get closer to forwarders, and closer to us. Forwarders are working very hard to support us.”

Airlines, however, responded that some forwarders did always not give them sufficient shipment information.

One airline executive said that in some RFQs, quality was secondary to rates. “We don’t even speak about it – the forwarder doesn’t always give us the information. It’s good you say we need to assess our quality – but don’t put everyone in the same basket.”

Andrea Gruber, senior manager for special cargo at IATA, said it was up to the shipper and the forwarder to bring the relevant parties together.

“Historically, airlines haven’t wanted to approach the shipper. But the ground handler also needs to be involved and the freight forwarder needs to get the right people together.”

Another airline noted that AstraZeneca was known as a “general cargo shipper” and asked whether more excursions occurred when shippers did not pay for the specialised pharmaceutical products offered by the airlines.

Mr Wann responded that the company did use some specialised products, but questioned the paying for the additional cost every time.

“The pharma services we see don’t always give us the protection we would like. We don’t always have to spend that. We can get it right without. And we want certainty for that extra cost.”

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  • Michael Morey

    December 15, 2014 at 5:14 pm

    We will be holding a session with the Cool Chain association in Amsterdam to be held in January for a workshop on better understanding of the IATA MOP and the process flow through the whole supply chain. I believe this is something that merits particular attention and offers a great opportunity to review all the key milestones and handoffs between shippers, forwarders and carriers as well as involvement from airports and truckers in the supply chain.
    By developing an overlay specific to Pharma, we would have a very strong platform to develop detailed requirements and expectations from each participant.
    Air freight is more than viable as a solution to moving pharmaceuticals and could and will be enhanced. All we need is the will to sit down and do it.

  • Dave Ambridge

    December 16, 2014 at 2:50 am

    Mike that’s good news. In my opinion something as sensitive as PHARMA needs to move only in Temperature Controlled ULD’s. Just loading them on PMC’s and hoping really is not the answer the industry needs. If we can do this at reasonable cost we may have a chance of getting PHARMA back in the air and off the sea!

  • Peter Lockett

    December 16, 2014 at 8:58 am

    All supply chain routes have risks, including sea – all shippers want to specify reefers less than 5 years old, there is limited supply – reefers are unplugged for 4-12 hrs at each port, creating excursions and temperature instability – disadvantages of inventory time lag etc.

    We hear a lot of blame in the industry – but we also see a lot of good!

    Where companies are getting it right, there is a lot of effort and investment in positive communication, training, robust and disciplined operating procedures, follow up.

    However, the key to success in most cases is whole hearted partner co-operation between shipper, forwarder, airline and ground handling. There may be a little more cost in time and budget, but the rewards are low/no excursions, on-time deliveries and ease of business relationships. Very gratifying.

  • Steve fullicks

    December 17, 2014 at 7:43 pm

    Interesting comments but the manufacturers need to employ people that really understand shipping.

    Airlines have always failed because of the ground staff and their inexperience.

    • Michael Morey

      December 18, 2014 at 2:31 pm

      It’s almost impossible to expect pharma industry to have the expertise in shipping, nor the air cargo industry to have the same level of expertise in pharmaceuticals. However, it is possible to establish a very clear and relevant business process specific to each participant in the supply chain to follow.

    • stavros

      December 19, 2014 at 11:38 pm

      what makes you think that airlines failed, and what makes you think airlines are inexperience?

  • Michael Morey

    December 22, 2014 at 8:52 pm

    I don’t believe the airlines failed at all. We just happen to be the part of the supply chain where any failures that occured along the line become evident, so naturally it is perceived as an airline problem. It isn’t. This is the reason we need to have a very frank conversation about who does what and how we hand over to the next participant in the supply chain.

  • J. Rill

    December 30, 2014 at 3:22 pm

    I had the chance to be part of the IATA workshop at Schiphol on 17-12-14 over CEIV. There is a lot of energy going into solving the issue around risks in airfreight. We got to see very interesting presentations on what is done and why. Also look here: http://www.iata.org/publications/tracker/july-2014/Pages/ceiv-pharma.aspx
    Initiatives like this will make the airlines/airports more attractive, so interesting for me is the precise share of price policy. Shanghai is one of the Airport that took part at the CEIV certification. Data on how this has influenced the amount of pharma cargo going via Airfreight is coming out soon and I consider it very interesting. Brüssel is also very advanced when it comes to CEIV.
    I also learned that packaging is indeed something for producers of pharma to look into. Simple things like a white box in place of a brown box make a difference. Bart Pouwels at Schiphol or Andrea Gruber at IATA may share their presentations around this subject.