@theloadstar pharmaceutical logistics

LongRead – Vol 8 – July 2017 1

LongRead Vol 8

Writers: Alex Lennane & Ian Putzger

Research: Dig WorldwideProduction: David Badger

Design: Alison Rolph

©The Loadstar Media Ltd 2017

5 Morocco St, London SE1 3HB

www.theloadstar.co.uk@TheLoadstar

Inside

Training

Mobile health

Pharmaceuticals by sea

CEIV

PharmaceuticalLogistics

A new flu vaccine is coming on themarket. It requires no injection, is asimple sticking plaster – but mostimportantly, it has no need forrefrigeration, and can be stored at anambient temperature for up to a year.

This development could havesignificant implications forpharmaceutical logistics, a sectordominated by regulations andrequirements. And that, of course,

means it is also a sector with highcosts for shippers – and high yields forthose logistics providers which canmeet all the rules.

What’s more, it is also a sector whichis growing and becoming increasinglycompetitive across all transportmodes.

Pharma freighters, drones, acornucopia of new monitoring devices,

It’s a growing and profitable sector, but constantly changing regulations, stricttemperature control, strong competition and new technologies means logisticsproviders must keep up, and stay close to the shippers

as well as the looming spectre ofAmazon breaking into the market aremarking the battle zones for thepharma logistics market. It is givingrise to a broad arsenal of tactics, toolsand speculation, as an ever-growingnumber of carriers and logisticsproviders vie for a piece of the action.

It is easy to see why. Last Septembermarket research firm Evaluate Pharmaprojected a global growth rate of 6.3%CAGR for the global pharma industrythrough 2022 to reach $1.12 trillion inprescription drug sales.

“The anticipated rate of growthexceeds all other segments,” saysAmeet Sareen, general sales manager,product business development cargoat Air Canada. The airline has enjoyeddouble-digit growth in this sector in thepast three years.

But the market is not one for thefaint-hearted. Regulation and qualityare critical.

Besides demographic trends,tightening regulations have been amajor driver of growth, especiallyserialisation, which mandates tracingby serial number in an effort to battlecounterfeit drugs. More than 40jurisdictions – including the EU, US,South Korea, China and Brazil – are onboard. According to industry trackingprovider Tracelink, over 75% ofprescription medications worldwidewill be covered by the new rules by theend of 2018.

And increasingly, pharma companies,driven by harsher regulations, arecalling on their logistics providers toensure quality and greater visibility.

“Focus on quality continues to be amajor trend,” says Mr Sareen.

“Customers are constantly asking formore visibility on the condition of theirshipments, including physical location,ambient temperatures and humiditylevels.”

High-end versus genericWhile high-end pharma trafficcommands juicy margins and bringsout the full expertise and technology ofcarriers and forwarders, it is dwarfedby generic drugs, which requiresimpler and more robust and cost-effective solutions.

Carriers like Air Canada reflect thiswith separate offerings fortemperature-sensitive commoditiesthat require active temperature-controlled ULDs, and for vaccines andmedications that can be moved withpassive temperature control measures.

With the latter, the Canadian airlinetypically uses Tyvek covers for LD-7size shipments, says Carolyn van Vliet,cargo products business developmentmanager. Growth has been strong inboth segments, she notes.

Ultimately, the question for everyplayer in this sector is whether a focuson one segment is more productivethan trying to cover the full range ofthe pharma industry, and make themost of both volumes and high-yieldniches.

“For one carrier to offer the entiregamut with the same level ofcompetence can prove challenging,”says Mr Sareen.

Susanne Wellauer, vertical industrymanager, pharma & healthcare atSwiss WorldCargo, finds that there isenough common ground to go afterthe full spectrum.

“Good distribution practice (GDP)rules apply to both high-end andgeneric pharmaceuticals, and they are

governed by the same principles,” shesays. “If the gap between low- andhigh-end is widening, it depends howwilling players are to invest.”

Brendan Beech, director of tradelane development at Maltacourt GlobalLogistics, says: “If you have thecapability and the knowledge of thebusiness, you can do both. We handleboth. Some companies focus on oneend.”

Product placementMore and more airlines have homed inon pharmaceuticals with specialofferings, while established players inthis sector have refined their services.Air Canada set up an internal supportgroup for pharma to ensure all aspectsof the operation function smoothly.

Forwarders welcome the carriers’focus on pharma traffic, says DavidBang, CEO of LifeConEx, thehealthcare specialist outfit of DHLGlobal Forwarding.

“Airlines’ inventory is all part of theecosystem. It strengthens it.”

Still, carriers face an uphill struggle toattract new clients who already havestable carrier relations. Most logisticsoperators in this sector work chieflywith a small number of preferredairlines which move the bulk of theirpharma traffic.

“We try to concentrate our spreadwith a handful of carriers with whomwe have close relationships. If we needa special service for a new customer,

2 LongRead – Vol 8 – July 2017

“Customers are constantly asking formore visibility on the condition of

their shipments, including physicallocation, ambient temperatures and

humidity levels.”

– Ameet Sareen, general sales manager,

product business development cargoat Air Canada


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we can go to the head of the carrier,”says Paul Martins, CEO of MNX GlobalLogistics, which specialises in time-critical shipments, especially in themedical sector.

He stresses that there is a need forairlines to offer more than services.

“We need airline partners thatunderstand the importance of it andthe unique challenges of it,” he says.MNX has worked closely with Delta,which consults the logistics firm onhow staff should be trained.

Increasingly, airlines are expected toaccommodate cold chain and,especially, monitoring technology fromcustomers that move pharma traffic.Air Canada has active temperaturecontrol ULDs from Envirotainer and C-Safe in its arsenal, but it also carriesva-Q-tec units bought by customers.Down the road, such units maybecome part of the airline’s portfolio,Ms van Vliet notes.

Sensors and tracking devices haveproliferated at a prodigious rate.

“There is a new tracker coming intothe market almost every day,” saysAlain Guerin, head of products,

services & technology management atSwiss.

Steven Polmans, head of cargo &logistics, strategic development ofBrussels Airport Company, sees a rolefor BRUCloud, the Belgian airport’scargo community platform, to improvevisibility and speed up the data flowbetween participants. This is one of thepriorities at Brussels this year, whileanother is the deployment of morecool dollies between aircraft andwarehouse, so all pharma shipmentscan be moved this way.

Collaborative technology

“The feedback we get is that ramptransportation is still the mostvulnerable time,” Mr Polmans says.Brussels started using such dollies lastyear and has four.

A third focus for him is onestablishing certified pharma lanes.Having developed the CEIV initiative atBrussels, he is now pursuing pharmaalignments with other airports toprovide end-to-end solutions.

“I think what Swiss did with lanevalidation is the way forward,” he says.

The Swiss airline joined hands withground handlers in Switzerland andSingapore last year to establish a‘pharma corridor’, and it has sinceexpanded the concept to other routes.

“The pharma industry is more andmore a multi-site industry. You can’t beonly good at the hub,” says Mr Guerin.By the end of the year the carrier aimsto have 100 lanes covered.

Air Canada’s Mr Sareen explains:“The quality departments of theshippers are looking for tradelane orroute qualifications. This enables themto understand the operational handlingcapabilities of the various partiesinvolved; temperature profiles on thattradelane, ie, what will possibly be themaximum and lowest temperaturesshipments will be exposed to on thattradelane; and risk evaluation of thattradelane, in order to better packagethe shipments.”

Mr Guerin believes collaboration withlogistics providers is the only wayforward in this sector. He points toserialisation, which makes it importantthat all the relevant information isshared.

“Collaboration is absolutely crucial,”

Pharmaceuticals are among the most expensive things to move– not because of the price of the cargo, but because of theregulations and expertise required. Products can’t be releasedto the commercial market if they have been damaged – to doso is a criminal offence, and a ‘responsible person’ must benominated to sign off shipments.

And that’s where training comes in. It differentiates thosecarriers that offer a ‘pharma product’, but can’t necessarilyguarantee its safety, from those who have the expertise toproperly ensure there are no temperature excursions.

“Training is a work-in-progress every day of the year,” saysAlan Dorling, global head of pharma and life sciences at IAGCargo.

“New personnel must meet EU Good Distribution Practicerequirements as well as IATA’s temperature control guidelines.We have a dedicated global training manager, and we havemade a big investment internally and with our groundhandlers.”

Alongside internal training, outside companies such asExelsius offer workshops to anyone interested from all parts ofthe supply chain.

IAG Cargo, which has a quality standard, offers refreshertraining every two years. And if issues occur at a particularstation, the training manager is sent there immediately toaudit and then train.

And training does prevent mistakes. Of 40,000 temperature-controlled shipments flown last year by IAG, 165 had transportexcursions, when the package – but not the contents – wentoutside its temperature limit. IAG recorded no instances ofproduct temperature excursions.

Every ground handler that works for the carrier must havetwo agents at any time in the warehouse that are the‘responsible person’ for pharma, and trained as such.

“It’s part of our service level agreements with the handlers,”says Mr Dorling. “The product is simply too critical to getwrong. It’s a very different category of cargo.”

Handlers are trained over several days. It does, of course, addto the cost.

“There are numerous debates going on about quality versuscost,” says Mr Dorling. “But if shippers want consistent qualitythen there is a substantial investment needed.

“We refuse to engage with the yield erosion strategies seenin the Middle East and Asia. This cannot be commoditised, itneeds specialisation. And if price was the singular mostimportant thing to shippers, we wouldn’t be growing,” he points out.

Training: a work very much in progress


“The pharma industry ismore and more a multi-siteindustry. You can’t be only

good at the hub,”

– Alain Guerin, head of products, services & technology management

at Swiss

agrees Mr Martins. The moreinformation a supply chain partner like acarrier or a handler has, the betterservice the company can provide, hereasons.

For Maltacourt, collaboration is alsokey. Being a mid-sized operator, it hasmoved to expand its reach beyond itsown footprint through the PharmaNetwork of the WCA Group.

“This way we can sell moreinternational tradelanes. We can sell notonly at origin but we can show thecustomer that we can cover thedestination as well,” says Mr Beech.“We’ve got some exciting things in thepipeline with agents in the US.”

In June, DHL outlined three keydevelopments that will change theindustry in its Future of Life Sciencesand Healthcare Logistics report:pressure to cut costs; consumerbehavioural change; and digitisation – orbig data.

Mr Bang says visibility is no longerabout pallets or containers, “and it’s notjust arrived and cleared, but also, is thiscompliant?” he said. “This is where bigdata comes in.”

According to him, big data analyticsand the internet of things are the wayforward.

“They are not just looming, they arethere with us right now.” he says. “Weinvested in these in the last three years,

and we are starting to get the benefits.With big data analytics we can predictwhere a problem may occur or where apackaging issue may arise.”

Personalised medication is anothergame-changer, although the volumes aresmall. In some cases, an injection twice ayear may replace a daily intake ofmedication, notes Ms Wellauer. MrGuerin believes the high value andunique nature of these shipments raisesthe bar for speed and cold chainintegrity and may require specialsecurity arrangements as well.

“As drugs become more patient-centric, there is greater need foraccountability and visibility,” says MrMartins.

Mr Bang points to the ramifications forthe final mile of the cold chain, as theseshipments are largely delivered tohospitals or directly to patients. Thisfavours logistics providers with final-milecapability, he says.

“And we need to be faster than ever

before, and more accurate,” he says,adding that monitoring and trackingtechnology is also affected.

“What was good visibility 10 years agois no longer good enough,” he says.

Mr Guerin says: “Maybe it will bring aneed for faster delivery, maybe it willchange delivery volumes in some areas.It may require more speed, and moredelivery to the door in future.”

Door deliveries are already happening.Chinese e-commerce giants such asAlibaba and JD.com are investing heavilyin China’s $1.1bn online pharmacymarket. Amazon has already partneredwith some of Japan’s pharmacies andspeculation is mounting that the giant e-tailer is poised to enter thepharmaceutical market.

Amazon has not commented, butaccording to one report, it has hired ageneral manager to lead the businessand personnel for it.

It has the infrastructure and aformidable technology platform to enterthis market. It would seem that this givesAmazon the potential to disrupt thegeneric side of the business, but it wouldbe harder for it to leave a mark at thehigh end.

“We have to continue to be veryspecialised, very personalised. That’swhat’s required in this industry,” reflectsMr Beech. “Amazon is too big forpersonal detail.”

“As drugs become morepatient-centric, there is greater

need for accountability andvisibility,”

– Paul Martins, CEO of MNXGlobal Logistics


PHAR

Global biopharma sales

$218bn

$788bn$876bn

$1trn $1.13trn $1.27trn $1.41trn$968bn $1.05trn

$260bn $309bn $360bn

2014

2014

2016

2016

2018

2018

2020

2020

Sales of cold-chain drugs and biologics will outpace overall industry growth

through 2020.

Source: Pharmaceutical commerce

Biopharma Logistics Spend:

$11bn $16.7bn$14.4bn$12.6bn

$77.1bn$71.4bn$62.2bn

cold-chain

non-cold chain

biopharma logistics spend

$61.5bn


MACY

Online pharmaceutical market: $128bn by 2023

Air: ETA: 24 hoursSea: ETA 3 weeks+

Shippers choose from: 5 shipping lines or 50 airlines

Internet of things-enabled healthcare devices in

2015:108m. In 2020:646m

12%volume

79% value

11% value

88%volume


The pharma companies will need to act fast and smart as disruptors enter their marketplace. And the pharma-serving logistics companies need to understand where the market is heading

Technology has disrupted us all. Fromshopping to shipping, from Apple toUber, nothing is the same. Traditionalindustries need to address – andembrace – this change.

Disruption has come later to highlyregulated, slow-moving, cost-heavyindustries such as pharmaceuticals. Butwhile pharma may be high-cost, it is alsohigh-margin – with ever-increasingglobal demand. That makes the sectorripe for the entry of low-cost, high-innovation and very disruptive techcompanies.

And they already have a major footholdin the health sector, changing thecompetitive landscape significantly.

The figures tell it all. Some 3.4 billionpeople have smartphones, and half ofthese have a health-related app.

More than 70% of doctors in the UK,

France and Germany haverecommended an app or tech-relatedhealthcare: 97,000 MHealth (mobilehealth) apps are already available,principally in the consumer sectors ofweight loss, exercise, sleep and women’s health. About 30% of the apps target healthcare professionals.

The MHealth market is said to be worth$26bn this year and $59.15bn by 2020.Shippers ignore these numbers at theirperil.

IT firms are investing big in healthcare.They are aggressive, unhampered by redtape and attracted by healthy margins.And they are very fast movers – in directcontrast to the research-heavy, highlyregulated pharma companies.

It took 10 years for smartphones tobecome ubiquitous – newer technology,such as wearables, will permeate even

faster. Fitbits took three years tobecome commonplace and now cameratechnology helps phone users easily geta diagnosis for ear infections. Themarket is accelerating.

Uptake is faster in developingcountries with less medicalinfrastructure, less access and lessregulation. Already, for example, amillion people have signed up for phoneconsultations with doctors in Mexico, for$5 a month. In the developing world,accessibility is key.

Tech will find more resistance indeveloped countries, where regulatoryauthorities and existing infrastructurecreate a barrier. But consumers – as wellas the medical profession, which isstretched financially – are backing thistech revolution.

Most apps relate to data capture andpatient monitoring – and they are

The future for shippers: digital health


moving forward fast. Germany’sVitaphone offers 24-hour advice,telemedical monitoring, charts andremote ECG analysis.

Medical-grade wearables are startingto be approved by regulators: smartdiapers, for example, can detect type 1diabetes, urinary tract infections andkidney problems. Smart inhalers cantrack pollution. The child’s syndrome oflazy eye can now be corrected with acomputer programme.

The tech companies are courting theregulators, and while the picture is stillblurry, with many questions to beanswered, the motivation is there. Andonce there is evidence of diseasereduction, uptake will be unstoppable.

A portable device allows healthcare tobe decentralised – as has happened innumerous other industries. It also edgespatients away from pills. (On the plusside for pharma, it also reducescounterfeiting.)

So how is pharma responding to thisattack on its market? Not very well.

The major pharma companies haverelatively few apps – most of which are

static and non-responsive, available injust one or two languages. The bestcompanies learned quickly that theyneeded to partner, rather than competewith technology. J&J, Novartis, GSK andAstraZeneca all have teamed with techfor various developments; most largepharma companies now have a digitalhealth or MHealth division.

Growing global demand for healthcare,with an ageing population, wideningmiddle class and more tracked diseases,has come at the same time as spirallingcosts and financial constraints.

Apps are cheap. They can keep peopleout of hospital. But there are financialgains to be made for pharma too.

An American hospital launched aclinical trial on Apple’s Reasearchkit.Within 24 hours, 11,000 potentialpatients had signed, which wouldnormally take a year.

About 140 interventional trials arecurrently using MHealth – which givesbetter data and greater patientretention.

MHealth is expected to save €99bn inhealthcare costs in the EU, while adding

€93bn to EU GDP this year. Of course,there is resistance and challenges. Dataprivacy, hacking, concerns overaccuracy, regulation, errors andinsurance can all present problems. Lossof revenue for private players couldslowdown the advance. But most ofthese challenges are from within theexisting industry, while the drivers forchange are on the outside.

And change is coming from singleback-bedroom entrepreneurs, medicalgroups and tech corporations likeMicrosoft, IBM, Intel, Apple, Google,Amazon and Telefonica.

Amazon, for example, has alreadypartnered with Japanese pharmacychains and will not be as fazed as othercompanies by the high regulatoryhurdles in selling and deliveringpharmaceuticals. In June, it hostedBayer at one of its German fulfillmentcentres.

But the question is, what actually willbe delivered?

“We might soon enter an era wherehealthcare professionals will beprescribing a lot more apps than pills,”said MHealth pioneer Erik Topol.

There was a palpable sense of alarm acouple of years ago when industryobservers first reported that somepharma producers had startedexperimenting with transportation byocean carrier.

In an era of sluggish demand andfalling yields, this suggested that thefinal bastion of air cargo might alsosuccumb to the pressure to sacrificespeed for cost savings.

The shipping lines are keen to get in onthe action. Ocean freight has severaladvantages, not least of which is cost.But more critically, its reefer containersoffer seamless temperature control fromdoor to door.

Since July, all the reefer equipment onGerman line Hamburg Sud, has metGDP guidelines for the transportation ofpharmaceutical products.

“With our new offering, we can respondeven better to the complexrequirements of our customers andprovide a high-grade and significantlycheaper alternative to airfreight,” saysFrank Smet, member of the executiveboard of Hamburg Süd.

“At the same time, we are positioningourselves in a strategically importantgrowth market.”

It is not alone among carriers in tryingto attract pharma customers. Thebiggest container line of all, Maersk, hasits sights firmly set on the business.

And Maersk has gone one step furtherby putting visibility into its system. Lastyear it introduced a remote containermanagement (RCM) system. Five yearsin the making, the project saw the line’sfleet of 270,000 reefers equipped with aremote container device that uses a 3Gsim card and GPS unit, as well as anantenna.

In addition, some 400 vessels havebeen equipped with a VSAT dome on theroof of the bridge, which receives datasent by a reefer’s antennae. This data isthen transmitted to orbiting

satellites and retransmitted to MaerskHQ in Copenhagen and back to thevessel, giving it complete visibility intothe containers.

“We offer cost savings and a goodproduct,” says Maersk’s globalpharmaceutical lead, Hristo Petkov. “Wehave clean containers that receive pre-trip inspection before each use, andglobal coverage. We are developing aglobal quality system. We recognise thatwe were not where our customerswanted us to be, but we are almostready now.

“We have quality teams, we arecreating transparency and we have doneGDP training. Our sales teams havepharmaceutical transportation

Pharma by sea

knowledge, so they know what’simportant for pharmaceuticals andoperational coordination. And we canspeak their language.

“In the past year, we have beenbecoming more educated and we are

now openly offering pharmashipments. We know we can handlepharma. It does cost more to ship, butthe price is not based on the cargo’svalue, but on the additional value weoffer, such as training, packaging,

expertise and peace of mind. Naturallythat comes at a premium. But thegenerics market is increasing all thetime, and that pays less.”

Ocean freight rates for pharma are,on average, about 15-20% higher than


IATA’s Centre of Excellence for Independent Validators (CEIV) ison a roll. In May, LATAM Cargo became the first Latin Americancarrier to obtain its badge of compliance, and participationkeeps rising – at the latest count, 151 stations/ companieswere certified.

Head of cargo at Brussels Airport Steven Polmans helpedpush forward the CEIV initiative to establish a quality standardfor logistics firms engaged in pharma traffic at Brussels whichcould be certified by independent auditors. And CEIV built upenough momentum last year to become regarded as a globalstandard. It is viewed as an entry ticket to the game, and isexplicitly asked for in tenders, he adds.

“There is definitely value in CEIV,” agrees Carolyn van Vliet,products business development manager at Air Canada Cargo.

“There was a lot of ambiguity around Good DistributionPractice (GDP),” she says, adding that CEIV provides step-by-step guidance, including designating who is responsible foreach step.

However, for most shippers, GDP remains the key criterion interms of logistics providers’ certification.

“A lot of pharma customers want you to be GDP-compliant,”says Paul Martins, CEO of MNX Global Logistics.

However, CEIV, which takes six to seven months to acquire, ismaking gains on shippers, according to IATA, which says it isreaching out to more.

“We have had very positive feedback from multiple shippers,”explains Ricardo Aitken, IATA’s assistant manager, cargo. “Forexample, not so long ago we received a letter of endorsementfor the programme from Merck Sharp and Dohme Asia Pacific.In addition, we have support from Baxter, the EuropeanShipper’s Council, Janssen and Zoetis, to name but a few.”

For Brussels, which can boast the world’s largest CEIV clusterof 20 firms certified, the initiative appears to be paying off.Last year pharma export volumes surged 36%.

Some forwarders have started building consolidation hubsfor pharma traffic in Brussels, says Mr Polmans, adding thatpharma shippers are increasingly looking to consolidate trafficacross borders, something they have been reluctant to do.

Rather than certify their operations in individual stations,some large forwarders are pursuing CEIV accreditation for theircomplete pharma network. Kuehne + Nagel has blazed a trailhere, and Mr Polmans expects others to follow. This way,forwarders can demonstrate certified set-ups at both ends of apharma tradelane.

As cold chains hinge on compliance of all participants, allalong the route, it was logical to extend the CEIV conceptbeyond individual airport communities to end-to-end coverage,which prompted Brussels and Miami to team up. They went onto launch the Pharma.Aero initiative, which was formallyestablished last autumn and had grown to 16 participants byApril, including airports, logistics providers and shippers. Thisgoes in the direction of pharma corridors that give end-to-endcoverage. All members must have CEIV accreditation.

There are currently 11 communities in the process of CEIV,and six in discussions – one of the benefits of a communityapproach is sharing information and best practice.

“There has been a growing expectation from the pharmacompanies to see standardisation, certification andtransparency across the supply chain,” says Mr Aitken. “As aresult, CEIV Pharma is expanding globally and CEIV-certifiedtradelanes are now emerging at a rapid pace.”

But, he adds: “Even if only one station is certified, theknowledge gained from the training courses, as well as the gapanalysis report and implementation plan obtained from theassessment stage, always provides benefits to one-stationparticipants.”

DHL Global Forwarding has signed up for Pharma.Aero.Nevertheless, David Bang, CEO of DHL subsidiary LifeConEx,reckons that other organisations will spring up alongsidePharma.Aero.

“I don’t mind multiple organisations, but not all working indifferent directions,” he says.

Others, though, are continuing along the GDP route, havingclaimed that CEIV is an expensive, marketing-driven exercise.But IATA counters that.

“The best recognition of the effectiveness of a programme orstandard is when it is adopted by the industry,” says Mr Aitken.“In the framework of continuous improvement aimed at havingglobal certified tradelanes, CEIV Pharma has taken the industryand moved it to another level.

“The industry is now driving itself toward that globalcertification. It is a ‘snowball effect’, focusing on quality in theair cargo industry.”

IAG Cargo’s Alan Dorling finds that there is little to be gainedin comparing CEIV and GDP.

“There is too much debate on the difference,” he says. “It’snot necessary. CEIV is excellent for companies such as groundhandlers – in our hubs we focus on GDP. The customers wantcompetence in all parts of the supply chain.”

A badge of honour – and of quality


HELPING THE AIR CARGO SUPPLY CHAIN TO

TRANSPORT MORE PHARMACEUTICALS BY AIR

WWW.IATA.ORG/CEIV-PHARMA

- Achieve pharmaceutical handling excellence

- Benefit from an industry-wide standard for the shipment of pharmaceuticals

- Capture more pharmaceutical business

- Collaborate better because patient safety is a joint responsibility

- Help ensure product integrity

- Get your organization certified in pharmaceutical logistics

PHARMA

so has air freight, indicating that themarket is growing, rather than asignificant modal shift to sea.

David Bang, CEO of LifeConEx, thetemperature-controlled logistics arm ofDHL, finds that a mode shift ishappening, but it is not necessarily aneasy or smooth migration. He agrees thatinstability on the ocean carrier side andlimits on carrier liability in this segmentare hampering the appeal of oceantransportation.

Despite the slower speed, somerequirements are the same as for aircargo, but visibility into reefers is moreimportant.

“It’s the same level of GDPrequirements as for air cargo, but thereare unique features. You need real-timetracking devices and IoT embedded inthe shipment, because you need to

understand the situation faster than in aircargo,” he said.

DHL Global Forwarding launched itsmarine version of its ‘Thermonet’ servicefor temperature-controlled shipmentslast year, and it has been catching onquickly, according to Mr Bang.

The choice of carriers is also morelimited on the ocean side. Whereas thelogistics firm works with more than 50airlines, of which about one dozen arepreferred carriers, on the maritime side itworks with only the top five carriers.

Shipping lines may have attractedlower-yield pharma traffic, but there isenough momentum at the higher end toensure that this segment will still enjoygrowth, which translates into demand forairfreight, adds Steven Polmans, head ofcargo & logistics at Brussels AirportCompany.

for general cargo – but this is stillsignificantly lower than by air.

While airlines argue that the speedof transit, plus unreliability, could holdback the lines’ ambitions, Mr Petkovthinks otherwise. “Yes, inventory is atsea, but customers have a supplychain and if it’s planned, it’ssomething they can do.”

Cargo can be delayed, and there isan estimated time of delivery, but it ismore or less fixed. “Delays do happen,but they don’t impact the customer asthey are aware of them.”

The other issue is insurance, whichlimits the amount of high-value cargoships can carry. But Mr Petkov says:“There are no problems withinsurance. We do accept high-valuecargo, up to $20m per container.”

However, according to IAG Cargo’sAlan Dorling, airlines can sometimesship just one pallet, with productsworth between $10m and $15m. Youcould put up to 11 standard pallets in a20ft container, meaning acontainerised shipment could beworth some $200m.

“What if there was a containermalfunction?” he asks. “Howaccessible are they to fix? If you stackthem at the back, what are theconcerns for exposure to sea water?Ocean freight does not compete.”

Air Canada agrees it has not seenany noticeable impact of modal shift,and that air continues to haveadvantages.

“The type of pharma shipments thattravel by air are extremely sensitive toboth temperature and time,” saysAmeet Sareen, product businessdevelopment cargo.

“Given the significantly shorterelapsed travel time by air, pharmacompanies are able to mitigate therisks of extended unfavourabletemperature exposures shouldsomething go wrong. On the AirCanada network, a pharma shipmentcan pretty much get from origin todestination within 24 hours, includingtender and retrieval times.

“If a pharma shipment can sustainthe long travel time and the risksassociated with it, then sea freightmay be a better option. However, theair freight industry continues to worktowards improving the airlines’pharma offerings with greateremphasis on quality and is likelygiving the pharma industry reasons tocontinue to stick with air transport.”

Maersk says it has seen growth, but

Brussels Airport

Biggest number of CEIV pharma certified

companies

Biggest concentration of dedicated pharma

infrastructure

Controlled temperature through the entire cool

chain at the airport

Excellent geographic location for pharma

consolidation and storage

The Preferred Pharma Gateway

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