There’s been a shift in the last several years of pharmaceutical shipping methods. The industry has been moving from air cargo to ocean containers, with the greatest cause pointing to transportation costs.
Pharmaceuticals have historically been transported via airfreight due to the sensitive nature of the product, temperature regulation, and time-sensitivity issues, according to Pharmaceutical Technology. However, “time-sensitive shipments make up no more than 15% of those shipments,” according to Alan Kennedy, pharma supply chain consultant, as reported by the American Journal of Transportation (AJOT). Kennedy is also involved in the development of Poseidon, a global program for pharmaceutical ocean freight.
According to Iceland-based Controlant, a company dedicated to improving efficiency in the global cold chain, 3.5 million metric tonnes of pharmaceuticals are shipped annually via ocean freight, while 0.5 million metric tonnes are shipped by air. Controlant also explained it is up to 80% less expensive to ship via ocean container rather than by air. Approximately $13.4 billion is spent worldwide on temperature-controlled biopharma logistics, and by 2021, that number could reach an estimated $16.6 billion, according to a recent International Air Transport Association (IATA) Cargo report.
Cost is not the only reason for the decline, however. There is also a lack of compliance, standardisation, accountability, and transparency across the supply chain, according to the IATA. In 2000, the air cargo share of global pharmaceutical product transport was at 17%, but fell to 11% in 2013, IATA explained. Annual pharmaceutical product losses range between $2.5-12.5 billion in a $300 billion a year market, IATA noted.
There are several stops along the supply chain where the cargo is handled, and standards may not be consistent at every checkpoint. The IATA Center of Excellence for Independent Validators (CEIV) is advocating for globally accepted standards and regulations, establishing validation checklists developed along with the industry, developing training content, certifying operators and locations, and managing databases of certified instructors and validators.
There has been increasing pressure: from governments to lower prices of pharmaceuticals, generic competition lowering profit margins, tighter regulations, and expiring pharmaceutical patents, as explained in Pharmaceutical Outsourcing. The hit to the bottom line translates into less ability to pay higher air cargo transportation costs.
Transporting pharmaceutical cargo via ocean freight is cheaper and provides better security, as the product is not touched once the container is sealed, according to Pharmaceutical Outsourcing. However, there are still concerns with sea transportation including the quality of reefers in some regions and transit times can be quite slow, which introduces more supply chain problems, Pharmaceutical Outsourcing continued.
Air cargo is still the go-to choice for transporting perishable goods and live animals, as reported by IATA. As air cargo shipments of pharmaceuticals decreases, one industry is growing exponentially via air cargo. E-commerce and the offer of express delivery for customers is a trend that doesn’t seem to be slowing down.
With the likes of Amazon and Alibaba, parcels delivered via airfreight have increased from 6.7 billion to 7.4 billion, according to the IATA report. China’s “Singles Day”, on 11 November, is the world’s biggest online shopping day and air cargo is an integral element. Last year, shoppers spent $25 billion, according to The Guardian.