Kuehne + Nagel is beefing up its cool chain capabilities. Last year the logistics provider added a new temperature-controlled room to manage pharmaceuticals that require ambient temperatures between 15 and 25 degrees Celsius in its bonded airfreight facility located near Toronto’s Pearson airport, and this summer will see the opening of a 203,8000 sq ft GMP facility, manned by a specialized team of pharma experts. Strategically located in “Pill Hill”, Mississauga, it is designed to manage multiple temperature ranges, and will be audited and certified by Health Canada.
“We are excited to be launching another new, leading-edge GMP facility to enhance the existing campus and support our growing pharmaceutical and healthcare customers in Canada,” comments Jamie Wood, president of Kuehne + Nagel Canada. “We will continue to invest in innovation to support our long term vision and corporate strategy, all under one umbrella, our KN PharmaChain product portfolio, an integrated global supply chain solution for our customers.”
Carey Roach, director of strategic customer development, pharmaceutical and healthcare, notes that the forwarder’s new facility will improve its immediate capacity needs. “We continue to experience significant growth in 2016 and expect the same in 2017,” she comments.
This is echoed by Gary Vince, head of airfreight, Canada at DHL Global Forwarding. He reports “fairly consistent growth” in the company’s existing trade lanes and adds that Air Canada’s expansion to Latin America should help in a promising growth market that has so far been hampered by shortage of direct connections.
While healthcare and pharmaceuticals has been a growth engine, it also keeps getting more challenging for operators. Tighter regulatory requirements keep raising the bar. More than 40 jurisdictions – including the EU, US, South Korea, China and Brazil – are moving to introduce new track and trade regulations, mandating tracing by serial number in a push against counterfeit drugs. According to industry tracking provider Tracelink, over 75 percent of prescription medications worldwide will be covered by the new rules by the end of 2018.
“Serialization is definitely going to change the game. It requires transparency end-to-end from the time it leaves the shipper’s dock to destination,” remarks Vito Cerone, director of marketing and sales, Americas at Air Canada Cargo. A major objective for the airline in 2017 is to enhance its service in this sector and elevate it to the next level, he adds.
Tighter regulations are also on the advance in other segments of the healthcare industry. The US Food and Drug Administration is pushing ahead with its ‘unique device identification’ regime for medical devices and officials in the European Union are in the process of formulating a set of rules for these, which are expected to come into effect about three years down the road.
A number of airlines have taken on new containers with temperature control features to beef up their offerings. Air Canada is looking to add containers from va-Q-tec, a provider of passive closed cold chain container solutions that cover temperature ranges from -70 to +25 degrees Celsius, to its arsenal of temperature-controlled devices. It is also mulling the introduction of special units to carry pharmaceuticals from warehouse to the aircraft in some stations, Cerone says.
As his remarks on serialization indicate, monitoring capabilities are another vital element that providers have to keep investing in to stay in this game. “Visibility is very important in this vertical,” he says.
According to Vince, serialization brings more opportunities than challenges. “It comes down to the ability to monitor and track and trace at the serial number level,” he says. DHL introduced a new app with this capability in the past year, which has been well received, he adds.
Air Canada is in the process of implementing RFID technology in warehouses at major gateways, which can be used to further enhance visibility for the healthcare sector, Cerone reckons. “This would be a huge step forward; it would be a big differentiator,” comments Vince.
Drawn by the growth and the higher yields compared to most other types of cargo, a rising number of airlines have deployed temperature-control technology and better tracking capabilities to capture a slice of this traffic. Roach welcomes these moves, saying that airlines’ service levels and visibility have improved markedly in recent years, which also supports the continued efforts to improve handling compliance.
Vince stresses that visibility is just as important as cold chain technology. “It is not just a case of what type of container an airline uses. It is about their ability to offer various solutions, and it is about the carrier’s ability to provide us with a measure of visibility. For example, we need time stamps when the cargo goes out to the ramp,” he says.
This implies a smooth flow of data between the various parties. Not surprisingly, Tracelink CEO Shabbir Dahod views this as vital, arguing that “implementing serialisation across global operations calls for new thinking about platforms that can not only deliver massive data and processing elasticity, but network connectivity and supply chain interoperability that links businesses together to advance the value of the pharmaceutical ecosystem as a whole.”
Data flow may not be enough. Increasingly operators stress the need for close cooperation within this ecosystem. “We work with our customers on solutions,” says Roach, adding that this has been a major driver for Kuehne + Nagel’s growth in this segment.
Alan Dorling, global head of pharmaceuticals and life sciences at IAG Cargo, emphasizes the need to include ground handlers in this as well as forwarders and shippers. “There is an emerging trend of preference to routing shipments over certified gateways,” he remarks. “The market is moving to GDP corridors”.
The notion that logistics providers – be they forwarders, handlers or airlines – need certificates to document their capabilities in this sector is gaining ground. “We are looking at getting CEIV and GDP certification at out key stations,” says Cerone “We are going to work with both to make sure we are aligned with the industry.”
Until recently GDP (Good Distribution Practice) has been the lone gold standard for healthcare-related logistics activities, but CEIV (Centre of Excellence for Independent Validators), which has been promoted by the International Air Transport Association, is gaining traction as a second important badge of quality. Airline executives report that it is becoming a standard question in RFPs.
Among other things, CEIV marks an effort of the air cargo industry to shore up its credentials at a time when more and more pharmaceuticals shippers glance at ocean transportation as a potential alternative mode of moving their traffic. Faced with mounting cost pressure, they are looking for more cost-effective solutions, notes Roach.
However, while the amount of pharmaceuticals that are shipped by ocean vessels is on the rise, there will always be a need for airfreight, she adds.
Dorling is unfazed by the mounting use of ocean transportation. Speed to market remains a potent factor in favour of airfreight, he stresses. Moreover, globalized production requires airfreight to link pharmaceuticals manufacture with packaging and other elements, he argues.
Air cargo stands to benefit from the emergence of biologics, especially medications tailored to the health profiles of individual patients, largely associated with cell therapy or gene editing. These are expensive to manufacture, and typically highly sensitive to ambient conditions.
According to Dorling, these substances usually have an 18-hour window. Roach, who anticipates large growth in this sector, expects to see more stringent requirements on handling and packaging of such shipments.
“It is going to be a challenge to meet these requirements,” she reflects.
The more information clients can give their logistics providers about the packaging, the loading options they have available and other aspects, the better equipped the logistics firm will be to ensure the precious shipment reaches its destination without any issues, she notes.
Airlines sense a similar need for more involvement to handle this new type of cargo properly. “That’s one reason why I want discussions not only with forwarders but also with manufacturers. I’d like to understand where they will be in three, four years,” remarks Cerone.