Consultant’s Insight: Expanding pharmaceutical networks amid shortages

Freight forwarders and express providers have always courted high-value pharmaceutical volumes, but as declines in e-commerce and other general inventory opportunities persist, they are turning to pharmaceuticals once more to fill planes and improve balance sheets. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] DHL Global Freight Forwarding , for example, recently opened a new facility at the Indianapolis International Airport (IND). “Indiana is an important pharmaceutical hub in the United States, and our focus is to ensure seamless and safe transportation of the important products being developed here to facilitate the growth of our customers’ operations in the region,” Jose Maria de Orduna , regional vice president, U.S. East Region of DHL Global Forwarding, said in a statement . The airport is also home to FedEx ’s second-largest Express hub in the U.S., where it handles pharmaceuticals, among other commodities. In 2020, DB Schenker and Cargolux announced a new full-charter cargo connection between Luxembourg (LUX) and Indianapolis to support increased pharmaceutical shipments. DHL Global Freight Forwarding also opened a 40,000 square-foot warehouse near the Research Triangle area in Raleigh, N.C., this year with specialized capabilities to service life sciences, health care and pharmaceutical companies, and other local customers. Not to be outdone, UPS over the past 20 years has invested in pharmaceutical and health care services through acquisitions and network investments. UPS opened 1 million square feet of dedicated health care space in the first quarter, including its first facility in Germany. According to CEO Carol Tome , this facility provides customers a broad range of temperature sensitive and handling solutions. The facility is close to its European air hub at then Cologne Bonn Airport (CGN), enabling customers to leverage its global network. “Our goal is to become the No. 1 complex health care logistics provider in the world,” Tome told analysts in April. “To help us get there, we plan to open seven dedicated health care facilities this year. In the first quarter, revenue from our health care portfolio reached $2.4 billion, and we expect to generate over $10 billion in health care revenue in 2023.” Drug shortages U.S. pharmaceutical air import volumes, in terms of kilograms, increased by 35% in 2022 from 2021 and 16% in terms of value for the same period, according to the U.S. Census’ USA Trade Online service. However, year-to-date through March, pharmaceutical air imports are down year over year in volumes and value. The declines are interesting given that the number of active drug shortages in the U.S. reached a five-year high of 295 at the end of 2022, according to findings from the U.S. Senate Committee on Homeland Security and Governmental Affairs. “Drug shortages are not a new problem,” the March report notes. “They are caused by a number of factors, including economic drivers, insufficient supply chain visibility, and a continued U.S. overreliance on both foreign and geographically concentrated sources for medications and their raw materials. These shortages have cascading effects on patient care, causing delays in treatment, increasing the risk of medication errors, and requiring the use of less effective alternative treatments. Hospitals have also experienced increased costs, medication waste and limited staffing capacity to address and remedy shortages.” The Biden administration has assembled a team to find long-term solutions for tightening the pharmaceutical supply chain and is interviewing manufacturers, doctors, hospitals and others involved.

Consultant’s Insight: Expanding pharmaceutical networks amid shortages

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