Pharma shippers are likely to continue to try to move away from a reliance on airfreight but will also look to outsource more of their supply chain operations.
Speaking at the Temperature Controlled Logistics event in London, pharmaceutical company Teva’s senior director, logistics Europe, Val Petursson, said that he viewed using airfreight, rather than less expensive seafreight, as a mistake in most cases.
Petursson said that airfreight was usually used in pharmaceutical supply chains because of internal issues such as low demand forecasting accuracy, problems with manufacturing or poor contracts with manufacturers.
“This is where we can do much, much better. If we want to benchmark ourselves against other industries like high-tech and automotive.
“We are paying millions and millions and millions just because we are too slow or lazy or misaligned,” he said.
However, he added that in certain cases there was a need to use airfreight.
“I definitely believe that there are segments in our industry that need and should be using airfreight, there is no question about it.
“For instance for inventory reasons, if your pallet costs $4m, you probably will not ship more than two or three pallets of that anyway.
“But I think in general, that airfreight is making a lot of money on other people’s mistakes and I think we can relatively quickly move away from that situation.”
Another shipper attendee at the event added that as well as high value small quantity shipments, airfreight also had a place for products with a limited shelf life and for the first batch of a new product.
Petursson is not the first pharma shipper to suggest that the industry should move away from airfreight in favour of seafreight.
Petursson was speaking as part of a wider presentation on how much of the pharmaceutical industry, especially larger global players, needed to switch from a transactional approach to supply chains, where a short term and price focused approach is adopted, to a more strategic approach to help create efficiencies.
Speaking in a later session, MSD associate director of supply chain management Ruud van der Geer said the need to adopt a more strategic approach to supply chains would lead to an increase in outsourcing of these activities.
“We see a positive trend in trusting our partners more than we did in the past, where big pharma companies would want to have control over the end-to-end supply chain.
“We are not at the level where we feel we can outsource everything, but there is definitely a trend in outsourcing the logistics aspects.”
He later explained that while there was an initial cost to outsourcing, supply chain companies were able to consolidate volumes to create efficiencies and could also offer a more standardized service across the whole supply chain, rather than various locations each running their own logistics operations in a different way.
Another future trend he identified was an increasing use of monitoring and data.
“We moved to 100% monitoring of all of our shipments, including room temperature products, which comes with a lot of data.
“We are now building on managing the data, learning from the data and we are seeing tools being developed to do that in a quicker fashion allowing us to react quicker than we did in the past.”