About the author:
Roger Crook is a member of the Deutsche Post DHL Management Board responsible for DHL Global Forwarding and Freight. He was previously in charge of the business unit DHL Express Asia Pacific, Eastern Europe, Middle East, Africa, and Singapore. Native to the UK, Roger has also held the position of CEO DHL Express Americas and of CEO DHL Express Global Customer Logistics.
Roger Crook started his career with various manufacturing companies in the UK. In 1988, he joined DHL Worldwide Express in Brussels, Belgium, and moved to Oslo, Norway, in 1992, taking the position as Managing Director DHL International A/S.
‘The cold chain’ may sound like a 1990s boy band, but as a logistics concept it is critical in meeting the needs of a rising number of global consumers. Put simply, more and more people around the world want their products ‘now’ and they demand guarantees that what they consume is safe.
For many sensitive life sciences and healthcare, pharmaceutical and food products this means a ‘cold chain’ must be established which guarantees a product is transported within fixed temperature ranges from production source all the way to the consumer. For rapidly needed medicines, a seamless supply chain can even be the difference between life and death.
Of course, this puts huge pressure on transport providers, but it also represents a huge opportunity for the logistics industry as a whole and the air cargo sector in particular.
Pharma carriage by air already offers supply chain providers robust yields but the sector still only accounts for less than 2% of global air freight volumes ([i]). This limits the ability of some airports and airlines to offer the highest cold chain standards as a key competency. But with more volumes will come the ability to justify such investments and there is ample evidence to suggest that volumes will grow in the years ahead.
This growth will come from a variety of sources but will be led by demand from the pharmaceutical sector which as an industry is expected to expand 3-6% annually to exceed $1 trillion in value by 2016 ([ii]). This expansion is certain to boost demand for expedited, secure air freight services, not least because many new products are biological and most biologic products require cold-chain distribution. For example, 9 out of 10 newly FDA approved drugs are temperature sensitive ([iii]), and 7 out of top 10 best-selling global pharmaceutical products are biotechnology derived temperature sensitive products ([iv]).
Indeed, worldwide sales of biotechnology products, which tend to require temperature control during transportation, tripled from $56bn in 2004 to an estimated $167bn in 2013, according to EvaluatePharma World Preview 2013.
Another driving force of volume growth is tighter regulation of controlled room temperature (+15 to +250C) cargo. In the past, products in this category have been transported with little or no protection or special handling. Now regulatory bodies want to see cargoes in this temperature range shipped according to far more stringent specifications. This might not strictly count as ‘cold chain’ logistics, but it requires similar attention to detail.
Overall, we forecast the cold chain logistics market will grow from $7.5bn in 2013 to $9.5bn in 2016[v]. But realizing these gains will require major investment if the air freight industry is not to lose out to other modal options.
In recent years a great deal of progress has been made in improving the regulations and standards that govern the expedited shipment of these products by air. Investment in processes and infrastructure has also smoothed flows. But there is still liberal scope for further improvement, improvement that will benefit all supply chain stakeholders as demand for temperature sensitive products soars.
In many parts of the world cold chain storage and handling facilities at airports are insufficient and unreliable, especially where they are owned and operated by local government authorities. These failings are compounded by customs regimes which fail to understand that any break in the cold chain carries a risk of product deterioration or fouling which both drives up costs and increases risk.
DHL has been working hard to try and reduce some of these risks. Based on extensive data and field-level knowledge of over 90 key global airports’ infrastructure and processes, we have now built up a detailed understanding of the level of risk associated with a wide network of partner facilities.
We work together with all supply chain partners to mitigate the risks of breaks in the cold chain. For example, through our preferred life sciences airline partner programme, DHL audits our partners’ ground handling operations on a regular basis. And through close collaboration and strategic partnerships with carriers and their contracted ground handlers and customs authorities, we seek to establish how best to optimize the handling and release of cargo.
We also invest in our own operations to reduce supply chain risks, cut costs and speed processing times. We now have some 70 THERMONET stations world-wide, each providing seamless temperature visibility along the supply chain and compliant with the EU’s Good Distribution Practice guidelines for pharmaceuticals.
In addition we are members of the Cool Chain Association, which is dedicated to improving the quality and sustainability of temperature sensitive products. And we are represented on the International Air Transport Association’s Time & Temperature Task Force, the body that generated IATA Perishable Cargo Regulation for Pharma and Rx360 which promotes supply chain integrity in life sciences and healthcare.
Through our active leaderships in these key organizations, we help set the standards that all parties can aspire to. But if the air freight sector wants to benefit from the cool chain logistics demand surge we anticipate, DHL needs more and better partners. Greater collaboration between air freight stakeholders is required, especially in the emerging markets where growth is expected to be most rapid.
Perhaps most importantly, government agencies and policy makers must acknowledge that where the cold chain is concerned the facilitation of trade drives economic growth and improves the safety of the goods purchased by consumers. How’s that for a win-win?
About the author:
Roger Crook is a member of the Deutsche Post DHL Management Board responsible for DHL Global Forwarding and Freight. He was previously in charge of the business unit DHL Express Asia Pacific, Eastern Europe, Middle East, Africa, and Singapore. Native to the UK, Roger has also held the position of CEO DHL Express Americas and of CEO DHL Express Global Customer Logistics.
Roger Crook started his career with various manufacturing companies in the UK. In 1988, he joined DHL Worldwide Express in Brussels, Belgium, and moved to Oslo, Norway, in 1992, taking the position as Managing Director DHL International A/S.
[i] Source: Seabury Global Trade Database 2011-2012
[ii] Source: IMS_The Global Use of Medicines: Outlook through 2017
[iii] Source: The Global Use of Medicines: Outlook Through 2016 – IMS Health
[iv] Source: EvaluatePharma_World_Preview_Outlook_to_2020
[v] Based on the source: Cold Chain Biopharma Logistics Sourcebook 2012
