Healthcare supply chains at a key moment of transition
Healthcare supply chains experienced some of the biggest reactions to COVID-19, as demand fell away for elective healthcare but stratospherically rose for pandemic related items. Roger Hailey investigates what will happen next
A COVID-19 vaccine will need an armada of freighter aircraft and container ships to distribute the life-saving medicine around the world.
The global logistics supply chain challenge will be enormous, with logistics giant DHL estimating that between 7,000 and 8,000 B747 flights will be required to move one billion doses of vaccine.
Airfreight cannot handle that challenge alone and for a global population of eight billion people, that means that means billions of temperature-controlled containers and packaging flowing across the world.
Pharmaceutical supply chain stakeholders have to assume that a vaccine will be approved for distribution by year end or first quarter 2021.
The planning has already started among vaccine manufacturers, freight forwarders, airlines, shipping lines, ports, airports and truckers.
Adapting to changes in the medical supply chain
They will use their experience from the supply chain shock in the first three months of the pandemic to plan for the vaccine’s distribution.
Larry St Ong, president, global sector, DHL Life sciences and healthcare, says that the COVID-19 pandemic saw an initial surge in demand for personal protective equipment (PPE), demand which has now subsided and a switch in focus on finding ways to maintain continuity in medical supplies and stock levels.
We have seen a significant postponement of elective surgeries and procedures in the first six months of the year
“Although there has been development in the activity for a COVID-19 vaccine, we have seen a significant decline in non-COVID-19 clinical trials around the world. Part of that is because patients don't want to go to hospitals and so we are working with our customers to try to overcome some of those challenges to provide point-to-point care for patients.
“We have seen a significant postponement of elective surgeries and procedures in the first six months of the year. Medical device manufacturers also saw a significant downturn in activity for pacemaker surgeries and other types of medical devices.”
When those patient fears about visiting hospitals ease, DHL believes that there will be a significant surge in elective surgeries, described as a "bullwhip" effect, because of pent-up demand.
Inoculating against vaccine supply chain failures
But right now, the focus is on the distribution of a vaccine and components of the supply chain such as packaging and maintaining the vaccine in a temperature-controlled environment right up to the last mile delivery, sometimes in remote and difficult to reach locations, to the hospital, clinic or even directly to the patient.
Pharma-aero, a cross-industry collaboration for pharma shippers, airport operators, IATA certified pharmaceutical cargo communities and other air cargo industry stakeholders, held a webinar on building resilient supply chains for vaccines delivery. The discussion was around early collaboration with all pharma stakeholders in order to plan for safe distribution at global scale.
One of the critical things for us regarding forecasting is to know when the containers are coming, the volumes, and what origin and destination pairs are going to be needed
Parag Deshmukh, director of global strategic business development at India-based vaccine manufacturer Serum Institute of India, said: “Within two months of the actual licence for a vaccine, each manufacturer should be in a position to provide information based on the volume of production,” and cautioned that it would not be a 100% forecast but around 70%, “which is doable”.
In the same pharma.aero webinar, Julian Sutch, head of global sales, pharma, at Emirates SkyCargo, said that the Middle East airline last year carried one million vaccines on a single Boeing 777 freighter, adding in terms of global distribution for a COVID-19 vaccine: “So if you do the maths, it is a big challenge.”
Sutch added: “The key thing is communication. One of the critical things for us regarding forecasting is to know when the containers are coming, the volumes, and what origin and destination pairs are going to be needed.”
Multi-modal is a must
It was also clear from the pharma.aero webinar that a vaccine airlift will have to work alongside ocean freight in providing the answer and that multimodal solutions, using both sea and air in one supply chain will be an important option.
In normal times, the ‘bellyhold’ cargo capacity in long haul passenger flights accounts for nearly 60% of total global airfreight, the rest being carried by pure freighter aircraft. When the vast majority of passenger flights were grounded from March this year, it created a massive shortfall in airfreight capacity.
While cargo-only passenger aircraft, sometimes stripped of their economy class seats for lightweight cabin cargo, provided vital additional airfreight uplift for PPE and other medical supplies in the first few months of the pandemic, they are not a long term economic solution due to operating costs.
There will be shorter supply chains because Europe and the United States are very dependent on China and India and a few other countries
The return of some passenger flights, with both baggage and cargo in the bellies, will help with the capacity shortage, but not enough. Refrigerated containerised seafreight and expedited ‘fast boat’ sailing schedules will play an important role, said DHL.
David Goldberg, chief executive officer, DHL Global Forwarding in the US, said an upgraded less than container load (LCL) service using faster ocean sailings on certain trade lanes reduces the transit times from Shanghai in China to the US east coast by up to 14 days.
Said Goldberg: “We expect to see a lot smaller shipments, so rather than a full 20 ft or 40 ft container, we continue to expand our LCL service and LCL extradited service, which puts the container on the fast boat and allows our customers to have a shared-use container from Asia to the US in 12 to 13 days, again giving customers an extra option versus full container ocean freight or airfreight.”
Testing and tracing the route back to normality
So, what are the longer-term impacts of COVID-19 on the supply chain for life sciences and healthcare products?
Professor Wouter Dewulf, academic director, C-MAT at the University of Antwerp, told a pharma.aero webinar that healthcare is “definitely back in the picture”, not only because of COVID-19 but because of demographics where people are getting richer “or at least care a more about their health”.
Dewulf believes that there will be more government intervention, not just in strategic industries but also in the life sciences sector: “There will be shorter supply chains because Europe and the United States are very dependent on China and India and a few other countries.”
Beyond COVID-19 we are certainly anticipating a bullwhip effect as more and more people return to clinics and hospitals for non-urgent procedures. This will certainly drive above-normal demand for orthopaedics such as hip and knee replacements and other non-essential treatments
David Kopstein, vice president, life sciences and healthcare, DHL supply chain north America, also looking at the longer term consequences of COVID-19, said that the impacts include “greater use of digital tools and a potential increase in near-shoring”.
Increased data will also see greater use of predictive analytics, while: “Beyond COVID-19 we are certainly anticipating a bullwhip effect as more and more people return to clinics and hospitals for non-urgent procedures. This will certainly drive above-normal demand for orthopaedics such as hip and knee replacements and other non-essential treatments.”
DHL’s Goldberg also made the point that there will be market growth outside of the life sciences company sector: “We have multinational companies establishing COVID-19 testing services for their employees which may become part of our everyday lives in the next year. These companies will look to DHL to help them get their employee samples to a central laboratory.”