EXECUTIVE WARNS OF EXAGGERATED PHARMA HOPES

Israel-based CAL Cargo Airlines is in the process of getting IATA Center of Excellence for Independent Validators (CEIV) certification at its operating base in Liege, which management expects to have completed by July. This will make it the first operator to have both the airline and handling operations certified to handle pharmaceuticals, airline management noted.

Others are also setting up cold chain capabilities to handle pharmaceuticals, building cold chain facilities or launching new products targeting this segment. The fanfare is deafening at times. Hardly a day goes by without an announcement from an airline, forwarder or even airport that it has boosted its capabilities to handle pharmaceuticals. Increasingly-aspiring players flaunt credentials like the Good Distribution Practice standard from Europe or IATA’s CEIV certificate to underline their ability to avert cold chain breakdowns and give pharmaceuticals the expert handling they require.

“Now everyone and his dog does pharma,” one airline general sales agent remarked.

The stampede to pharmaceuticals is understandable, given that this segment has maintained its growth momentum and is expected to continue growing – unlike many traditional airfreight staples that have either migrated to slower, less-expensive transportation modes or shrunk in volume.

However, the outlook may not be as rosy as many of these aspiring players anticipate.

“It is a very significant and attractive sector, and it is growing. It has grown substantially,” said Oliver Evans, chief cargo officer of Swiss WorldCargo and outgoing chairman of The International Air Cargo Association. By virtue of serving a market that is home to a number of pharmaceuticals giants, Swiss has long been one of the leading operators in this sector.

“You have to distinguish between pharma shipments that require active and passive temperature control solutions,” Evans pointed out. The majority of pharma shipments do not need active temperature control, and certain types that used to can now be shipped with passive solutions, he said.

Hence, the future is not as rosy as some pundits reckon, Evans warned. “Pharma volumes for high-end solutions are not as big as some people make out,” he said.

Worse still, operators who recently launched special services targeting this sector may be barking up the wrong tree. Swiss has abandoned its marketing effort for its branded offerings and now stresses close cooperation with customers to tailor solutions to their particular requirements. This means that industry expertise is as critical as the right tools to offer temperature-controlled solutions, such as active temperature control containers, Evans noted.

“You need a combination of the appropriate equipment and in-depth experience and knowledge within the organization,” he said. “Pharmaceutical companies look for true partnerships, they look for tripartite cooperation with carrier and forwarder.”

Latecomers will find it difficult to sway pharma shippers to hand them their traffic, with millions of dollars at stake if something goes wrong.

“The level of sophistication of the supply chains involved means that usually pharma companies do a strict audit before they allocate a route, and don’t switch so fast and easily,” Evans said, adding that the closer ties that carriers have formed over time with pharma shippers developing special solutions for them are hard to bypass.

As for certified performance levels, he sees merit in them. Indeed, Swiss has embraced GDP and insists its partners in stations where the carrier does not perform the handling also seek it. “I hope it will become the norm,” he said. “This is what the pharmaceutical industry is hoping.”

He is less enthusiastic about CEIV, describing it as “a typical example of initiatives that lack an adequate level of consultation with the appropriate stakeholders, and through the appropriate channels.”

In the absence of full alignment between locally-set BDP standards, shippers, forwarders, airlines and handlers pay exorbitant amounts and spend inordinate amounts of time conducting parallel or overlapping audits, he noted.

“Instead of seeking or creating the necessary consensus, IATA have spotted an opportunity to make money. Others have jumped on the bandwagon, perhaps seeking publicity,” he said.

 

By Ian Putzger

Air Freight Correspondent | Toronto