Summer 2023

Pharma air cargo market in good health

Pharma air cargo market in good health

Stakeholders are stepping up their capabilities to handle rising healthcare volumes, which continue to grow in importance as demand for other products wane. Ian Putzger reports

Carriers, airports, and other air logistics stakeholders are stepping up their capabilities to handle rising pharma and healthcare volumes, which have held firm and even continued to grow slightly in the last year while general cargo volumes have waned.

Figures from WorldACD Market Data indicate that temperature-controlled pharma tonnages carried by air rose by around 1% in 2022, with average prices or yields rising 9% and overall pharma air freight revenues up by around 11%, whereas general cargo tonnages fell worldwide by around 8% last year and other product categories such as high-tech and perishables have also seen volume declines. Air freight lanes that saw particularly strong pharma traffic growth include Seoul-Taipei, Brussels-Chicago and Hyderabad-New York, WorldACD noted, reflecting those markets’ important roles as regional pharma production clusters or logistics hubs.

In late March, Delta Cargo boosted its cold chain capabilities at New York’s John F. Kennedy airport with a new cooling facility. The building, which has dedicated chambers with distinct temperature zones and humidity control, is the largest cooler at the airport.

Rob Walpole, Delta’s vice-president cargo, describes the investment as the latest step in a strategic build-up for this sector that started five years ago with infrastructure investment at the airline’s Atlanta hub and other locations and the push to become the first CEIV-certified US carrier.

“Over the past 12 months, we’ve expanded our footprint and capabilities. The JFK cooler is a big part of that,” he says.
With 34 flights to 26 cities in Europe, Africa and the Middle East, Delta is the largest global carrier at JFK. This route network includes the top ten pharma markets.

Capacity resurgence
A lot of the dedicated cargo flights that the airline operated while its passenger operations were curtailed was pointed at the pharma market, according to Walpole. These have ended with the resurgence of international passenger flights.

“As that capacity came back, business has shifted back from the integrators to the regular networks,” says Walpole. “For the summer of ’23, transatlantic we have 100% recovered.”

While network recovery has been one factor for Delta’s growing pharma traffic, the main driver has been the expansion of the market itself. Life sciences logistics specialist Biocair reported a 30% increase in sales volume last year, which saw the opening of the company’s operational hub in Paris and two offices in South Africa.

“The healthcare market grows faster than GDP. We’re seeing good progress,” says Walpole.

Miami developments
Miami International airport (MIA) has handled over 16,000 tonnes of pharma traffic in four of the past five years. Last year saw a record in terms of the value of the airport’s pharma throughput at $6.93 billion.
As it is approaching its capacity limits, with little land to build on, the airport is planning to establish the first vertical air cargo structure in North America. This will roughly double capacity, with “a good cross section of the new facility earmarked for refrigeration capability”, according to Jimmy Nares, section chief for aviation marketing at Miami-Dade Aviation Department.
Other airports are also looking to build up their pharma capacity. Menzies Aviation has won the tender for a new 150,000 sq ft (14,000 sqm) cargo terminal at Philadelphia International airport. Pharma traffic will be a major plank in the operation, as many pharmaceutical firms have been moving into the area, notes Peter Weir, Menzies’ senior vice-president cargo for the Americas.
In January, the handler signed a 10-year lease to operate a new 50,000 sq ft warehouse at Rockford International airport that was completed in the same month. Weir says Menzies is planning to install cool rooms and to obtain GDP certification for the new facility.

Another cargo airport that has set its sights on pharmaceuticals is Rickenbacker International in Ohio, where a dedicated handling facility is nearing completion. A lot of biomedical firms have set up shop in the area over the past few years, notes Bryan Schreiber, manager of air cargo business development. He sees the new building as a starter facility that will be expanded down the road.

Hong Kong improvements
Meanwhile, in Asia, Cathay Cargo opened a 1,250 sqm pharma handling centre in January at its Hong Kong base, which doubles the carrier’s pharma capacity there. The facility is equipped with computer-controlled temperature management and has rooms ranging from -25 Celsius to +25 degrees, which are backed up by mobile temperature-controlled storage units equipped with temperature and location tracking. The facility boasts dedicated, insulated truck docks and a temperature-controlled lobby.

With a direct connection to the terminal’s container handling system, shipments can be transferred from storage to planes within minutes. In addition, Cathay has set up priority vaccine handling to process imports in six minutes and transhipments in four minutes.

The facility follows a revamp of the airline’s pharma service portfolio under the new ‘Cathay Pharma’ moniker last autumn, which streamlined it into two broad solutions – passive and active. Each of these includes a wider array of features for customers to pick. To broaden the choices, the airline added two new container providers to the mix.

“We felt this was the ideal time to refresh our specialist shipment solution for our pharmaceutical customers,” commented Tom Owen, Cathay’s cargo director.

In a flanking move, the carrier has combined its pharma offerings with its newly deployed next-generation ‘Ultra-Track’ technology for 24/7 shipment monitoring, with proactive ‘en-route’ intervention enabled via the operations control centre and live-chat capability for real-time enquiries. According to Cathay, there are further potential system linkages for greater visibility with shippers and forwarders through APIs, to move data back and forth using IATA’s One-Record standard.

Evolving demands
The push from pharma customers for more sophisticated solutions is relentless.

“Customer demands will continue to grow and get more complex in the future,” remarks Susanne Wellauer, vertical industry pharma & healthcare representative at Swiss WorldCargo (SWC).
Regulatory pressure is not likely to let up either. In Europe, new requirements for handling medical devices came into play a year ago, notes Trevor Caswell, manager for demand and product development of Edmonton International airport (EIA) and chair of the association Pharma.Aero.

Edmonton has handled a string of charters recently bringing in medication to bring down fever in children in response to a shortage of such medication. The first batch went to the city’s university hospital, with the following lots replenishing empty shelves in pharmacies.

Drug shortages
Regulatory action may ensue, in order to protect against critical drug shortfalls. A new US Senate committee report labels drug shortages a national security risk, noting that last year brought a five-year peak with over 15 critical products in short supply for more than a decade. Shortfalls included supplies of life-saving drugs like cancer treatments and emergency room pharmaceuticals as well as common medicines like antibiotics.

The report also decried poor visibility for government agencies and a concentration of production in two areas – India and China.
A fundamental shift in the healthcare sector is set to usher in more regulatory activity as well as requirements for new cold chain solutions. Personalised healthcare and cell and gene therapy (CGT) are widely regarded as game changers for the sector.

Pharma.Aero completed a white paper on CGT and the airfreight cold chain last year.

“CGT will change healthcare and related logistics drastically. The current airfreight supply chain is not ready for this,” says Caswell. “There are challenges that are not fully mapped out.”

Cryogenic shipment needs
One aspect that needs addressing is the need for cryogenic shipment at temperatures down to -200 degrees Celsius. EIA invested in deep cold storage capabilities during COVID, while UPS’s Healthcare division has adopted a liquid-nitrogen, dry-vapour shipping container validated to maintain temperatures of -150 degrees Celsius for up to ten days. For most airlines, though, this is not on the agenda.

“CGT is a very small portion of traffic in volume terms. We’re not going to build capabilities to house cryogenic for any period of time. That’s back to the container providers. For us, it’s about data and transparency and tracking,” says Walpole.

SWC’s Wellauer also stresses good processes in the ability to handle this traffic. “Since the lifespan of these products is short, it is very important to offer a stable and reliable network, combined with quick turnaround times, and short acceptance times, quick transfers and deliveries. With our hub in Zurich and our GDP-compliant warehouse, we can offer customised services and secure a smooth transit for these time-sensitive shipments,” she comments.

For Delta, shipments like live organs and blood samples move mostly in domestic lanes and usually are not stored in its warehouses. “They’re usually dropped into our ‘Dash Critical’ stream and transported by a defined product,” says Walpole.

At this point, personalised healthcare shipments account for a relatively small portion of Delta’s pharma traffic, but this is growing much faster than the overall market. “In the domestic market, it’s important to build out end-to-end capabilities with partners for the first and last mile,” he says. “With the largest domestic network, we are able to move this faster than a hub carrier like FedEx or UPS.”

Sustainability element
In addition to market and regulatory pressure, shippers are increasingly calling for sustainable solutions. Every project that Pharma.Aero is involved in has a sustainability element, says Caswell.
Wellauer notes: “On our way to a more sustainable cold chain logistics, data, innovation and collaboration are key. In fact, data is the enabler that can bring the progress of essential tools forward, such as giving the transparency of carbon emissions, reporting efforts, and using artificial intelligence for routings optimisation.”

New passive solutions
Recent years have seen significant progress in the development of new packaging solutions. In conjunction with improved cold chain technology, this has led to faster growth in the use of passive cold chain solutions, notes Walpole. Demand for active solutions was stronger a few years ago but has softened slightly due to advancements in passive solutions, he adds.
This does not mean that active temperature control technology is in retreat. Envirotainer expanded its production capacity for its active containers last year and aims to grow its pool of 7,500 certified units by another 1,300 this year. According to the company, its containers are deployed in over 2,000 pharma trade lanes connecting some 300 airports in more than 100 countries. Last year it saw a 24% increase in life-saving medicines transported in its containers.

Swiss was one of the first carriers to adopt Envirotainer’s ‘Releye RAP’ unit, which can accommodate five pallets and features integrated live monitoring via a control tower.
While packaging solutions have advanced, there has been a push to bring the disparate parts of the cold chain closer together and foster more collaboration. Samantha Betancourt, head of marketing and strategy at UPS Healthcare, stresses the need for closer ties between the healthcare industry and supply chain partners. “An ensemble approach to adopting creative solutions and emerging technologies is needed to spur innovation at a rate not possible with traditional supply chains,” she states.
For one thing, this means improved visibility, which should go through a single platform “to choreograph the movement, condition and chain of custody of products, with every package visible at a glance”, she argues.

Caswell notes: “Access to real-time information – that’s one particular interest.”

Designated corridors are widely seen as another critical element. Wellauer says: “We have been investing heavily in developing ‘Quality Corridors’, comprising of a network of certified pharmaceutical trade lanes, in co-operation with our ground handling partners around the world, to meet the highest quality standards and safeguard product integrity.”

Pharma corridors
The blueprint for the establishment of different pharma corridors has been created by Pharma.Aero, which arose initially out of IATA’s CEIV initiative. It is “applicable to regional and local needs and is the basis for any further in-depth developments in relation to digitisation, capability mapping and risk mitigation”, says Caswell.

The certification of Avianca Cargo last December brought the number of CEIV operators at MIA to eight, comprising of five airlines, two forwarders and one handling company. The airport was one of the founders of the Pharma.Aero initiative, along with Brussels International airport.

The pair of founding airports had been working on developing air service between them, but the pandemic interrupted these efforts. Nares is also looking to Puerto Rico, the largest pharma hub in the Caribbean, to establish a pharma corridor. “Amerijet has CEIV certification. They have a big presence in Puerto Rico. We’re looking at ways how we could leverage that,” he says.

While these corridors cover the airport-to-airport piece of healthcare supply chains, it is important to think end-to-end, as Walpole’s comments on working with first- and final-mile providers indicates. From Pharma.Aero’s vantage point, Caswell stresses the need to also think multimodal and understand the other parts of the chain.
“We have to make sure we’re educated about all elements, not just air cargo,” he says.