Pharma driving cool chain sector, but investment needed

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The cool chain sector is growing, fuelled by the rising movement of pharmaceuticals, and investing in infrastructure is becoming a high priority across the supply chain.

Cool Chain Association (CCA) chairman, Sebastiaan Scholte (pictured) tells Air Cargo Week more and more airlines seem to focus on pharma, mainly driven by better yields and growth opportunities, but in absolute volumes, the perishable market is still a lot bigger than healthcare.

Scholte notes the biggest air cargo trade lanes for pharma remain between Europe and the US, while the Asian markets, like India and China have shown robust growth in recent years.

He says according to Seabury the biggest growth lanes for pharma by air last year were Europe to North America (increasing nine per cent) and from North America to Asia (up 15 per cent), whereas from Europe to Asia there was a decline of 10 per cent.

The biggest flows for perishables remain from Latin America to the US and Europe and from Africa to Europe, and intra-Asia, while Seabury says the biggest trade lane for perishables is still from Latin America to North America, but it grew only one per cent last year.

The second biggest trade lane is from Africa to Europe, which saw growth of 20 per cent, but intra-Asian growth remained flat last year, whereas the trade lane from Latin America to Europe decreased by five per cent.

However, Scholte says improvements are needed in the industry: “Shippers have been complaining about a lack of common quality standards, mainly for pharmaceuticals. There are now different common quality standards in place, like GDP  [Good Distribution Practices] and recently CEIV [Center of Excellence for Independent Validators], which focusses more on the air cargo supply chain.

“The latter is gaining momentum in the industry where more and more companies are getting the CEIV certification. It is now a question of getting enough critical mass of certified companies, allowing an end-to-end cool chain that is aligned to the same set of quality standards.”

He feels the weak link remains operations at the tarmac, but adds: “It is good to see that at certain airports they now have temperature controlled dollies in order to avoid temperature deviations during the tarmac transport between the cargo warehouse and the aircraft.

“For airports in moderate climate zones a thermal cover or a passive transport dolly are enough, whereas airports in more extreme hot or cold climate zones active temperature control is required. Equally important is the pharma mindset of the staff handling the cargo. Training can increase awareness and avoid mishandling.”

There is a need to improve temperature control at the tarmac in the opinion of Scholte, as he says not all the handling agents can invest in cool facilities at every airport. “In smaller airports the relative small market does not justify the investment for more handlers,” he adds.

Better meeting the needs of shippers is something many in the industry feel is pivotal for air cargo operators, which he agrees with.

“We need to listen more to the shippers. At the end they pay the final bill. Additionally sub-optimising only part of the cool chain is not a solution. Therefore only by collaborating between the different partners in the cool chain a reliable and transparent cool chain service will be guaranteed,” Scholte says.

There are a raft of challenges and opportunities across the cool chain air cargo sector, notably the need for visibility and standards, which is still proving a big challenge.

Scholte says shippers do not always know where and how their products will be handled in a complex supply chain involving many handover points: “Temperature loggers will register the temperature deviations, but the failure will only be visible upon arrival at final destination. The growth of this sector is an opportunity. Demographics more than economics define the growth.”

And challenges with perishables remain, such as imbalances in the air cargo flows, as more is being exported from Colombia, Ecuador and Kenya than being imported by air, while weather remains a factor that influences volumes.

“The other issue, especially with perishables is that there is more seasonality than with general cargo, which makes it harder for airlines with freighters to allocate the right capacity according to the demand,” Scholte says.

As for where the CCA is and plans for 2016, he says it is the association’s goal to foster collaboration, networking, share information, and create awareness in the cool chain sector through the two conferences a year, one on pharma and the other on perishables.

Due to the increased global demand and attention, the CCA is organising events outside Europe as well and last year it had a perishable conference in Miami (US) and in 2016 it will have a pharma conference in Dubai in September. It will have an extra conference on air cargo cool chain issues in Dallas (US) in December.

Scholte says the most important issue moving forward for CCA members is simple – they want to see more visibility and to know where their cool chain shipments are and what the status is of their shipment.

The cool chain sector is certainly thriving in pharma and perishables, but more investment is clearly needed across the supply chain to tap into the opportunities on offer and win business from other transport modes.