The growing investment and activity behind vaccine development and production around the globe will be a key driver for pharma airfreight activity in the next five years, that is the claim of IAG Cargo global head, pharmaceutical and life sciences, Alan Dorling (pictured).
He says: “There will be significant growth in vaccines shipments in 2018 and ’19. Significantly, this will include vaccines for malaria, dengue fever, childhood diarrhoea and yellow fever. The growth of type 2 diabetes because of the spread of a Western lifestyle, is leading to growing worldwide volumes of insulin being transported.”
There is also growing volumes of the penta 5-in-1 vaccine tackling diphtheria, tetanus, pertussis or whooping cough, polio and Hib disease.
Pharma shipments play a critical role in a global supply chain covering packaging materials, active pharmaceutical ingredients, excipients, and final products such as clinical trial materials, pharmaceuticals, medical devices, combination products such as drug-eluting stents, and dietary supplements.
Dorling, who spent 32 years as a applied bio-chemist before he joined the airline in 2011, is very confident about the future of pharma airfreight shipping.
“It is becoming more and more professional,” he says. “The sector is now increasingly regulation-driven. Shippers are driving standards. They are demanding Center of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV Pharma) status and Good Distribution Practices (GDP) Certification for Pharmaceuticals from carriers.”
Pharma shipments are an important traffic for the four airlines – British Airways, Aer Lingus, Iberia and vueling – in the IAG Group, says Dorling: “They make quite a significant contribution to the business.”
A key indicator of the important of pharma traffic to IAG Cargo is the growth of the group’s personnel handling the traffic.
“When I joined in 2011 there was only one other dedicated person in control of pharma. Now there are 36 team members,” he says. There are staff in every region of the group’s operations.
The global growth in demand for pharma shipments, however, is not to be entirely welcomed because of one major manner in which it is impacting the business, notes Dorling.
He says: “There are 34 competing airlines operating in pharma shipments. This is leading to an erosion in yields as rates are dropped. There is almost a race to the bottom by airlines with spare capacity. IAG Cargo will not go there. We refuse to reduce our margins.
The investment, services and modern facilities to handle pharma do not come cheap. That is why airlines consider this a premium product. In turn, some shippers will try and bear down on the airline rates. This could be a reflection of the pressures many pharma manufacturers face on branded drug prices worldwide.
However, Dorling says that IAG Cargo will not compromise on quality and will retain its rates.
“Shippers can’t have it both ways,” he says. Quality always comes at a price.
That is one reason behind the 55 million euro investment in pharma at London Heathrow.
The group had a very good 2017 for pharma, says Dorling, and 2018 has gotten off to a robust level of business.
While pharma is handled throughout the group’s network, key lanes include out of Europe as well as India to Latam; the US to India via the UK; and, from Ireland to the US and Asia Pacific. Key sources of pharma traffic are India and Mexico.
One way in which Dorling emphases differences between IAG Cargo and its competition is his section’s willingness to allow shippers to see the pharma airfreight operation for themselves.
He says: “We encourage customers to our facilities, to see for themselves the operation of loading their products on aircraft. Other airlines are ‘shy’ and unwilling to let their customers see the operation. I believe very much in that we should ‘walk the walk and talk the talk’ about our operations.”
Pharma products are, by their nature, some of the most time-sensitive and delicate items shipped by air.
Dorling says: “The nature of the product is very delicate. There are always danger on the tarmac from wind, sunshine, odours and fumes. That is why airlines have to consider tarmac exposure time. Middle Eastern airlines are investing in cool dollies.”
Though packages of phials and pharma bottles may be small in volume and weight, one aspect of the cargo that may surprise the observer is the sheer value of the products being handled by Dorling and his team.
He says: “It’s not uncommon to have a pallet with cargo worth $10 million.”