Will the ‘real’ pharma air cargo leaders stand up?
SOME air cargo operators are falsely claiming market leadership in the shipping of expensive, specialist pharma and life-sciences products around the world – even though this expanding airline niche lacks consistent, comparable, accountable data.
The problem lies with how traffic figures are collected and how each airline categorises its Time and Temperature Sensitive Services (TTSS), writes Thelma Etim.
TTSS business models differ substantially from one carrier to the next. An airline may include general pharma shipments, or express deliveries of the same, as well as some dangerous goods services under its TTSS umbrella of healthcare, whilst another may categorise its life-science and pharmaceuticals premium products as strictly distinct from other services it offers.
The result is the figures amassed by Customs and other data research consultancies do not reflect the truth, suggests Alan Dorling (pictured, below right), global head of pharmaceuticals and life-sciences at IAG Cargo, the freight arm of the holding company of British Airways, Iberia, Vueling Airlines and Aer Lingus.
“A lot of the statistics collected by Customs and other data sources cannot give you a single category of time and temperature airfreight in its purest numbers,” he advises. “Therefore I am very sceptical of any numbers I see.”
Reliable air cargo pharma market research data is needed
Talk to different people and they will view it differently. “Some of our competitors are set up on a healthcare sector organisational structure so that includes any pharmaceuticals they support through their freight services across all of their freight categories, where as [our] Constant Climate – IAG’s premium pharmaceuticals and life-sciences product – is a definitive service only for time and temperature sensitive airfreight,” he adds.
Dorling is not expecting the situation to change any time soon.
“All of the players would welcome a good market research data source that has some accuracy behind it, but since it is a relatively small sector overall in the whole global cargo market, who is going to produce that data and will they get a return on selling that data to the [small] number of players in the market?”
There are currently about 36 airlines that claim to ship time and temperature sensitive shipments in a niche market that has evolved in the last decade, growing in popularity among airlines as they try to claw back lost revenue as the general air cargo market continues to suffer from China’s economic rebalancing, slowing global trade, and bellyhold overcapacity.
With rock-bottom freight rates, air cargo operators have been desperately exploring all possible revenue-enhancing initiatives.
Global pharma sales boom
Lufthansa Cargo, for example, is assuming the role of the forwarder by taking over express logistics company time:matters. Peter Gerber, the German carrier’s cargo boss, has revealed the airline will hold direct talks with express retail giants Amazon and Alibaba.
Like many, the German cargo airline sees a healthy future in TTSS, fuelled by the high and increasing global demand for vaccines and immunisation programmes. No carrier can afford to miss out on global pharma sales estimated to reach US$1.3 trillion by 2018.
But some of these players lack sufficient infrastructure and expertise, which is not the case at IAG, insists Dorling. Quality and expertise is the heart of its premium service.
“I am not aware of any other airline for example, that has a quality insurance manager that is a qualified RP (Responsible Person) and I actually have two in my team,” he asserts. “I have a global quality assurance manager and I have a regulatory compliance manager and I am not sure that anybody has global training managers that are responsible for training the entire network on an on-going, permanent basis.”
IAG is also the only company that runs Good Distribution Practices (GDP) academies, he boasts. This certification for pharmaceuticals approves the quality and standard of the warehouse and dedicated medicine distribution centres throughout the supply chain.
Pharma regulations can be complex and extensive
Increased regulation is among the major trends Dorling has noticed over the last decade, such as IATA’s Chapter 17 Air Transport Logistics for Time and Temperature Sensitive Healthcare Products emplacement within its Perishable Cargo Regulations.
Other key developments include the move from single, multi-site manufacturing to global manufacturing; and rising instances of diabetes, particularly in central Latin America and the Middle East, which is fuelling the major rise in insulin sales, expected to reach $48 billion by 2020. “Insulin is one of our most shipped products,” Dorling reveals.
Another trend at some carriers has been the emergence of dedicated expert teams capable of managing and monitoring every single shipment. “10 years ago we had one person managing Constant Climate when it launched, but today I have 36 people in my vertical team monitoring every shipment handled around our network.”
Dorling is now seeing other airlines aggressively replicate that by building their own focus teams, “as indeed, the freight forwarders also do.”
The rewards for getting it right end-to-end have resulted in inevitable price wars in this sector.
“What is changing is the [TTSS] price erosion,” reveals Dorling. “There is a point at which we cannot compete against some of the other airlines because we are seeing yields being eroded and the only outcome of yields being eroded is a lack of future investment in this category and that what’s it needs, not just at your hubs but also at your ground handling agent – and station gateways need to invest likewise and create these GDP corridors.”
After 10 years, some big TTSS challenges remain the same: such as avoiding temperature excursions in shipments on unprotected airport tarmac areas, and dealing with poorly administered Customs operations in places like Latin America and parts of Africa.
These organisations think nothing of keeping hold of sensitive or life-preserving shipments for an astonishing 30 days or more before clearing it, he laments.