During the 2015 IQPC Cool Chain & Controlled Room Temperature conference in Frankfurt, a meeting of over 500 industry experts highlighted the huge gaps in the perspectives and focus of the pharmaceutical industry regarding their use of sea freight as an alternative to air freight. It showed that some companies were excelling using this mode whilst others did not know where to start. Discussion and debate were extensive but it was evident that there were gaps between parties, with knowledge fragmentary whilst “answers” simply lead to more, and deeper, questions.
It was clear there was a need to bring expertise from across the supply chain together, especially the key stakeholders from pharmaceutical manufacturing, freight forwarding, shipping line, port operation, insurance, temperature-controlled solution providers and any other parties involved - that is exactly what the Cold Chain IQ Sea Freight Working Group set about doing.
The global pharmaceutical logistics market was valued at $70 billion in 2015. It is amongst the most regulated and expensive cargo business in the world today. Pharmaceuticals have traditionally moved by air freight but pharmaceutical manufacturers are being squeezed from all angles – government pressure to reduce prices, generic competition eating away at previously large margins as patents expire and the difficulty of finding the next “blockbuster” which will deliver profit growth for shareholders. The impact of this pressure is that a considerable number of products can no longer sustain air freight transportation costs, so alternatives are being considered.
Additionally, regulators are introducing ever tighter rules around the transport of pharmaceuticals, such as the current EU Good Distribution Practice Guidelines (GDP) from 2013. These ask for “label claim” (the storage temperature or conditions detailed on the product label by the pharmaceutical manufacturer) to be maintained during transportation. This has a major impact on transport and logistics costs, increasing costs by between 200 and 1000 percent depending on the profile of the routes and transport modes used. Therefore, pharmaceutical manufacturers are looking at all parts of their operations to try and reduce costs whilst delivering improved service and quality. There has been some excellent work around supply chain and the realization that a world class set up in this area can be a defining factor for manufacturers. Allied to this has been the desire to meet the tougher regulations whilst reducing costs. Sending pharmaceuticals by sea freight can achieve these seemingly counter intuitive goals.
Sea freight is normally used for inter-continental movements and primarily consists of hub and spoke systems through “feeder” and “mother” vessels. Sea freight is much cheaper than air freight but transit times are significantly slower. It can also be used when enhanced security is required.
The benefits of sea freight include much more than lower costs and better security when compared to air freight. The risk of product damage is significantly lower because your product is not physically touched by outside parties once the container is sealed; this has the extra benefit of less temperature excursions so quality can be considered higher.
However, all is not perfect and there are some drawbacks from using sea freight. Temperature controlled containers, known as reefers, are of variable quality whilst availability of good equipment can be poor in some regions. Transit times are slow which can increase inventory costs and introduce supply chain problems.
In addition, there are certain points en route when the reefers will not be powered, such as during loading and unloading from the ship or the truck delivering to port.
These drawbacks can be mitigated in various ways. Shipping lines and container manufacturers advise that container performance is consistent throughout the lifespan but pharmaceutical manufacturers have generally found that using containers less than 5 years old is a good benchmark as these have been shown to be more reliable. Communication of requirements well in advance of shipment to ensure availability and working with your freight forwarder to find out which line offers the best service on each route are good disciplines to have. It is also recommended that, if you use a freight forwarder, you have a tri-partite quality agreement with them and the relevant shipping line, or multiple shipping lines if this applies. This means that the carrier of your product, the shipping line, has fully understood your needs and you have a signed document to that effect.
For the time the reefer is not powered, various providers offer thermal blankets or passive packing solutions to maintain product temperature. Different ports and vessels will have different power outage times so a full risk assessment of this part of the supply chain will need to be carried out to comprehend the risk and arrange suitable mitigation.
Sea freight is governed by very old rules and all parties with product on a ship are deemed to have an “interest” in the voyage. This means you should always have marine cargo insurance to cover all eventualities.
Container shipping lines have differing ways of calculating their maximum levels of liability so you need to understand what that is for your, or your forwarder’s, choice of line. If the limit is below the value of your shipment, then some lines will ask you to sign an indemnity to take your booking.
In order to put some practical “flesh” on the “bones” described above, it is helpful to consider the individual steps you ought to take to successfully move pharmaceuticals by sea freight.
Carry out a pre-trip viability assessment including such aspects as origin and destination, climate in each of these; the types of reefer available at your origin point and their general condition; the availability of a “pre-trip inspection report” from the shipping line to verify the condition and the efficacy of the reefer. Ensure generator sets are available to power the reefer during transportation from your loading site to the port.
When booking the shipment, check how much advance notice the shipping line requires in order to have a reefer available at the origin; clearly state the temperature range and the reefer “set point” e.g. +15°C to +25°C with a set point of 20°C; communicate the value of the product and arrange the indemnity if required; don’t forget that you also have to verify the weight of the laden container (see my full article on this complex subject at http://www.pharmalogisticsiq.com/packaging-shipping-systems/columns/seafreight-container-weight-regulations%E2%80%93-update ).
The container needs to be loaded properly. Once again, this is a very complex subject but entails leaving proper gaps for airflow whilst ensuring that the product cannot move during transit.
When the reefer arrives at the load point, make sure you perform checks to establish that it is clean, free of dunnage (waste from previous usage), functioning correctly, set to temperature per your requirements. There are differing options with regards to temperature operation during loading and these depend on the facilities you have available so it is important to work through these with your freight forwarder and the shipping line before you make the booking for the reefer.
At the port, you will need to ensure that the reefer is quickly transferred to the relevant area where it can be plugged in and operational whilst waiting to be loaded on the ship. This is again something to discuss and agree with the relevant parties well in advance of a booking being made.
During the voyage, the best vessels will have automated alarms in the bridge to advise the crew of any issues with your reefer. If these are not available on the vessel you use, then find out what procedures will be followed. On some vessels, the reefers will only be manually checked once every 24 hours which you may consider to be insufficient for the needs of your product. Of course, safety of life at sea is paramount so even these checks will not be made when the weather is too bad.
At the destination, during unloading and onward delivery, the procedures described above happen in reverse so you must once more check to ensure that your reefers are handled in accordance with your needs, or take mitigating action where this is not possible.
Various forms of remote tracking and monitoring are available which may alert you to a temperature issue. However, this does not mean that the problem can always be solved; that said, ships carry a lot of reefer spares and can carry out a large number of running repairs whilst reefers themselves, especially under 5 years old, are very reliable.
For products which must be transported between +2°C and +8°C, also called cold chain, temperature problems can escalate very quickly. Also, these products are normally at the higher end of the value scale so any losses will be significant. Therefore, you would usually take additional measures to mitigate the risk of excursions such as passive packing systems or very high quality blankets. Usually these steps would be taken after a very thorough evaluation process carried out on dummy or low value/risk shipments.
For all of these practical steps, standard operating procedure and quality agreement signed by all key parties are critical success factors.
In summary, sea freight is in many respects no different to your current supply chain and is an excellent solution in the right circumstances. Therefore, you need to have a full understanding of said current supply chain before making any changes. Also, look out for the IQPC Cold Chain IQ Pharma Sea Freight Working Group report which forms a “best practice” guide, expanding on the many practical steps described above, to steer you through this challenging, but rewarding, process.
Mark Edwards has over 25 years of logistics experience garnered at a variety of logistics service providers and product manufacturers; he is currently the Managing Director of Modalis which is a dynamic logistics consultancy specializing in pharmaceutical and temperature-controlled logistics. His projects at Modalis have included helping a major pharmaceutical manufacturer to achieve GDP compliance, moving an electronics manufacturer to a new freight provider to save 40% on freight costs, migrating two distribution centers for a telecommunications company and successfully assisting various companies with their RFP/RFQ. Prior to Modalis he was Global Freight and Compliance Manager at Actavis (which Allergan has just sold to Teva for $40 billion), one of the top, global pharmaceutical manufacturers. He was responsible for all aspects of international logistics and was the subject matter expert for transportation, warehousing, Incoterms, Customs’ compliance, Good Distribution Practice and new product launches. Amongst his many achievements were consolidation of the supply chain from over 200 transport providers down to just two, the introduction of GDP compliance & temperature control to all shipments at no additional cost to the business and a 100% on time, in full, first to market success for all of Actavis’ new product launches. Additionally, Mark is chair of the Sea Freight Working Group which seeks to bring pharma manufacturers, shipping lines, port operators and freight forwarders together in order that they can understand each other’s needs and move more pharmaceuticals by sea freight.