keynote feature Commenting on the same air
versus ocean issue, Bill Hook, vice president, global strategy for US-based UPS Healthcare Logistics, agreed that the often high value of pharmaceutical products makes some shipping lines wary of carrying such shipments. “Another factor is that more
and more healthcare products coming through the pipeline are temperature-sensitive so there is concern about them being on the ocean vessel for a longer period and retaining the necessary temperature control,” he commented. “But we are continuing to see the technology advance in relation to both air and ocean freight and pharmaceutical producers are looking to use ocean more where they can.” Asked whether the growing volumes of lower value generic
Hook: ”we are continuing to see technology advance in relation to both air and ocean freight”
First commercial flight of Envirotainer’s RAP e2 container
than air cargo. “What we tend to see is that when a drug goes from patent to generic, the initial launch of that generic product moves by air because of the need for speed to market. The generic guys tell us that whoever is first into the market wins double-digit market share for the next 12 months and those who follow get only single-digit,” he said. “So when a drug comes off patent and goes generic the
focus is initially on securing all the air capacity you can and getting the pipeline filled. Then in most cases the product moves over to ocean cargo. Whereas with a new patented product, the launch will also involve air cargo, but it may stay as air cargo for the rest of its life.”
SEA AND AIR CONSIDERATIONS To service those differing requirements, DB Schenker offers healthcare/pharmaceutical sector customers both air and ocean transport options. In fact, said Gahan, DB Schenker’s ocean- based healthcare/pharmaceutical traffic is currently growing faster than its air freight business, at around 60 percent annually compared with 13 percent for air cargo. However, he pointed out, the volumes being moved by air are surprisingly much larger than those being shipped by sea. One of the key reasons for that, Gahan explained, is the
often very high value of pharmaceutical shipments, with one ocean container potentially able to hold product worth anything up to US$250-500 million. Shipping lines are often reluctant to accept such high-value
cargo. “Some ocean carriers are now getting a little more receptive to handling higher value shipments but not the ultra- high value products,” he added.
AIR LOGISTICSCHINA 13
drugs requiring international shipment might further encourage greater use of ocean freight by the healthcare/pharmaceutical sector, Hook agreed that could be the case. “However, there is a caveat,” he added. “When a product
switches from patented to generic, maintaining supply is critical. If a supplier runs out of product, buyers will quickly switch to another supplier. So, for that reason, a significant proportion of the generic business will continue to be shipped by air while the rest goes by ocean.” Overall, suggested DB Schenker’s Gahan, the global
pharmaceutical industry is likely to continue making greater use of air cargo rather than ocean freight because of the value of the products involved. “The big pharmaceutical companies tell us that while air cargo is more expensive than ocean freight, there is less product at risk in any single shipment. If they load an ocean container they are putting a lot of product at risk in one location whereas individual air shipments are smaller so there is less risk to the overall supply chain.” Commenting on the issue of growing pharmaceutical industry activity in developing countries, Gahan said that in
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