KEEPING COOL: Facing the Challenges of Cold-Chain Logistics

Third-Party Logistics (3PL) Companies are betting heavily on the cold-chain technologies and are spending more on equipment, expanding capacity, investing in new and better technologies, and are continuously developing overall process improvements. It’s a pretty good bet when research shows that approximately $12.6 billion dollars is expected to be spent this year on managing the transportation of temperature controlled pharma products.

And there is no slow-down in sight, with projections showing nearly $16.7 billion being spent by 2020 as explained in more detail in this Pharmaceutical Commerce article. However, this does pose some unique challenges that are not just isolated to the cold-chain logistics sector. These challenges such as globalization, cost constraints and sheer volume can seem daunting enough without taking into consideration the challenges of the cargo itself due its sensitivity and high-value.

Pharmaceutical companies are increasing their development of more sensitive biologics that require very restrictive controls on temperature, time, and security. Even more, this is being done with products that must meet the highest regulatory and quality standards.

Here is a more in-depth look at some of the challenges facing cold-chain logistics:

Globalization

A phenomenon, which is fueled by international trade, investment, and further aided by information technology, has decreased the perceptive distance between countries. As countries increase their dependence on one another, their access and ability to afford quality-of-life products also increases. As the demands go up, so do the needs to supply them efficiently and effectively. Over the last few years, there has been a slight slow-down due to the world’s economic health, but as the middle-class grows, the demand will invariably grow along with it.

Security

Biologics are more expensive and represent a higher value target for both thieves to steal and counterfeiters introducing their counterfeit products into the supply chain. This means that 3PL companies have to invest in more robust systems for security, both while the products are in the warehouse and in-transit.

Regulations

As the reach of these products expand into new markets, so do the governing bodies that impose the regulations. There has been a concerted effort for harmonization among the various regulatory bodies, such as the US Food and Drug Administration (FDA) and the European Union (EU), but these are still on-going. In November 2013, the European Union (EU) guidelines on Good Distribution Practice (GDP) for medicinal products for human use went into effect, which extended temperature requirements to transportation, and expanded coverage to include over-the-counter drugs. Now 80% of pharma-products require temperature controlled shipping in EU.

Cost Reduction

Common themes in the marketplace today such as cut costs, increase capacity, be lean, do more, with less, etc… are an even greater challenge for 3PL companies, especially where cold-chain is concerned. 3PLs are also dealing with other factors, such as capacity issues, investments in refrigerated fleets that require significant capital investment, driver shortage when they require specially trained drivers, and an increase in overall liability.

Technology Investment

The supply chain is getting more complex and the customers’ expectations are only increasing, especially in cold-chain. Successful 3PL’s are investing in technology that allow for location and environmental condition tracking in real-time, temperature monitoring and security. This includes both on-board technologies, as well as back-end IT infrastructure investments.

The world of pharmaceutical cold-chain logistics is complex, challenging, and ever-evolving. As companies strive to meet the new demands of a more connected global economy, they need a 3PL partner that brings expertise in cold-chain management. They also need to be able to depend on the company to manage the complexity and risk, reduce total cost, and help maximize efficiencies to increase profit. These are all achievable, but only with a strong partner that knows the process intimately and is able to effectively collaborate with your team. If you are looking for more information on cold-chain logistics, talk to one of our experienced team members today.

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