More complexity. Less capacity. Managing the rising cost of global logistics.
Freight capacity - the domino effect
The belly space in the lower decks of passenger aircraft usually provides more than half of the available global cargo capacity but travel restrictions have kept most planes on the ground since March 2020.The International Air Transport Association (IATA) predicted travel would return to 2019 levels by 20231 (global air cargo capacity is expected to be 3% up on 2019 levels by 2023, driven by strong demand).
The organization then extended its forecast by another year to 2024 as COVID-19 infections spiked in the United States and in developing countries.
A return of passengers will increase utilization of parked aircraft and belly capacity as a result, partially rebalancing the belly-freighter split, but not to the pre-COVID levels.
Simon Brinckmann, Senior Director of Strategy, states: “It is unlikely that capacity will return to ‘normal’ levels anytime soon. At a minimum, we expect increasing demand to exceed air capacity for at least the next 18-24 months, maintaining pressure on global logistics.”
On top of that, sea freight is facing new problems. As global economies have reopened and consumer travel demand has returned, retailers have rushed to restock inventories and shipping systems have struggled to maintain pace. Ports around the world are working around the clock to shift queues of waiting ships with logistics companies having to move higher value, time sensitive shipments by air cargo due to the delays.
Reduced direct flights also complicate logistics and create staffing issues, meaning it often takes longer to offload planes and leading to more pressure and costs in the supply chain.
Added to this, consensus forecasts compiled by Bloomberg predict a 5.3 per cent year-over-year increase in the consumer price index for August in the United States2.Jet fuel costs have also risen sharply and are quickly returning to 2018 rates, when they reached their highest level since the 2014-2016 collapse3. Both are directly increasing the cost of shipping anything by air.
Biopharma drugs are more complex than ever
As drug development pipelines continue to shift towards more advanced and personalized biologic therapies, shipment complexity grows and there is more demand for specialist cold chain handling and air freight capacity.
The net effect of all these factors is an overall rise in air cargo rates. As mentioned above, our internal data shows airfreight costs are up by over a third compared with rates at the onset of the pandemic and show no sign of falling.
How to help mitigate these pressures
Acting early and collaborating with partners is essential. Ultimately, there is less cargo space available on planes and this is likely to be the case for some time. By helping your logistics partner plan and forecast demand better, they can mitigate the impact on your supply chain.
Global consultative, rather than smaller transactional, logistics partners will help create services tailored to each customer's requirements and the most cost-effective approach that ensures the safe delivery of drug products.
Our president, Rafael Teixeira adds that: “Engaging logistics partners that understand clinical trials markets early in the planning process will help to build customized end-to-end logistics strategies that ensure products are delivered on time, and in the right condition. These relationships enable biotech and pharmaceutical companies to better leverage expertise in medical logistics and are essential to expanding global access to innovative therapies.”
The World Courier difference
World Courier is carrier agnostic, which means we operate with more flexibility. We offer consultative support and expertise, ensuring our products meet increasingly complex logistics needs. We have a truly global network, operating across 190 countries and offer a specialist, white-glove service for high-value, complex biopharmaceutical goods.
Navigating challenges together
We’re here to help you navigate every logistics challenge for your most complex therapies. Our associates offer expert guidance on pharma logistics and storage solutions tailored to the needs of your product and your patients.