Meeting Pharma’s Needs with Air Cargo
Since American Airlines Cargo Division (AA Cargo) began its temperature-control service for pharmaceuticals, ExpediteTC, in 2009, the carrier has shipped just over a half-million pounds in temperature-controlled drugs. “Why just last week, we broke a weekly record,” notes David Brooks, president of AA Cargo, speaking to PMP News in September 2010.
|David Brooks, President of AA Cargo|
AA Cargo’s ExpediteTC business has been growing steadily, and Brooks credits that to the temperature-control needs of the drug industry. “It is a huge, growing market. Twenty-five percent of pharmaceuticals need temperature control, 65% of biotech products need it, along with 100% of vaccines,” he says, citing data from IMS Health.
But Brooks also says that AA Cargo’s careful preparation equipped it to serve the industry. The carrier is a qualified Envirotainer provider in 59 cities and 23 countries. “We spent a lot of time developing the right shipping and handling procedures and training all staff who handle these products around the world. It took about a year’s work to ensure this,” he explains.
Challenges are inherent in shipping air cargo. “We have a lot to contend with that is outside our control,” says Brooks. “There are weather delays and aircraft breakdowns. But we still have to maintain product temperatures and re-book shipments so that they arrive as scheduled. We need a good plan B and even a good plan C. If we fail to recover, the consequences are severe, especially when you are talking about million-dollar shipments. And if the shipment doesn’t move as booked, the shipper doesn’t pay.”
Maintaining the Envirotainer active shipping containers provides the needed shipping consistency, regardless of most of these challenges. “As long as the refrigerants are maintained, usually dry ice, and the batteries are powered, the temperature can be maintained in the Envirotainer as needed,” says Brooks.
AA Cargo’s second strength is tracking and visibility. “We micromanage all shipments and bar code scan all product around the world. And we have daily conference calls on these high-profile shipments,” he says. Emerging tracking technology expected to be available in about one year should enable AA Cargo to provide 24-hour tracking. “Past limitations in tracking technology have been around the fact that such systems are not certified for use with avionics on most aircraft,” Brooks says. AA Cargo has been working with OnAsset to use its 24-hour tracking device—about the size of a deck of cards—that moves communication between GPS and cellular networks.
Brooks recently spoke at IQPC in Philadelphia with Bob Gahan, vice president of global sales-health care, DB Schenker, about the importance for pharma to build good relationships among the shipper, freight forwarder, and carrier. AA Cargo and this freight forwarder have developed effective collaboration to handle shipments between Japan and Puerto Rico. “In typical air shipments, all three entities operate in their own little silos, and that works 95% of the time. But silos don’t work for pharma—these shippers have a great need for visibility, and they realize the importance of collaboration. It is a new business model for air cargo, so SOPs need to be developed and dialogue maintained.”
The next challenge for air cargo involves managing costs in a market with growing demand yet air capacity limits. “One question I got at IQPC was regarding how much air capacity would be available in the future,” says Brooks. “It is the concern of all shippers. Fuel prices are up, and security constraints could hamper air capacity. So we have to find out how to be able to meet double-digit pharma growth with single-digit air capacity growth.” One potential solution for pharma is to work with freight forwarders that buy priority air capacity, he notes.
But rates could rise in the future, given fuel price increases, Brooks says. So AA Cargo is looking at alternatives to active shipping containers that could offer some savings for certain applications. “Active solutions using batteries are expensive to use, so freight forwarders are asking for passive control. We are working on some passive solutions. Normally these shippers are not very large, but we are also looking at pallet-sized options.”