A Changing Growth Dynamic
- China decelerates
China’s e-commerce sector is experiencing a slowdown in growth as the market matures and policymakers shift their focus to the rural economy. Over the next five years, e-commerce is expected to grow 23.6% from 2020 levels. That’s still healthy, but nowhere near the 70.6% growth rate for the previous five years.
Slowing growth rates are already apparent. Alibaba sales for 2021 Singles Day, the mammoth annual shopping event, were $84.5 billion – a record and up 8.5% from 2020 – but the smallest increase in growth since the start of the festival in 2009.
- 10 Years of Growth in 3 Months in the U.S., but …
At the outset of the pandemic, the United States witnessed a decade’s worth of growth in e-commerce penetration in just three months’ time, according to McKinsey. Consumers continue trying new stores, websites, brands and types of shopping experiences.
Globally, though, the 2021 e-commerce growth rate is unlikely to match the pace set in 2020. Oberlo forecasts a 17% increase in global e-commerce sales for 2021 vs. nearly 26% in 2020.
- Emerging markets outpace others
“India, Brazil, Russia, and Argentina are all projected to post at least 26% growth in retail ecommerce sales this year,” says eMarketer.
The Brookings Institution says the “latent demand for e-commerce in emerging markets remains large.”
Changes in the Warehouse
- Smarter robots
Gartner predicts that warehouse automation and digital transformation will reduce inventory carrying costs by 30% in North America and Europe by 2024. Driving much of that reduction will be the arrival of upskilled, multi-skilled or dual-purpose robots to replace robots that specialize in a single task. The next generation of machines will be able to perform more than one job. Imagine a smart machine that could conduct warehouse inventory, replenish the shelves — and clean the floors.
- AI-led warehouse configuration
Amazon’s new fulfillment center in Sydney, Australia will use artificial intelligence to store 50% more per square meter, accelerating shipping times and allowing for greater product selection.
- More micro-fulfillment
Retailers everywhere are experimenting more with micro-fulfillment centers – small, on-premise spaces devoted to processing online orders intended for pickup by customers or third-party delivery specialists. Walmart is among the many companies expanding the use of micro-fulfillment, which typically allows shoppers to drive up and scan codes to receive their orders.
Investment in businesses such as Fabric, a U.S.-based company that provides automated micro-fulfillment technology for grocers and general merchandise retailers, is surging along with growth in the same-day delivery market.
Look for more retail lockers – known in the business as Forward Deployment Fulfillment Centers (FDFCs) — in supermarkets, malls, office buildings, and other public places.
Changes in Delivery
- Low-emissions and no-emissions delivery
B-Line Urban Delivery in Portland, Oregon, has two revenue streams. One is its last-mile logistics delivery business, which delivers using large custom cargo bikes mounted with boxy containers that carry parcels. The other stream comes from selling advertising on the visually striking containers. B-Line and others are meeting the desire of cities and businesses to find ways to cut emissions and vehicle congestion.
- Creative sell-deliverer partnerships
Bed, Bath & Beyond is going to Uber Eats to launch a baby and kids vertical that will sell and perform same-day delivery of diapers, wipes, baby food and other items to new parents. Products from 750 Bed Bath & Beyond stores are available for on-demand delivery through the Uber and Uber Eats apps.
Changes in Customer Experience
- Increased use of voice search
E-commerce sellers need to optimize their sites for mobile voice search, which has grown in use as voice assistants on mobile phones and smart devices have improved. The number of voice shoppers is expected to grow 55% in 2022, according to Entrepreneur.
So sellers need to make sure that voice search makes commonly requested information – web address, physical address, contact number and business hours – easily accessible via voice. Entrepreneur recommends online sellers adopt strategies that identify and rank keywords and phrases most likely to be used in voice searches.
- Augmented reality (AR) to “see” what you’re buying
Up until now, AR has been of greatest interest to apparel brands because it allows consumers to virtually try on garments they are considering for purchase. But Oracle Netsuite urges companies with other types of businesses to take note of the rapid advance of AR technology.
Consumers doing home remodeling, for instance, will want to use AR to “see” what that new room will look like before they agree to remodel. AR can show them the flooring, wall colors, furniture, artwork and more.
- Personalization on steroids
Online sellers are relying more on artificial intelligence and machine learning to predict individual shopping habits based on their customers’ browsing and shopping histories. At the same time, Deloitte says, consumers are increasingly willing to share their personal data in return for the prospect of customized or personalized products and services. “Mass personalization” is how Deloitte describes it.
One example: Enfamil, which asks expectant mothers for their babies’ due dates and sends them personalized information throughout their pregnancies.
In one study, retailers that were able to scale personalization boosted revenue by 25%, according to Big Commerce.
On the Back End
- Open source e-commerce
Open source software systems have been popular with smaller e-commerce players, but larger companies have tended to favor proprietary solutions. That’s changing, particularly when it comes to user interface features (marketing, product catalogs, cart & checkout, order status, chat and support, account management) and a smaller set of APIs.
McKinsey says open source software typically provides more speed and flexibility, and that large e-tailers have overcome most of their doubts about scalability, security, and support requirements.
“Open source for e-commerce is an increasingly viable option for large companies, especially for those that have the requisite engineering talent and regard e-commerce as an important strategic consideration,” McKinsey says.
Read the original article by Hassan Mikail, Head of Shipa Ecommerce, at https://www.globalbankingandfinance.com/12-top-trends-in-2022-e-commerce/
Mobility ecosystems are transitioning as economies recover and move to zero-emission road transport by 2030. The aim of this session is to enhance global collaboration on the path to inclusive and sustainable mobility recovery.
The economic damage and costly business disruption brought on by the global spread of the COVID-19 virus have failed to slow the gathering momentum behind environmental sustainability and the array of efforts to battle climate change.
After decades of doubt on the part of business leaders, sustainability is delivering ROI. Businesses, investors, consumers, governments and others see it as a source of post-pandemic resiliency, efficiency and competitive advantage. Why is it proving durable now?
1. A green recovery could be a stronger one
“A low-carbon recovery could not only significantly reduce emissions, but also create more jobs and economic growth than a high-carbon recovery would,” McKinsey says.
Many industries are doubling down on sustainability investments. Few are backing off. In an Agility survey of 1,200 global supply chain executives, 72% of respondents said their companies will maintain or increase their environmental sustainability commitments coming out of the pandemic.
Want more proof? In May, the International Energy Agency slashed its forecast for the amount of renewable energy capacity to be added worldwide in 2020. But by year’s end, the IEA was forced to backtrack.
“The renewables industry has adapted quickly to the challenges of the COVID crisis. We have revised the IEA forecast for global renewable capacity additions in 2020 upwards by 18% from our previous update in May. Supply chain disruptions and construction delays slowed the progress of renewable energy projects in the first six months of 2020. However, construction of plants and manufacturing activity ramped up again quickly, and logistical challenges have been mostly resolved with the easing of cross-border restrictions since mid-May,” the IEA says.
2. Investors want more
Global asset managers want in on sustainability. In 2020, they poured more than $5 billion into so-called blank-check companies created to invest in businesses that are driven by environmental, social or governance (ESG) principles or formed to bring ESG ideas to market.
“Capital markets are wide open for investment in green businesses in a way that they’ve never been before: Interest rates are at historical lows, technology costs have fallen, and financial regulators are beginning to nudge investors, so the risk-reward equation is beginning to shift,” says Dickon Pinner, who leads McKinsey’s global Sustainability practice.
There were 20 ESG-focused blank-check companies — also known as Special Purpose Acquisition Companies (SPACs) – launched last year, according to Pitchbook. (Agility said in January that it invested $35 million in Queen’s Gambit Growth Capital, a blank-check company that will target businesses offering sustainable solutions in clean energy, healthcare, financial technology, industrials, mobility and emerging technology.)
3. It’s a culture thing now
A report by SAP and media firm Which-50 indicated a “strong shift to sustainability” among the corporations tracked by consultants and research firms such as BCG, Gartner, Juniper and Forrester.
“Sustainability has shifted from a discussion largely driven by compliance to one at the centre of business strategy,” says Which-50.
Companies are taking aggressive steps to stay ahead of the pack. VF Corp., parent of Timberland, North Face and Vans brands, is one of many companies drilling deeper into their own supply chains. VF’s traceability mapping gives the company a view of its tier 1 through tier 4 suppliers. In a show of transparency, VF has posted 46 of 100 anticipated product maps online.
4. Businesses can’t afford to be out of step with consumers
In a recent survey of European consumers, 57% of respondents said they had made significant changes to their lifestyles to ease the environmental impact. More than 60% said they were taking steps to recycle and buy products in environmentally friendly packaging.
“Consumer behavior and changing tastes are all moving in the direction of sustainability and adding pressure on companies and brands to do the same,” says Mohammed Esa, Agility GIL’s Senior Vice President of Global Business Development. “Social media plays a big role because it gives consumers a much bigger voice than they ever had.”
5. There is competition … and cooperation
Thousands of companies have announced ambitious goals. Apple, for instance, vows to be carbon-neutral by 2030.
Fifty-three companies signed the Climate Pledge, co-founded by Amazon, committing to getting themselves to net-zero carbon emissions by 2050 – 10 years ahead of the Paris Agreement. The pledge requires them to adopt rigorous reporting, cut emissions and neutralize remaining emissions with credible offsets. Climate Pledge signatories include Microsoft, IBM, Johnson Controls, Unilever, Canary Wharf Group, Uber, Henkel, Siemens, Mercedes-Benz, Infosys, Real Betis, Daabon Group,
Another group has promised to share best practices for achieving net-zero emissions. The Transform to Net Zero initiative includes Maersk, Danone, Mercedes-Benz, Microsoft, Natura & Co., Nike, Starbucks, Unilever, and Wipro. The initiative makes business plans and other resources available online.
6. Technology is making it easier
TextileGenesis, based in Hong Kong and India, is one of many apparel companies adopting blockchain so it can track the sourcing of raw materials through to production and shipment of finished garments.
The fashion and apparel industry is moving to introduce sustainable materials such as recycled cotton, lyocell (made from wood pulp) and viscose (made from wood) in place of less environmentally friendly fibers like polyester and nylon, which contain petroleum, coal and chemicals. Blockchain would help apparel manufacturers source, track and certify their use of the new materials.
Piramal Glass, an Indian company that makes bottles and glass packaging for the pharma, cosmetics and perfume industries, is using blockchain to get supply chain transparency and auditability.
Another important advance is the use of digital or virtual twinning.
The flood of data available from the Internet of Things (IoT) and cloud computing makes it possible and cost effective to create digital “twins” that model and simulate processes with potential to deliver environmental benefits.
“This pairing of the virtual and physical worlds allows analysis of data and monitoring of systems to head off problems before they even occur, prevent downtime, develop new opportunities and even plan for the future by using simulations,” says Forbes.
The Port of Rotterdam is using digital twinning to model automation, design and sustainability features that are part of its push to become “the world’s smartest port.” Twinning gives port planners the ability to virtually test use of autonomous ships, “digital handshakes” for documentation exchanged between vessels and the port, and emissions-lowering port call practices.
Without digital twinning, port officials would have no way to test the transformational processes without disrupting operations at a sprawling port that handles 8.8 million containers and 15 million twenty-foot equivalent units a year.
“In a virtual environment, we can verify and validate solutions before the real tests begin, maturing solutions much faster. We also don’t have the safety risks or hazards we would in real-life tests and that’s why this digital environment is better and faster for development and validation work,” says Karno Tenovuo, CEO of Awake.AI, the Finnish company that is Rotterdam’s smart-port development partner.
Tenovuo says ports will able to lower CO2 emissions 10% by adopting the features and optimization methods that will be harnessed in Rotterdam.
7. The ocean industry is racing to catch up
Slow to embrace sustainability, the maritime logistics industry is now an area to watch.
Leading container lines and ports are working on standards for a just-in-time port call process that would eliminate wasteful delays and dwell times. JIT port calls would allow ships to optimize steaming speed, lower fuel use, cut CO2 emissions, and avoid getting stranded outside ports waiting for berthing slots.
Singapore’s futuristic Tuas port is being built to handle 65 million TEUs a year. By consolidating existing container-handling facilities at a single location, Singapore will cut inter-terminal trucking hauls and emissions. Reused and recycled materials make up half of the land reclamation work, and the port is moving sensitive coral colonies that would have been damaged by the construction.
Maersk, the world’s largest container line, is accelerating development and deployment of the world’s first carbon-neutral container ship. Maersk says the vessel, a smaller ship known as a feeder, will run on biomethanol, made from paper-mill waste and other byproducts. It will join the Maersk fleet in 2023.
RightShip, a maritime risk-management company, created a ratings system to compare the efficiency of different cargo ships, along with operational performance used to score ships on safety. RightShip ratings allow shippers to choose vessels with lower CO2 footprints, better fuel efficiency, and higher safety ratings.
8. There are carrots to go with sticks
European Union companies that rely on imports from South Asia are promising broader market access, training and gap assessments for Sri Lankan exporters whose products can meet international sustainability standards.
The initial group of Sri Lankan companies are providers of rubber, apparel and food products, but a German and EU business delegation has agreed to help Sri Lanka extend the project to its critical tourism sector.
Banks and venture capital firms are offering preferential terms to companies that agree to meet environmental criteria, such as reporting CO2 emissions and implementing emissions-reduction strategies.
9. The sticks are real
In early 2020, BlackRock, the world’s largest asset manager, notified hundreds of listed companies in its portfolio that it had started to factor environmental issues and performance into its investment decisions.
A year later, BlackRock told its own investors that it had voted against the management of 53 companies – including some of the biggest global names in manufacturing and industrial supply – because those companies failed to “make sufficient progress regarding climate risk disclosure or management.”
Too many companies still rely strictly on internal data to get a picture of their supply chains. To strengthen their post-pandemic supply chains and drive sustainability, many realize they need to exchange data with suppliers and customers.
10. There’s nowhere to hide
Seventy-percent of shippers look at sustainability as part of RFPs, and more are requiring their vendors to report on sustainability metrics on a regular basis. They want to know about fuel efficiency; CO2 emissions; alternative fuel use; personnel & staffing devoted to sustainability; and fleet age.
Climate TRACE, an alliance of climate research groups, is close to launch of an initiative that will track and publish greenhouse gas emissions traceable to individual factories and ships.
“Our work will be extremely granular in focus – down to specific power plants, ships, factories, and more. Our goal is to actively track and verify all significant human-caused GHG emissions worldwide with unprecedented levels of detail and speed,” the alliance founders say.
Climate TRACE will give business leaders, investors, NGOs and climate activists a powerful tool “while ensuring that no one – corporation, country, or otherwise – will ever again have the ability to hide or fake their emissions data.”
Agility’s Tarek Sultan joined the London Business School’s Middle East Club for a fireside chat on the rise of successful startups.
Nearly 90% expect export growth by using tech to overcome shipping, regulatory obstacles
DUBAI – May 10, 2018 – Small and medium-size businesses that have struggled for equal footing in the global economy are increasingly looking to cross-border trade for growth, seeing technology as a way past obstacles in shipping and compliance, according to new research from Shipa Freight.
Shipa Freight’s global study of 800 SMEs from developed and emerging markets shows that smaller companies are remarkably upbeat about their ability to expand through trade.
Eighty-nine percent of exporting SMEs surveyed say their export revenue will grow over the next three years. Seventy-one percent say they are concentrating more on international markets than on their home markets. The Shipa Freight survey included exporters and importers from the UK, USA, Germany, Italy, China, India, Indonesia and UAE.
Smaller companies account for an estimated 95% of all businesses and employ two-thirds of the world’s workers. Critics of globalization have argued that decades of efforts aimed at easing the flow of goods, capital and jobs across borders has come at the expense of SMEs and disproportionately benefitted multi-nationals and other large businesses.
“Smaller businesses used to think they couldn’t compete in trade. Now many see it as their best path for growth,” says Toby Edwards, CEO of Shipa Freight, the online freight service. “SMEs are not naïve about the obstacles to unlocking new markets. They see online tools and other technology as a way to conduct transactions, get financing and gather market intelligence.”
Three-quarters of SME executives surveyed by Shipa Freight believe businesses that operate internationally are more resilient. Nearly 80% say they are already using online platforms for freight quotes and bookings.
SMEs identified numerous obstacles they face in international trade. Forty-two percent say the costs of shipping abroad are too high, or that they don’t have an accurate picture of their costs. Forty percent say they find it difficult to understand documentation requirements.
A significant minority say their cargo has been held up in customs (39%) or lost in transit (27%).
Small and medium-sized businesses based in emerging markets are finding export regulations particularly challenging: 67% identify export regulations as a difficult issue, compared with just 44% of SMEs based in mature European markets. Seventy-nine percent of exporters from India, China and Indonesia say they find it challenging to penetrate markets in Europe.
SMEs that view the UK as one of their top export markets are looking elsewhere because of Brexit. Seventy-three percent say Britain’s vote to leave the European Union has prompted them to prioritize trade with other European countries. Sixty percent of UK SMEs that export and 52% of UK SMEs that import say that leaving the EU Single Market would be “disastrous” for them.
New tech boosts export prospects
Smaller companies clearly see technology as a way to close the gap with bigger competitors, cope with documentation requirements and get quick access to competitive shipping options. Eighty-six percent say that tech is “leveling the playing field” for SMEs to operate globally; 89% believe technology is transforming the logistics industry.
“The logistics industry has traditionally ignored SMEs and done far too little to help them find new markets and grow,” Edwards says. “Technology is giving them the ‘virtual’ scale that they’ve needed to lower their costs, get real-time information and compete.”
About the study
Shipa Freight’s Ship for Success research examines the trade patterns and barriers of SMEs, defined here as organizations with 10-250 employees. The opinion research was conducted in winter 2017 amongst 800 companies (400 exporters and 400 importers). There were 100 respondents from each of the following markets: UK, USA, Germany, Italy, India, Indonesia, China and UAE. Study participants included SME leaders, such as managing directors and operations directors. Participating companies were drawn from the following sectors: retail and fashion, fast-moving consumer goods (FMCG), automotive (including supply chain), industrial and manufacturing, and technology. You can explore the findings and download the full report below. Download full report
About Shipa Freight
Shipa Freight is the new online service powered by Agility that makes it easy to get air and ocean freight quotes, book, pay and track your shipments online. With our global network of logistics experts and industry-leading technology, we ensure that your goods arrive safely and reliably every time.
Agility is one of the world’s leading providers of integrated logistics. It is a publicly traded company with more than $4.6 billion in revenue and more than 22,000 employees in over 500 offices across 100 countries. Agility Global Integrated Logistics (GIL) provides supply chain solutions to meet traditional and complex customer needs. GIL offers air, ocean and road freight forwarding, warehousing, distribution, and specialized services in project logistics, fairs and events, and chemicals. Agility’s Infrastructure group of companies manages industrial real estate and offers logistics-related services, including customs digitization, waste management and recycling, aviation and ground-handling services, support to governments and ministries of defense, remote infrastructure and life support
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‘Emerging markets’ refers to the combined results of India, China and Indonesia. It does not include UAE figures. ‘Mature European markets’ refers to the combined results of the UK, Germany and Italy.
Agility and Transport Intelligence discuss the 2021 global economic outlook, ongoing supply chain turmoil, and lasting change brought about by the pandemic — all reflected in the just-launched 2021 Agility Emerging Markets Logistics Index.
After a difficult year of deaths and lockdowns, hope is finally on the horizon as the first COVID-19 vaccines appear on the market. The very first doses of the COVID-19 vaccine have already been administered, but full distribution of the vaccine to the global population—which will represent the largest vaccine procurement and supply operation in history—is yet to begin in earnest.
This operation will greatly impact every aspect of the global supply chain. There are a number of expected vaccine logistics shortages from COVID-19, from shipping container availability to cold chain supplies. And that’s not counting the many COVID-19-related challenges the supply chain is already facing, such as route disruptions and skyrocketing cargo rates.
This article will discuss the impact of the global COVID-19 vaccine distribution on supply chain logistics, including anticipated COVID-19 vaccine logistics, unique distribution challenges of COVID-19 vaccines, development of the COVID-19 supply chain, and how the vaccine could impact pharmaceutical supply chain logistics.
Anticipating COVID-19 vaccine logistics
The COVID-19 vaccine distribution effort is not yet in full swing, but it’s possible to anticipate how the logistics of the effort will work. Both national and global agencies have discussed putting into place coordinated distribution initiatives on an unprecedented scale, which will require the cooperation of supply chain agents and logistics providers.
The vaccine supply chain before COVID-19
Pre-COVID-19, the vaccine supply chain was an end-to-end system that was meant to ensure effective vaccine storage and handling, as well as strict temperature control in the cold chain. It has always been essential for the vaccine supply chain to run smoothly to ensure uninterrupted vaccine delivery to populations in need.
However, even before COVID-19, the World Health Organization (WHO) reported that national supply chains were struggling to manage the volume of new vaccines and to take advantage of improved vaccine supply chain technology like updated cold chain materials.
Necessary changes to the vaccine supply chain due to the COVID-19 vaccine
Moving forward, the vaccine supply chain cannot afford to get bogged down in supply chain issues like inadequate storage, transportation, and personnel capacity. This creates bottlenecks, and in the past has led to spoilage of many vaccines. A global coordination effort will be needed to optimize the supply chain for this crucial operation. Possible steps include the following:
- Standardization of all COVID-19 vaccine packaging to ensure proper fit within containers
- Coordination of vaccine deliveries based on the two necessary doses of the COVID-19 vaccine
- Maintenance of the COVID-19 accessory supply chain for supplies such as needles and alcohol swabs
- Open communication across all agents within the supply chain
How the COVAX initiative will affect the logistics of the COVID-19 vaccine
COVAX is the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator, launched by the WHO, the European Commission, and France in April 2020. It is leading efforts to procure vaccines and distribute them to ninety-two lower-income countries, while also supporting procurement for more than ninety-seven upper-middle-income and high-income nations.
According to UNICEF, the United Nations agency responsible for providing humanitarian and developmental aid to children worldwide, these represent more than four-fifths of the world’s population. UNICEF, a COVAX member, is responsible for the transportation and supply chain piece of the COVID-19 vaccine distribution.
COVAX will allocate vaccine doses to participating countries, proportional to their total population size. To distribute the vaccines, UNICEF is working with manufacturers and partners in procurement, freight, logistics, and storage. UNICEF is well suited to handling the distribution, because it is the single largest buyer of vaccines in the world and already has longstanding expertise in procurement and logistics.
How large a project is the COVID-19 vaccination effort expected to become?
The COVID-19 vaccination effort will be the largest vaccine procurement and supply operation in history. The World Economic Forum (WEF) expects approximately six to seven billion doses of COVID-19 vaccines to be consumed in 2021. This accounts for nearly the entire global population of 7.8 billion people.
Europe, North America, and Asia are expected to consume the largest shares of the 2021 doses. The WEF projects that the largest inflows of vaccine doses will be to Asia, excluding China and India (820 million doses), and Africa (450 million doses).
How the COVID-19 vaccination effort will affect other health care logistics
The health care and pharmaceutical industries will experience logistical challenges as a result of the COVID-19 vaccination effort, because of the vaccine effort itself and also because of disruptions to the medical and pharmaceutical supply chain due to COVID-19 and vaccine distribution.
Air shipments to Africa and parts of Asia-Pacific will lead to an imbalance in normal air freight trade and diversion of aircraft to routes leading to hubs in those regions, which may impact other supply chains, including medical and pharmaceutical supply chains.
In addition, shipping and freight prices are high and volatile due to the impact of COVID-19 on the entire shipping industry: global air cargo capacity remains about 20 percent below prepandemic levels, mainly due to reduction in passenger flights and resulting shortage of widebody belly capacity, which is down nearly 70 percent. Also putting pressure on rates is the lack of natural backhaul cargo from Africa and other southern hemisphere destinations.
To improve the COVID-19 vaccine supply chain, the pharmaceutical industry could consider combining a distributed manufacturing approach with multiple manufacturing sites in different regions in order to minimize distribution needs. Shipment in less-than-container loads for transport by ocean could be a possibility. In addition, the pharmaceutical industry may also be able to save time by shipping the vaccines in bulk.
Unique distribution challenges of COVID-19 vaccines
Vaccines are among the most difficult cargo to transport due to their very particular temperature requirements, so we can expect significant challenges in shipping the COVID-19 vaccine. In addition, associated shipping materials may become in short supply, while the unprecedented scale of the vaccine distribution effort will strain the entire global supply chain. Logistics providers will need to strategize carefully to effectively transport vaccines to their destinations.
The role of cold chain logistics in the distribution of the COVID-19 vaccine
“Cold chain logistics” refers to the process of safely transporting temperature-sensitive products in the supply chain. Vaccines are among these cold chain products: according to Supply Chain Dive, they must be shipped at a temperature between -50 degrees and -15 degrees Celsius if frozen, or 2 to 8 degrees Celsius otherwise. Temperature stabilization is tricky in shipping, and unfortunately, a quarter of all vaccines are degraded by the time they reach their destination.
Eighty-three percent of COVID-19 doses will be normal cold chain products requiring storage at 2 to 8 degrees Celsius; roughly 17 percent will be ultra cold chain products requiring storage at lower temperatures.
Temperature-sensitive shipping often relies on dry ice. One significant challenge in the COVID-19 vaccine supply chain is that different types of passenger aircraft are limited in the amount of dry ice they can carry. The range is 180 to 950 kilograms, with most aircraft types limited to the lower end of the range.
Materials in demand for the successful distribution of the COVID-19 vaccine
As discussed above, temperature-controlled shipping materials are essential in the vaccine supply chain and thus will be highly in demand.
There are two options when it comes to cold chain shipping: active containers and passive containers. An active container has active temperature control, while a passive container is an insulated container with no active temperature control. Cooling packaging must be used in passive containers, and cooling materials such as dry ice may soon be in short supply due to high demand.
In addition, requirements for related cargo could be significant: one pallet of vaccine doses requires one truckload of syringes and related equipment. Shipping space will be even more in demand because of this additional cargo.
How will the sheer size of the COVID-19 vaccination effort impact logistics?
The COVID-19 vaccination effort will make the entire logistics landscape look very different than usual. COVID-19 vaccines will represent five times the air freight volumes for all vaccines in 2019, and the vaccines will represent 12 percent of the pharmaceutical industry’s total air freight volume in 2019. Industry groups estimate that global COVID-19 vaccine distribution will require the equivalent air freight capacity of 928 Boeing 747-400 aircraft.
To prepare for the coming changes in the logistics industry, Agility’s COVID-19 Response Team & Charter Desk has done detailed analysis of carriers for capacity, frequency, scheduling, routing, cost, flow type, dry ice constraints, lead time requirements, cancellation rules, and types of agreements (HB, SB, ad hoc/spot). We are also evaluating carriers based on their performance records, flexibility, and risk, as well as the likelihood they will increase rates.
Since major shipping hubs on the ground will certainly feel the strain in the supply chain as well, we have evaluated their ground handling capabilities, airport requirements and constraints, and nearby cold storage availability and options.
Agility has expanded its network of life sciences centers to thirty-two locations worldwide. In addition, we are leveraging our parent company’s global footprint and logistics assets, which include aviation and ground handling expertise and facilities, truck fleets, and workforce, as well as international-standard logistics parks in Asia-Pacific, the Middle East, and Africa.
Developing the COVID-19 vaccine supply chain
Agencies involved with vaccine distribution are aware that developing the vaccine was just half the battle; the other half is effective distribution, a massive challenge in itself. Task forces have been appointed for just this purpose, and these groups will need to address safety precautions in the vaccine supply chain, as well as ways to streamline the process.
The role of the WHO’s COVID-19 Supply Chain Task Force
The WHO’s COVID-19 Supply Chain Task Force is addressing shortages in essential supplies, including personal protective equipment, diagnostics, and medical equipment. It is taking a three-pronged approach to this challenge in the following ways:
- Establishing a global strategy to provide access to essential supplies
- Bringing together public and private partners to help meet those needs
- Ensuring the distribution of essential supplies and cargo
The WHO is pursuing these goals through the following methods:
- Consolidating demand to avoid overlap and demand amplification
- Coordination of procurement to aggregate volumes and get better access and pricing
- Forming allocation agreements based on need, country capacity, and vulnerability levels
- Forming a singular distribution network that allows movement of deliveries through established hubs around the world and to designated ports of entry worldwide
Safety precautions in the coronavirus vaccine supply chain
The biggest vulnerability in COVID-19 vaccine distribution is the possibility of temperature excursions. Vaccine manufacturers must use only temperature-regulated shippers and containers that are certified to meet the international regulations for temperature-controlled products.
At the same time, manufacturers will need to prepare for risks that arise during the shipping process. Companies will need to have a plan for rescuing vaccine shipments that are delayed in delivery, so that temperature excursions do not occur. Companies will also need to plan for a certain inevitable level of vaccine spoilage and damage incurred in the shipping process.
How the coronavirus vaccine supply chain can be streamlined
As a logistics expert, Agility recommends the following strategies for helping the COVID-19 vaccine shipping process go more smoothly:
- Identify and evaluate key lane pairs based on value and importance
- Engage in forward planning, forecasting, and building of stock levels
- Examine possible changes to shipping solutions to reduce volume and weight
- Increase cold chain packaging availability and develop backup plans with key suppliers
- Tighten alliances with strategic partners
How the COVID-19 vaccine could change pharma supply chain logistics
The COVID-19 vaccine distribution will have an unparalleled impact on pharmaceutical supply chain logistics. The vaccine will strain the supply chain more than perhaps any other pharmaceutical product in history. Due to the COVID-19 vaccine, the pharmaceutical supply chain will face certain geopolitical issues and a changed market outlook, at least in the near future.
How will the COVID-19 vaccine rollout change supply chain logistics for pharmaceutical companies and products?
Agility has been talking to various industry stakeholders, including clients, airlines, ground handlers, and packaging providers about the market outlook for pharma supply chain logistics. In short, no one yet has a clear picture.
These stakeholders are looking closely at the following factors:
- Timeline/duration and shipping cycles
- Vaccine availability/expected shipping volumes
- Vaccine transport requirements, including variation in temperature requirements for different vaccines
- Beyond temperature control requirements, the product has a relatively low monetary value, yet a high criminal value. The aspect of product safety cannot be neglected.
- The air market situation and the COVID-19 pandemic impact on equipment and capacity
Agility foresees challenges in equipment and supplies of containers, dry ice shippers, and dry ice itself. We also anticipate imbalances and return logistics challenges for containers. On the road freight side, capacity and drivers will become an issue.
What can the pharmaceutical industry learn from the global distribution of COVID-19 vaccines?
In addition to being a challenge, the COVID-19 vaccine distribution effort can also represent an opportunity for the pharmaceutical supply chain, especially in terms of future vaccine distribution. Never has there been such an impetus for the pharma supply chain to optimize and coordinate its operations on a global scale.
After the COVID-19 pandemic, the pharma supply chain will be able to take advantage of optimized operations that were developed out of necessity for COVID-19 vaccine distribution. It can continue to coordinate pharmaceutical packaging to ensure it fits optimally within containers. It can also utilize strategies developed for COVID-19 vaccine distribution to push more pharmaceuticals to hard-to-reach areas. Finally, it can keep the lines of communication open to ensure better transparency across the supply chain, which will help keep products at the necessary temperatures, leading to less vaccine wastage overall.
How could the pharma industry prepare for future disruptions to its supply chain?
In the future, pharmaceutical manufacturers can make their supply chains more resilient by diversifying their sources and suppliers. In many cases, this will mean lessening dependence on China, which accounts for 28 percent of manufacturing worldwide. Regional supply chains will emerge, reducing the dependency on a limited number of suppliers located in one geography.
The other major way to “future-proof” pharmaceutical supply chains is to rely more on digital capabilities such as predictive modelling, big data, and partner integration. The increased information and flexibility afforded by these technologies can make all the difference in a crisis situation.
The supply chain’s role in conquering COVID-19
The COVID-19 disease and vaccine will continue to impact the entire global supply chain for the foreseeable future. The supply chain is crucial to distributing the vaccine and finally seeing an end to the pandemic. For the sake of human health and safety worldwide, it’s essential for every party involved to understand the logistics issues inherent in COVID-19 vaccine distribution and to strategize properly for an organized, effective approach.
This article is part of the World Economic Forum Annual Meeting
- The number of potentially disruptive technologies in logistics is daunting.
- This makes it difficult for supply chain businesses to know where to look.
- Blockchain, IoT, automation and data science should be first on their list.
Astute business leaders discipline themselves to be on constant lookout for disruptive new technologies.
They foster an internal business culture that is able to evaluate promising technologies through a continuous cycle: Watch > pilot > partner > adopt or discard.
In logistics, as in many other sectors, the number of potentially disruptive innovations is daunting. It includes everything from augmented reality and big data to autonomous vehicles and 3D printing. Even the most agile businesses can’t test or pilot everything, so what’s the right approach?
For companies with goods to move, there are several technologies that bear watching and four that every party in the supply chain should be testing at some level. These four are the BIRD technologies – blockchain, the internet of things (IoT), robotic process automation (RPA) and data science.
The BIRD technologies are inter-related and mutually reinforcing. Blockchain, or distributed ledger technology, establishes trust in data. The IoT provides a vast quantity of relevant data points. RPA improves the accuracy of data. Data science extracts value.
Blockchain has its skeptics, including many who believe the technology has already fallen short and might be too inherently problematic. Some skepticism is justified, but it’s premature for blockchain to be written off.
The idea behind blockchain is that all of the information required for completion of a transaction is stored in transparent, shared databases to prevent it from being deleted, tampered with or revised. There is a digital record of every process, task and payment involved. The authorization for any activity required at any stage is identified, validated, stored and shared with the parties who need it.
In ongoing pilots of this technology, shippers, freight forwarders, carriers, ports, insurance companies, banks, lawyers and others are sharing “milestone” information and data about their pieces of an individual shipping transaction. What’s missing today is agreement by all the relevant parties in the supply chain – including regulators – on a set of common industry standards that will govern the use of blockchain.
Absent a consensus on standardization, blockchain offers little. But with a common framework and set of rules, it could make shipping faster, cheaper and more efficient by increasing trust and reducing risk. It would shrink insurance premiums, financing costs and transit times, and eliminate supply chain intermediaries who add cost today but who would become surplus to requirements.
2) The internet of things
As a platform for sharing trusted data, blockchain is ideally suited to the internet of things. IoT devices can be attached to almost anything. As 5G technology evolves and spreads, tiny IoT chips embedded in products will enable businesses to track and monitor shipments of pharmaceuticals, high-tech goods, consumer products, industrial machinery and garments.
That data can be encrypted and shared through the blockchain so that customers and suppliers have a real-time record of the transaction. An IoT-enabled supply chain would be both leaner and less risky. It would allow for true just-in-time production by guaranteeing inventory accuracy and, in turn, reducing working capital requirements.
3) Robotic process automation
Of course, data is no good if it is not accurate. In the supply chain, the leading cause of inaccuracy is human error. Robotic process automation, or RPA, is the artificial intelligence used to allow software to handle many of the steps involved in a shipping transaction by understanding and manipulating data, triggering responses and interacting with other digital systems.
Use of RPA can ensure accuracy in customs declarations, safety certificates, bills of lading and other paperwork. It can reduce reliance on the manually entered data, emails and digital forms that produce errors, create delays and add cost all along the supply chain. RPA frees up workers to be more productive by doing what humans do best: solve problems, react to the unexpected, think creatively and deal with customers.
4) Data science
Thanks to data science, we are in the midst of seismic change in the supply chain. We are getting more data from more sources; it is the right data; and it is accurate. Tools such as artificial intelligence, machine learning and cloud computing enable us to analyze and use that data in powerful new ways.
Rather than using information to sound alarms when there are “exceptions” – problems or anomalies with an individual shipment or in the supply chain – we can use it to prevent them. Data becomes about managing the future, not the present.
The risk, of course, is that only large, well-resourced supply chain players will be able to take advantage of BIRD technologies and other advances that involve harnessing data. That would create a dangerous new digital divide between large and small, haves and have-nots.
Thankfully, data is having a democratizing effect by making the global economy fairer and more inclusive in important ways. Small businesses and emerging markets companies aspiring to go global aren’t piloting blockchain or developing their own RPA applications. But they are already the beneficiaries of new, inexpensive, data-informed tools and platforms underpinned by artificial intelligence and machine learning: online freight booking, instant financing, automated marketing, cheap cloud computing and remote advisory services.
The BIRD technologies generate trust in data, ensuring accuracy and giving users the ability to predict and act. In a data-driven world, they can help businesses of all sizes take flight.