Pharmaceutical Shipping Takes to the Ground

Cost and cold chain concerns drive a decrease in shipping via air freight.

Pharmaceutical manufacturers are increasingly opting for slower methods of transporting their products due to cheaper pricing and difficulty insuring the integrity of the cold chain.

Baxter, a top manufacturer of products that treat conditions such as hemophilia, kidney disease, and immune disorders, transports large quantities of raw materials and more than 100 million cases of finished products through the company's global supply chain each year. Baxter also operates its own product distribution system, which includes a private fleet to home deliver Renal products in certain regions.

The company recently transitioned to reduce air freight product distribution in favor of intermodal services through truck and rail, which not only cut costs, but also drove a decreased carbon footprint through a reduction of 18,000 metric tons of carbon dioxide in 2013.

“In its largest US replenishment center, Baxter deployed a new application that assists transportation planners to maximize the total weight of a truckload. This application suggests an optimal product mix and loading pattern to increase the total truckload weight, while not exceeding the legal weight limitations,” the company said via press release. “Based on 2013 results, it is expected that deploying this technology will result in 900 fewer truckloads annually, or 2300 metric tons of CO2e. Baxter plans to roll out the application to other replenishment centers over the next 18 months.”

A global health care logistics report by the firm Transport Intelligence noted that 85% of pharmaceuticals were transported by air in 2013, while 15% were shipped via ocean and truck. By next year, however, air transport of pharmaceuticals is expected to decrease to 65%, while ocean and ground transport is expected to increase by 35%, according to Outsourcing Pharma.

“Various changes within the industry have left health care manufacturers facing rising costs and shrinking profits. For many, this means a long, hard look at the supply chain,” Transport Intelligence wrote in the report. “Significant opportunities exist in health care logistics, cold chain, pharmaceuticals, medical devices, and clinical trials to name just a few. However, in order for the logistics provider to [achieve] success it must prove itself in this in this challenging, highly regulated industry.”