The air cargo industry is at the nexus of supply and demand. Combined with its role in the services industry, the air cargo industry is heavily influenced by the latest technologies and market forces. As a result, making business plans one month, let alone one year, in advance is a tall order.
As we look to make strategic decisions this year, let’s take a look at the fastest-growing air cargo trends shaping the transport of pharmaceuticals in 2019.
1. Blockchain provides new options for tracking physical movement.
Identifying the source of product damage after a shipper has arrived at the end user’s facility is a next to impossible task. Not only can the source of the damage come from nearly any leg of the journey, but the culprit also isn’t likely to volunteer themselves to pay for the damages to a payload that, in the case of biologics, can be worth well over seven figures. Paper-based manifests, chain of custody and damage records can be fabricated and liability obfuscated.
Blockchain technology; however, can create a permanent and incorruptible record that tracks the physical movement1 of a shipper and can aid the investigation in who is to blame for damages incurred. Through serialization, blockchain can identify when a major 3PL contracts a local, third-party trucking company, for instance, and damage to a carton is incurred.
In a PwC 2018 Global Blockchain Survey of 600 executives from 15 territories, 84 percent of respondents indicated they are involved in blockchain and 15 percent reported they already have a live project, pilot or proof of concept.
How will blockchain specifically impact the logistics industry? While there are currently a number of blockchain variations, the Blockchain in Transport Alliance (BiTA)2 is pushing for a standardized implementation in the logistics industry. At this time, large industry partners such as UPS, FedEx, DHL, and Union Pacific have signed on with BiTA, making the future of blockchain in air freight a near certainty.
Within the decade, I expect that blockchain will expand beyond tracking between the shipper and receiver and encompass the entire pharmaceutical supply chain. Blockchain technology allows for increased data and visibility—from the ingredient suppliers to end-user patient and stages in between—using a permanent, decentralized and public digital record.
2. Artificial intelligence presents new options for factoring package arrival.
Artificial intelligence (AI) and predictive software have huge implications for the shipping industry. Algorithms that can account for weather forecasts, flight times, gulf streams and even expected wait times and holdovers at customs and border protection facilities, all factors impacting the arrival times for packages.
Datasets from pharmaceutical distribution are large, making the application of AI ideal for the industry. Using this data, AI has the potential to identify new and ongoing issues, empowering positive interventions to preserve shipments.
This level of data has the potential to allow third-party logistics (3PL) providers to provide pharmaceutical manufacturers and other stakeholders a new level of customer service; early adoption of AI will be a key differentiator for shippers in the next three to five years.
3. External market factors force consideration of more cost-effective alternatives for less critical return trips.
Pilot shortages and an increase in commercial shipping have led to a six percent undersupply in available air freight in each of the last two years. Creating, as a result, long lines for a dwindling resource and increased air freight prices to accommodate for supply and demand.
As 3PLs and others providing transport look to rebalance shipping containers in this new climate, it will be essential to seek out cost-effective alternatives to transportation options that focus solely on air cargo. One of those alternatives is sea freight for the return of containers after payloads have reached their destination.
By utilizing less expensive options for the rebalancing leg of the trip, such as sea freight, packaging suppliers can sidestep the laws of supply and demand in air cargo and pass those savings on to their customers. We expect suppliers will continue to look to sea freight and other alternative shipping lanes as a way to mitigate increased air freight cost associated with trade tensions and shortages.
4. Warehouses further embrace robotics and automation.
The pharmaceutical cold chain industry is already harnessing the power of robotics to automate a number of repeatable tasks such as selection of packaged pharmaceuticals and preparation of freight pallets for shipment. Conveyor belts and robotic pickers move cartons throughout a warehouse, from storage, and to a palletizing area. Humans then load the pallet, ready it for shipment—using plastic wrap or other protection—and then load into a bulk shipping container for transportation to the airport.
Due to the delicate nature of airplanes, robotics isn’t quite ready to take over the task of loading aircraft cargo holds at this time. However, the technology to do so is currently in development and it won’t be long before even high-value pharmaceutical/biotech products are loaded without human intervention.
While trends like blockchain, AI and robotics might not currently appear to be a factor directly impacting the transport of pharmaceuticals, these—along with factors like trade climates, pilot shortages and plane shortages—are trends that are likely to impact air cargo in the coming years.
With a large portion of pharmaceuticals shipped via air freight, even the most innocuous trends in air cargo can have a significant impact on the pharmaceutical cold chain.
As a result, staying ahead of the latest trends impacting air cargo is a business imperative for those looking to safely and efficiently ship these types of payloads.
Dominic Hyde is Vice President of Crēdo on Demand for Pelican BioThermal.