By Doug Cameron
The pandemic has revealed shortcomings in global supply chains and forced business to make logistics a bigger strategic priority. Successfully delivering Covid-19 vaccines will test manufacturers and shippers on what lessons have been learned.
"If 50 million doses were available today, could we distribute them?" asked Glyn Hughes, head of cargo at the International Air Transport Association, a trade group. "The answer is almost certainly 'No', for every jurisdiction."
The air-cargo industry is making plans for delivering as many as 20 billion Covid-19 vaccination doses, even before regulators have approved any of the multiple treatments under development. Shippers say they are having to plan without knowing exactly how many vaccine doses they'll have to ship, where they will be manufactured and how cold they have to be kept.
Pharmaceutical companies and shippers say they expect the bulk of vaccine supplies to be transported by air. Cargo-airline executives are working on a delivery schedule that assumes initial batches become available during the traditional peak season for shipping that runs from fall through early February.
Carriers such as FedEx Corp. and the DHL arm of Deutsche Post AG have started preparations such as introducing new temperature-monitoring systems to track future vaccine shipments. United Parcel Service Inc. and Deutsche Lufthansa AG are building "freezer farms" combining multiple refrigerators at their airport hubs to store vaccines in transit.
Yet cargo flights are fast filling up through February with bookings for consumer electronics, apparel and industrial parts through the holiday season and new year, said airline executives. This year's peak season is expected to include a lift from the delayed iPhone 5G from Apple Inc. and Sony Corp.'s PlayStation 5.
"We're planning for the mother of all peaks," said Don Colleran, president of FedEx's express division, on an investor call last month.
Airlines said they would make room for essential supplies such as vaccines, just as they have for personal protective equipment throughout the pandemic.
Most of the potential vaccines have to be kept at a low constant temperature throughout the journey to prevent spoiling, according to cargo experts. These fall into two temperature ranges--around freezing and about minus 70 degrees Celsius--with very different transport and storage requirements.
Pharma executives said spoilage rates for other vaccines during transport range from 5% to as much as 20% because of poor temperature control.
"This is going to be one of the biggest challenges for the transportation industry," Michael Steen, chief commercial officer at Atlas Air Worldwide Holdings Inc., said in an interview. Atlas is one of the largest cargo airlines, flying freight on behalf of customers including Amazon.com Inc. and DHL.
Cargo executives said they expect it will take two years for a vaccine to reach all of the world's population, with particular challenges in some emerging markets where infrastructure is limited.
The air-cargo industry isn't starting from scratch. Pharma products have been one of the fastest-growing and most profitable cargo types over the past decade. Shippers have developed increasingly sophisticated supply chains for vaccines in recent years, especially for the flu. Gene therapies, another booming area, already require transport and storage at very low temperatures.
Planning flu-season vaccine deliveries typically starts months ahead and includes analyzing which routes and airports carry the highest risk for delays and spoilage, said Larry St. Onge, president of DHL's life sciences and health care unit.
DHL is applying that analysis to potential Covid-19 vaccines, which will have more-urgent delivery needs and far larger volume.
IATA estimates transporting a single dose to the global population would require the equivalent of 8,000 fully-laden Boeing Co. 747 flights, based on dimensions for vials and packaging provided by pharma companies. A recent study by DHL and McKinsey & Co. pegged demand at 15,000 flights, while including syringes and protective equipment for medical staff would increase the cargo-space requirement.
Pharma shipments already account for around 1.9% of global air-cargo volume, said IATA, and adding Covid-19 vaccines could double that share. Not every freighter jet is able to handle very cold cargo because of regulatory restrictions on how much dry ice they can transport to cool them, said executives.
Air-cargo capacity is already tight, with flights flying fuller than before the pandemic started. International air-cargo capacity was down 32% in August from a year earlier while demand was only 14% lower.
The pandemic-driven travel downturn has removed from service hundreds of passenger jets and the belly space that once carried cargo. More freighters are joining the fleet, with Atlas returning stored 747s from the desert and passenger airlines converting around 100 planes to carry freight in their cabins.
Covid-19 vaccine makers such as Pfizer Inc. have already begun manufacturing doses to be ready for shipment should regulators authorize their use. However, the uncertainty over approval timing and shipping requirements has meant they have stopped short of booking space on cargo flights, said airline executives.
The U.S. government last month outlined its initial plans for distributing vaccines domestically under its Operation Warp Speed program run by the Department of Health and Human Services and the Pentagon, as well as the Centers for Disease Control and Prevention.
McKesson Corp., one of the world's largest drug wholesalers, has been contracted by CDC to ship some vaccine types in the U.S. It hasn't detailed how they would be transported, and air-cargo executives said they haven't signed any Covid-19 vaccine-related deals yet. McKesson declined to comment.
President Trump said during the opening presidential debate last week that the military would support distribution of the vaccine. The Pentagon said it doesn't expect to have to use military transport aircraft, except to very remote areas. "Our best military assessment is that there is sufficient U.S. commercial-transportation capacity to fully support vaccine distribution," said a spokesman.
Write to Doug Cameron at email@example.com
Corrections and Amplifications
This article was corrected at 12:26 p.m. ET because it misstated the position of Michael Steen. He is the chief commercial officer at Atlas Air Worldwide Holdings Inc., not the chief operating officer.
(END) Dow Jones Newswires
October 05, 2020 05:44 ET (09:44 GMT)Copyright (c) 2020 Dow Jones & Company, Inc.