Customer viewpoint: Kuehne + Nagel

posted on 15th September 2020
Customer viewpoint: Kuehne + Nagel

One of the biggest challenges since the start of the pandemic was how to secure GDP compliance when key airline partners were forced to reduce capacity, highlights Terrence Sell, global pharma product manager, air logistics, at Kuehne + Nagel

How have air cargo pharma demand patterns been affected since the start of the pandemic? How has that been evolving?
Pharma and healthcare companies were no different from other industries where COVID-19 lockdowns reduced or even eliminated ‘demand’ through delayed elective surgeries or routine doctor appointments. One large increase was obviously in the medical device space where demand for ventilators, PPE medical supplies and other COVID-19 products were in unprecedented demand. We have seen the need to increase our frequency of reviews with our customers to ensure we are able to react to the changing demand signals and ensure supply of product.

What have been the biggest challenges for Air cargo pharma carriers and customers during this time?
One of the biggest challenges we faced was how to secure GDP compliance when our key airline partners were forced to reduce capacity. This was no small task as change control mechanisms simply weren’t agile enough to cope with the amount of change in the market. We worked with our customers and contingency change control processes were quickly developed, approved and put into effect specifically for Covid-19. This allowed us to increase our approved pharma carrier pool as well as introduce new capacity partners based upon our existing supplier management systems and having an adapted risk analysis of critical control points at airline premises. This acceleration tested our process, and we were able to show how we could bring additional GDP capacity into a difficult market and continue to provide the service expected by customers.

How have carriers (and/or their customers) been adapting to accommodate these challenges and changing demand and supply patterns?
Many pharmaceutical and healthcare companies have had to accept changed conditions due to the massive reduction in available air cargo capacity due to the international travel restrictions around COVID-19. Additionally there has been an uptick of charter activity and especially that around temperature-controlled product moves. Now with COVID-19 vaccine development in trial phases, there is a lot of planning and research on the infrastructure and capabilities to transport these new vaccines and supplies worldwide, given their specific temperature and handling needs. This will need to be a global response that will utilise our secure GDP network and carrier partners.

To what extent have carriers (and/or their customers) been able to maintain their pharma products and networks?
The pandemic has created many issues for the transport industry which have impacted the servicing of pharma and healthcare shipments via air freight. The key is to continue to work with our carrier partners, maintain communication with our carrier partners to see what is or is not possible and minimise the impacts as much as possible. We then need to translate these messages into our customer’s risk management plans.

How do you see demand patterns developing in the coming months – for example, as vaccines for Covid-19 emerge? Are customers talking with you about a need to prepare for that? How are you preparing for that?
We are in very close communication with our customers to support them when they have a vaccine available for public use and consumption. We are prepared and have taken investments in infrastructure and are currently already handling both the clinical products with our QuickStat group as well as <-60C intermediate substance. Next phases will include vaccines at <-20C and then 2 to 8C. We are talking to many of the companies today to support the design of the supply chain from clinical to commercial product. We must start now to meet the needs when the product(s) are approved.

What are the main implications of these developments for your organisation?
As Kuehne+Nagel had already had an excellent track record when it comes to digitalisation, we had a good foundation which minimised the shock or impact of the pandemic with our teams and remote working. Regarding our interaction with our customers, we have increased our clockspeed and level of engagement to have conversations regarding: Medically and revenue critical products; Market updates: established weekly customer update webinars; ‘Airbridge’ solutions on key lanes dedicated to pharma and healthcare products; Service levels: We know how critical supply is to our customers and their patients; leveraging our secure GDP network and going the ‘extra mile’ is critical.

Separately, we have seen the need for continuous investment in our pharma facilities and infrastructure, people development, as well as solutions such as our Pharma Airside Services, which shall be needed to support the coming vaccine which is coming.

Any other comments
As airlines continue to ‘right size’ their networks and fleets depending on international travel demand, all industries including the pharma and healthcare sector have to reconfigure their supply chains. Airlines will focus on more ‘gateway to gateway’ international flights, thus relying on alliance partners to ferry passengers to final destinations within the regions. This will force cargo to move through those gateways as opposed to historical direct routings outside of those regional gateways. Couple this with national governments looking to safeguard their healthcare supply chains by requiring certain pharma and healthcare products or components to be produced locally, we will see a global shift of all pharma and healthcare supply chains over the years to come and we will continue to adjust our network to meet these needs – ensuring reach and supply.