Your default browser language is set to . Browse this site in another language: Continue color Created with Sketch.
  • Newsletter subscription (View Sample)
  • Used DHL Services before
MORE FROM THIS COLLECTION

Equipment shortages fuel bull market for container shipping

For the first time in decades, ocean freight demand and rates remain high even as the year comes to an end.
18 December 2020 •

The end of the calendar year usually heralds a slew of carrier blank sailings as freight rates and demand on the major East-West ocean lanes subside following the summer peak season. In 2020, however, the trade playbook has been ripped up.

After surging from May onwards, spot and contract rates on the trans-Pacific eastbound trade hovered at near-record levels from early September through the first week of December.

At the start of the month, Shanghai-New York and Shanghai-Los Angeles spot freight rates were up 92 percent and 164 percent year-on-year respectively, according to the World Container Index assessed by shipping consultancy Drewry.

The unusual plateau of rates on trans-Pacific services into the U.S. east and west coasts occurred even as ocean supply chains faced multiple blockages and heavy demand. This prompted some analysts to question whether regulatory pressure from the U.S. and China, and carriers’ profiteering, were influencing liner pricing.

Asia-Europe crunch

Over the last month, Asia-Europe spot rates have spiked.

Shanghai-Rotterdam spot freight rates, for example, rose 30 percent in the week to December 3 to move 180 percent higher than a year before, according to Drewry data. Shanghai-Genoa rates gained 19 percent in the same week to move 163 percent ahead of a year earlier.

After successfully hiking rates on December 1, some container lines announced plans for circa US$1,000 (€835) per 20-foot equivalent unit (TEU) peak season surcharges and/or General Rate Increases for mid-December.

With demand outstripping capacity and logistics disruptions ongoing, carriers such as CMA CGM initially declared it would stop accepting Asia-Europe bookings in December before eventually announcing additional capacity in response to the unprecedented demand. Others continued to skip calls at congested UK ports.

Container shortages causing problems

One factor interlinked with spiraling freight rates and supply chain bottlenecks in late 2020 has been the chronic shortage of containers.

“A combination of strong cargo demand in Asia and an increasing shortage of 40-foot containers explain why spot rates for Chinese exports have risen so sharply over the last few weeks,” said Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific, in DHL’s Ocean Freight Market Update this month.

Analysis by online container marketplace Container xChange found that container availability in China was “at a record low” at the start of December, with shortages of 40-foot high cube containers particularly acute.

Container shortages might also partially explain the leveling up of average spot rates between the China-U.S. West Coast and Asia-Europe (the Mediterranean and North Europe) trades in recent weeks. Previously, lines and forwarders prioritized containers for the more lucrative China-U.S. trade, forcing European shippers to pay premiums to secure equipment.

Lars Jensen, CEO of shipping analyst firm Sea-Intelligence, said container shortages were just one factor in what he described as “one of the strongest bull markets for the container carriers in at least the last few decades”.

He said pandemic-induced lurches in demand have been applying pressure on all elements of the supply chain, leaving ports struggling to cope as ships arrived with more containers than expected. Delays at berths and storage areas were adding to delays in returning containers.

However, there are indications that the strains on container markets will not last too far beyond an expected peak before the Chinese New Year holidays next February.

The shortage of containers has led to spiraling freight rates and supply chain bottlenecks.
The shortage of containers has led to spiraling freight rates and supply chain bottlenecks.

Chinese container manufacturers are ramping up production and container lines are rushing containers back to Asia as quickly as possible. “For a faster turnaround, some carriers have even resorted to sending empty containers immediately back to China, which is proving a growing problem for shippers exporting to Asia,” explained Leung.

Jensen, who predicts the equipment situation will be resolved after Chinese New Year 2021 even if demand remains at heightened levels, said lines could also increase capacity by speeding up ships should the demand-supply crunch continue.

Demand for space could yet soften

Still, there are indicators that demand might slowly subside.

China’s export growth surged 21.1 percent year-on-year in November, driven mainly by exports to the U.S. (up 45 percent year-on-year) and EU (up 25.9 percent year-on-year).

Despite the November numbers, there are still good reasons to suspect the export boom will run out of steam, easing supply chain logjams in the process.

Underpinning China’s export performance has been the insatiable demand for products related to the coronavirus pandemic such as personal protective equipment (PPE) and electronics products for working from home. Many of these products are considered by economists as ‘one-off’ purchases that will not be repeated.

Moreover, as vaccines are rolled out and second-wave lockdowns ease, consumers are expected to shift consumption from goods backs to services.

“Many Covid-related purchases won’t happen again and we eventually expect a global rotation from goods to services consumption as vaccine availability reduces the need for social distancing,” said Louis Kujis, head of Asia economics at Oxford Economics.

According to Jensen, if demand does abate, this will take the momentum out of the spot market and see the removal of surcharges for equipment availability.

However, he warned that carriers would likely show their resolve and reduce vessel capacity matching the decline, meaning rates are unlikely to collapse.

		Array
(
    [get_fields] => Array
        (
            [introduction_paragraph] => For the first time in decades, ocean freight demand and rates remain high even as the year comes to an end.
            [seo_title] => Equipment shortages fuel bull market for container shipping
            [excerpt] => For the first time in decades, ocean freight demand and rates remain high even as the year comes to an end.
            [thumbnail] => Array
                (
                    [wide] => Array
                        (
                            [ID] => 9692
                            [id] => 9692
                            [title] => Article Key Image_1764413609
                            [filename] => Article-Key-Image_1764413609.jpg
                            [filesize] => 765710
                            [url] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609.jpg
                            [link] => https://lot.dhl.com/equipment-shortages-fuel-bull-market-for-container-shipping/article-key-image_1764413609/
                            [alt] => 
                            [author] => 159
                            [description] => 
                            [caption] => 
                            [name] => article-key-image_1764413609
                            [status] => inherit
                            [uploaded_to] => 9691
                            [date] => 2020-12-17 06:47:18
                            [modified] => 2020-12-17 06:47:18
                            [menu_order] => 0
                            [mime_type] => image/jpeg
                            [type] => image
                            [subtype] => jpeg
                            [icon] => https://lot.dhl.com/wp-includes/images/media/default.png
                            [width] => 1200
                            [height] => 630
                            [sizes] => Array
                                (
                                    [thumbnail] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-150x150.jpg
                                    [thumbnail-width] => 150
                                    [thumbnail-height] => 150
                                    [medium] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-300x158.jpg
                                    [medium-width] => 300
                                    [medium-height] => 158
                                    [medium_large] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-768x403.jpg
                                    [medium_large-width] => 768
                                    [medium_large-height] => 403
                                    [large] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-1024x538.jpg
                                    [large-width] => 1024
                                    [large-height] => 538
                                    [1536x1536] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609.jpg
                                    [1536x1536-width] => 1200
                                    [1536x1536-height] => 630
                                    [2048x2048] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609.jpg
                                    [2048x2048-width] => 1200
                                    [2048x2048-height] => 630
                                    [story_normal] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-300x248.jpg
                                    [story_normal-width] => 300
                                    [story_normal-height] => 248
                                    [story_single] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-800x420.jpg
                                    [story_single-width] => 800
                                    [story_single-height] => 420
                                    [story_wide] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-800x310.jpg
                                    [story_wide-width] => 800
                                    [story_wide-height] => 310
                                    [whitepaper_thumb] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-300x417.jpg
                                    [whitepaper_thumb-width] => 300
                                    [whitepaper_thumb-height] => 417
                                    [story_gallery] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-1024x538.jpg
                                    [story_gallery-width] => 1024
                                    [story_gallery-height] => 538
                                    [story_ampsize] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-1200x630.jpg
                                    [story_ampsize-width] => 1200
                                    [story_ampsize-height] => 630
                                    [ads_mobile] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609-300x158.jpg
                                    [ads_mobile-width] => 300
                                    [ads_mobile-height] => 158
                                    [web-stories-poster-portrait] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609.jpg
                                    [web-stories-poster-portrait-width] => 640
                                    [web-stories-poster-portrait-height] => 336
                                    [web-stories-publisher-logo] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609.jpg
                                    [web-stories-publisher-logo-width] => 96
                                    [web-stories-publisher-logo-height] => 50
                                    [web-stories-thumbnail] => https://lot.dhl.com/wp-content/uploads/2020/12/Article-Key-Image_1764413609.jpg
                                    [web-stories-thumbnail-width] => 150
                                    [web-stories-thumbnail-height] => 79
                                )

                        )

                    [square] => Array
                        (
                            [ID] => 9693
                            [id] => 9693
                            [title] => Single Column Image_1825997768
                            [filename] => Single-Column-Image_1825997768.jpg
                            [filesize] => 108801
                            [url] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                            [link] => https://lot.dhl.com/equipment-shortages-fuel-bull-market-for-container-shipping/single-column-image_1825997768/
                            [alt] => 
                            [author] => 159
                            [description] => 
                            [caption] => 
                            [name] => single-column-image_1825997768
                            [status] => inherit
                            [uploaded_to] => 9691
                            [date] => 2020-12-17 06:47:48
                            [modified] => 2020-12-17 06:47:48
                            [menu_order] => 0
                            [mime_type] => image/jpeg
                            [type] => image
                            [subtype] => jpeg
                            [icon] => https://lot.dhl.com/wp-includes/images/media/default.png
                            [width] => 300
                            [height] => 248
                            [sizes] => Array
                                (
                                    [thumbnail] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768-150x150.jpg
                                    [thumbnail-width] => 150
                                    [thumbnail-height] => 150
                                    [medium] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768-300x248.jpg
                                    [medium-width] => 300
                                    [medium-height] => 248
                                    [medium_large] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [medium_large-width] => 300
                                    [medium_large-height] => 248
                                    [large] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [large-width] => 300
                                    [large-height] => 248
                                    [1536x1536] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [1536x1536-width] => 300
                                    [1536x1536-height] => 248
                                    [2048x2048] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [2048x2048-width] => 300
                                    [2048x2048-height] => 248
                                    [story_normal] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [story_normal-width] => 300
                                    [story_normal-height] => 248
                                    [story_single] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [story_single-width] => 300
                                    [story_single-height] => 248
                                    [story_wide] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [story_wide-width] => 300
                                    [story_wide-height] => 248
                                    [whitepaper_thumb] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768-300x248.jpg
                                    [whitepaper_thumb-width] => 300
                                    [whitepaper_thumb-height] => 248
                                    [story_gallery] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [story_gallery-width] => 300
                                    [story_gallery-height] => 248
                                    [story_ampsize] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [story_ampsize-width] => 300
                                    [story_ampsize-height] => 248
                                    [ads_mobile] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768-300x248.jpg
                                    [ads_mobile-width] => 300
                                    [ads_mobile-height] => 248
                                    [web-stories-poster-portrait] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [web-stories-poster-portrait-width] => 300
                                    [web-stories-poster-portrait-height] => 248
                                    [web-stories-publisher-logo] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [web-stories-publisher-logo-width] => 96
                                    [web-stories-publisher-logo-height] => 79
                                    [web-stories-thumbnail] => https://lot.dhl.com/wp-content/uploads/2020/12/Single-Column-Image_1825997768.jpg
                                    [web-stories-thumbnail-width] => 150
                                    [web-stories-thumbnail-height] => 124
                                )

                        )

                    [thumbnail_category_option] => none
                    [gif_wide] => 
                    [gif_square] => 
                    [video_key] => 
                    [video_single] => 
                )

            [story_options] => Array
                (
                )

            [category] => 4217
            [regions] => Array
                (
                    [0] => 26
                    [1] => 70
                    [2] => 75
                )

            [countries] => Array
                (
                    [0] => 370
                    [1] => 179
                )

            [industry] => 14
            [business_units_bu-related] => Array
                (
                    [0] => 19
                )

            [collection] => 4107
            [quoted_persons] => Array
                (
                    [0] => 389
                )

            [resource_type] => article
            [resource_formats] => 4215
            [related_content] => 
            [content] => Array
                (
                    [0] => Array
                        (
                            [acf_fc_layout] => wysiwyg
                            [wysiwyg] => 

The end of the calendar year usually heralds a slew of carrier blank sailings as freight rates and demand on the major East-West ocean lanes subside following the summer peak season. In 2020, however, the trade playbook has been ripped up.

After surging from May onwards, spot and contract rates on the trans-Pacific eastbound trade hovered at near-record levels from early September through the first week of December.

At the start of the month, Shanghai-New York and Shanghai-Los Angeles spot freight rates were up 92 percent and 164 percent year-on-year respectively, according to the World Container Index assessed by shipping consultancy Drewry.

The unusual plateau of rates on trans-Pacific services into the U.S. east and west coasts occurred even as ocean supply chains faced multiple blockages and heavy demand. This prompted some analysts to question whether regulatory pressure from the U.S. and China, and carriers’ profiteering, were influencing liner pricing.

Asia-Europe crunch

Over the last month, Asia-Europe spot rates have spiked.

Shanghai-Rotterdam spot freight rates, for example, rose 30 percent in the week to December 3 to move 180 percent higher than a year before, according to Drewry data. Shanghai-Genoa rates gained 19 percent in the same week to move 163 percent ahead of a year earlier.

After successfully hiking rates on December 1, some container lines announced plans for circa US$1,000 (€835) per 20-foot equivalent unit (TEU) peak season surcharges and/or General Rate Increases for mid-December.

With demand outstripping capacity and logistics disruptions ongoing, carriers such as CMA CGM initially declared it would stop accepting Asia-Europe bookings in December before eventually announcing additional capacity in response to the unprecedented demand. Others continued to skip calls at congested UK ports.

Container shortages causing problems

One factor interlinked with spiraling freight rates and supply chain bottlenecks in late 2020 has been the chronic shortage of containers.

“A combination of strong cargo demand in Asia and an increasing shortage of 40-foot containers explain why spot rates for Chinese exports have risen so sharply over the last few weeks,” said Kelvin Leung, CEO, DHL Global Forwarding Asia Pacific, in DHL’s Ocean Freight Market Update this month.

) [1] => Array ( [acf_fc_layout] => outbound_box [cards] => Array ( [0] => Array ( [type] => linked [linked_post] => WP_Post Object ( [ID] => 9379 [post_author] => 159 [post_date] => 2020-12-01 10:00:12 [post_date_gmt] => 2020-12-01 02:00:12 [post_content] => [post_title] => DHL Ocean Freight Market Update – December 2020 [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => dhl-ocean-freight-market-update-december-2020 [to_ping] => [pinged] => [post_modified] => 2022-05-10 07:59:02 [post_modified_gmt] => 2022-05-09 23:59:02 [post_content_filtered] => [post_parent] => 0 [guid] => https://lot.dhl.com/?p=9379 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [custom] => Array ( [thumbnail] => [title] => [excerpt] => [cta] => Read more [linkmail] => [cta_url] => [email_address] => [outbound_email_subject] => ) ) ) ) [2] => Array ( [acf_fc_layout] => wysiwyg [wysiwyg] =>

Analysis by online container marketplace Container xChange found that container availability in China was “at a record low” at the start of December, with shortages of 40-foot high cube containers particularly acute.

Container shortages might also partially explain the leveling up of average spot rates between the China-U.S. West Coast and Asia-Europe (the Mediterranean and North Europe) trades in recent weeks. Previously, lines and forwarders prioritized containers for the more lucrative China-U.S. trade, forcing European shippers to pay premiums to secure equipment.

Lars Jensen, CEO of shipping analyst firm Sea-Intelligence, said container shortages were just one factor in what he described as “one of the strongest bull markets for the container carriers in at least the last few decades”.

He said pandemic-induced lurches in demand have been applying pressure on all elements of the supply chain, leaving ports struggling to cope as ships arrived with more containers than expected. Delays at berths and storage areas were adding to delays in returning containers.

However, there are indications that the strains on container markets will not last too far beyond an expected peak before the Chinese New Year holidays next February.

The shortage of containers has led to spiraling freight rates and supply chain bottlenecks.
The shortage of containers has led to spiraling freight rates and supply chain bottlenecks.

Chinese container manufacturers are ramping up production and container lines are rushing containers back to Asia as quickly as possible. “For a faster turnaround, some carriers have even resorted to sending empty containers immediately back to China, which is proving a growing problem for shippers exporting to Asia,” explained Leung.

Jensen, who predicts the equipment situation will be resolved after Chinese New Year 2021 even if demand remains at heightened levels, said lines could also increase capacity by speeding up ships should the demand-supply crunch continue.

Demand for space could yet soften

Still, there are indicators that demand might slowly subside.

China’s export growth surged 21.1 percent year-on-year in November, driven mainly by exports to the U.S. (up 45 percent year-on-year) and EU (up 25.9 percent year-on-year).

Despite the November numbers, there are still good reasons to suspect the export boom will run out of steam, easing supply chain logjams in the process.

Underpinning China’s export performance has been the insatiable demand for products related to the coronavirus pandemic such as personal protective equipment (PPE) and electronics products for working from home. Many of these products are considered by economists as ‘one-off’ purchases that will not be repeated.

Moreover, as vaccines are rolled out and second-wave lockdowns ease, consumers are expected to shift consumption from goods backs to services.

) [3] => Array ( [acf_fc_layout] => outbound_box [cards] => Array ( [0] => Array ( [type] => linked [linked_post] => WP_Post Object ( [ID] => 8328 [post_author] => 1122 [post_date] => 2020-09-23 17:49:10 [post_date_gmt] => 2020-09-23 09:49:10 [post_content] =>

Vaccine logistics for Covid-19 will pose challenges along the supply chain that must be jointly addressed by governments, NGOs, pharmaceutical companies, and logistics players urgently.

With vaccines historically being developed over a timeline of five to 20 years, the idea that a Covid-19 vaccine could be broadly administered as early as late-2020 is ground-breaking.

In August, Dr. Tedros Andhanom Ghebreyesus, the Director-General for the World Health Organisation, said that WHO has been in extensive consultations to develop a new framework to guide fair and equitable access to Covid-19 diagnostics, therapeutics, and vaccines for all countries.

He added: “We will need to quickly manufacture billions of doses to reach all those who need the vaccine.

“All this means elite planning at the highest levels is needed right now to prepare to vaccinate and treat the world, as new technologies come down the pipeline.”

With over a hundred scientific teams worldwide pushing hard to develop a Covid-19 vaccine, the race is on, with much talk about a vaccine being delivered towards the last quarter of 2020.

But even should they succeed, there are considerable complexities in ramping up and distributing the vaccine, with the pandemic itself still crippling much of our supply and distribution workforce numbers and efficiencies.

For national governments, managing and leading vaccine manufacturers, supply chain logistics and infrastructure adds to their current challenges of containing the pandemic.

WATCH: What Lessons Has Covid-19 Taught On Securing Stable Supply Chains For Future Health Emergencies?

Temperature matters

DHL Customer Solutions and Innovations recently released a white paper titled Delivering Pandemic Resilience, that focuses on securing stable supply chains for essential medical goods during public health emergencies, such as the ongoing Covid-19 pandemic.

Katja Busch, Chief Commercial Officer DHL and Head of CSI, explains, “When it comes to expected Covid-19 vaccine cold-chain protocols, there are essentially two approaches: the conventional, based on current vaccine protocols; or a more stringent one.”

“For the stringent approach, producers of certain vaccines and their logistics providers have to choose to adhere to strict and extreme temperature requirements (up to -80 °C) to maintain the effectiveness of the vaccines during storage and transport.

“These conditions are in line with the ones used for certain Covid-19 vaccine clinical trials (Phase III) currently.

“These requirements might be lifted over time if vaccine efficacy under higher temperature is proven by stability testing, or if formulations are improved, and additional manufacturing steps are added to increase stability.

“The certainty of success of following a conventional approach partially depends on the vaccine platform. “

While for a protein-based vaccine, more manageable transport requirements (+2°C to +8°C) have been trialed and tested, applying a conventional transportation approach to the front runners, such as viral vector and ribonucleic acid (a polymeric molecule essential in various biological roles in coding, decoding, regulation and expression of genes) platforms, is riskier and based on less experience and stability data. 

If things go extraordinarily well, the first vaccine that proves to be clinically effective could, in theory, be the ideal candidate, in that it is not only effective but also allows for scalable production and a manageable distribution at room temperature. However, the announced production capacities are particularly high for vaccines of the RNA and viral vector type.

When finished vaccine products are ready for distribution and delivery, most private vaccine companies will work with specialized third-party logistics companies (3PLs). These companies specialize in cross-border movement, customs approvals, maintaining cold chain infrastructure, and equipment to facilitate product pickup and last-mile delivery. They also have access to warehousing, ocean containers, trucks, and other facilities with cold chain refrigeration and temperature measurement capabilities.

RELATED ARTICLES


White Paper: Delivering Pandemic Resilience
This white paper looks at solutions to some of the big supply chain questions for countries facing large-scale public health emergencies.

Public-private partnerships will be crucial when a vaccine is ready

Under the stringent scenario, pharmaceutical companies, governments, NGOs, and logistics providers need to be prepared to handle these requirements on a scale far beyond the clinical trials.

The question is – are national governments ready to take over these vaccines upon their arrival, and manage their distribution channels within their communities with the necessary cold chain facilities? Primary hubs of local distribution could include hospitals and schools, with private-sector workplaces also serving as alternative distribution locales.

Unfortunately, it seems current cold-chain facilities that can accommodate such intensive one-day vaccination events would still only cover a fraction of the healthy population in most, if not all countries.

According to a report by John Hopkins’ Bloomberg School of Public Health, it is highly likely that 70 percent of the global population will need the vaccine for Covid-19 within a short time frame, which increases the importance of a cold chain-ready distribution framework. As it stands, WHO estimates that up to half of all vaccines are wasted each year globally, mostly because of a lack of temperature control and the logistics to support an unbroken cold chain for them.

Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, also recently raised concerns on cold chain infrastructure and transport in the U.S, according to ABC News.

At a meeting convened by the U.S. Advisory Committee on Immunization Practices, she said, “The complexities of a plan for vaccine storage and handling will have a major impact in our ability to efficiently deliver the vaccine.”

Dr. Erin Fox, senior pharmacy director for drug information and support services at the University of Utah added, “Most pharmacies, most clinics, most places are not going to have ultra-low-temperature freezers on hand.”

Leonora Lim, Vice President in Asia Pacific of DHL Customer Solutions and Innovation, Life Sciences and Healthcare said, “While I am sure all countries have some form of healthcare distribution systems, we still do not know when the vaccines will be ready, and the timing as well as the volume that they will be sent. With differing levels of maturity and sophistication in each country, it has made the need for public-private and public-public partnership more pressing, especially in such a dynamic and volatile environment.”

Referencing the cold-chain public infrastructure in Asia-Pacific, Lim said: “The region is vast, and heterogeneous, including the world’s top two most populous countries – India and China.

RELATED ARTICLES


How South Korea juggles cold chain logistics, amid high Covid-19 test kit demand
South Korea has emerged as one of the biggest producer countries for Covid-19 test kits – here’s how the country meets the high global demand.

Thailand is a positive example when such public-private partnerships go right, according to WHO’s previous case studies on vaccine supply chain and logistics. In 2009, Thailand’s vaccine supply chain and logistics system faced challenges such as wasted and expired vaccine products, inventory control issues, and high costs.

To improve efficiency, Thailand outsourced its vaccine supply chain through a vendor-managed inventory (VMI) system. The system was initially piloted in 28 of 76 provinces and gradually expanded nationwide by late 2010.

The outsourced VMI system streamlined inventory management by reducing from five to three the number of steps that vaccines had to go through in the supply chain. This reduced both the volume of vaccine stock and the length of time vaccines spent in storage.

The economic analysis revealed that in its first year, the VMI system saved nearly one-fifth of the cost of distributing vaccines throughout the national supply chain system. This was achieved through more efficient use of resources, lower logistics costs, and efficiency gains from a reduction of vaccines procured and distributed.

Busch concluded, “Managing such complex supply chains and distribution networks is a demanding task that requires experts to carry them out, and this becomes only more important when talking about highly sensitive products such as vaccines or similar medical products that are crucial to protecting people’s lives.”

“We are convinced that having a go-to logistics partner in place, and most importantly, planning with identified contacts in place ahead of time will go a long way in ensuring stable operations when those are needed most.”

[post_title] => Vaccine Logistics: The key challenges for governments and private sector players [post_excerpt] => [post_status] => publish [comment_status] => open [ping_status] => open [post_password] => [post_name] => vaccine-logistics-the-key-challenges-for-governments-and-private-sector-players [to_ping] => [pinged] => [post_modified] => 2022-09-27 23:13:05 [post_modified_gmt] => 2022-09-27 15:13:05 [post_content_filtered] =>

With vaccines historically being developed over a timeline of five to 20 years, the idea that a Covid-19 vaccine could be broadly administered as early as late-2020 is ground-breaking.

In August, Dr. Tedros Andhanom Ghebreyesus, the Director-General for the World Health Organisation, said that WHO has been in extensive consultations to develop a new framework to guide fair and equitable access to Covid-19 diagnostics, therapeutics, and vaccines for all countries.

He added: “We will need to quickly manufacture billions of doses to reach all those who need the vaccine.

“All this means elite planning at the highest levels is needed right now to prepare to vaccinate and treat the world, as new technologies come down the pipeline.”

With over a hundred scientific teams worldwide pushing hard to develop a Covid-19 vaccine, the race is on, with much talk about a vaccine being delivered towards the last quarter of 2020.

But even should they succeed, there are considerable complexities in ramping up and distributing the vaccine, with the pandemic itself still crippling much of our supply and distribution workforce numbers and efficiencies.

For national governments, managing and leading vaccine manufacturers, supply chain logistics and infrastructure adds to their current challenges of containing the pandemic.

WATCH: What Lessons Has Covid-19 Taught On Securing Stable Supply Chains For Future Health Emergencies?

Temperature matters

DHL Customer Solutions and Innovations recently released a white paper titled Delivering Pandemic Resilience, that focuses on securing stable supply chains for essential medical goods during public health emergencies, such as the ongoing Covid-19 pandemic.

Katja Busch, Chief Commercial Officer DHL and Head of CSI, explains, “When it comes to expected Covid-19 vaccine cold-chain protocols, there are essentially two approaches: the conventional, based on current vaccine protocols; or a more stringent one.”

“For the stringent approach, producers of certain vaccines and their logistics providers have to choose to adhere to strict and extreme temperature requirements (up to -80 °C) to maintain the effectiveness of the vaccines during storage and transport.

“These conditions are in line with the ones used for certain Covid-19 vaccine clinical trials (Phase III) currently.

“These requirements might be lifted over time if vaccine efficacy under higher temperature is proven by stability testing, or if formulations are improved, and additional manufacturing steps are added to increase stability.

“The certainty of success of following a conventional approach partially depends on the vaccine platform. “

While for a protein-based vaccine, more manageable transport requirements (+2°C to +8°C) have been trialed and tested, applying a conventional transportation approach to the front runners, such as viral vector and ribonucleic acid (a polymeric molecule essential in various biological roles in coding, decoding, regulation and expression of genes) platforms, is riskier and based on less experience and stability data. 

If things go extraordinarily well, the first vaccine that proves to be clinically effective could, in theory, be the ideal candidate, in that it is not only effective but also allows for scalable production and a manageable distribution at room temperature. However, the announced production capacities are particularly high for vaccines of the RNA and viral vector type.

When finished vaccine products are ready for distribution and delivery, most private vaccine companies will work with specialized third-party logistics companies (3PLs). These companies specialize in cross-border movement, customs approvals, maintaining cold chain infrastructure, and equipment to facilitate product pickup and last-mile delivery. They also have access to warehousing, ocean containers, trucks, and other facilities with cold chain refrigeration and temperature measurement capabilities.

RELATED ARTICLES


White Paper: Delivering Pandemic Resilience
This white paper looks at solutions to some of the big supply chain questions for countries facing large-scale public health emergencies.

Public-private partnerships will be crucial when a vaccine is ready

Under the stringent scenario, pharmaceutical companies, governments, NGOs, and logistics providers need to be prepared to handle these requirements on a scale far beyond the clinical trials.

The question is – are national governments ready to take over these vaccines upon their arrival, and manage their distribution channels within their communities with the necessary cold chain facilities? Primary hubs of local distribution could include hospitals and schools, with private-sector workplaces also serving as alternative distribution locales.

Unfortunately, it seems current cold-chain facilities that can accommodate such intensive one-day vaccination events would still only cover a fraction of the healthy population in most, if not all countries.

According to a report by John Hopkins’ Bloomberg School of Public Health, it is highly likely that 70 percent of the global population will need the vaccine for Covid-19 within a short time frame, which increases the importance of a cold chain-ready distribution framework. As it stands, WHO estimates that up to half of all vaccines are wasted each year globally, mostly because of a lack of temperature control and the logistics to support an unbroken cold chain for them.

Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, also recently raised concerns on cold chain infrastructure and transport in the U.S, according to ABC News.

At a meeting convened by the U.S. Advisory Committee on Immunization Practices, she said, “The complexities of a plan for vaccine storage and handling will have a major impact in our ability to efficiently deliver the vaccine.”

Dr. Erin Fox, senior pharmacy director for drug information and support services at the University of Utah added, “Most pharmacies, most clinics, most places are not going to have ultra-low-temperature freezers on hand.”

Leonora Lim, Vice President in Asia Pacific of DHL Customer Solutions and Innovation, Life Sciences and Healthcare said, “While I am sure all countries have some form of healthcare distribution systems, we still do not know when the vaccines will be ready, and the timing as well as the volume that they will be sent. With differing levels of maturity and sophistication in each country, it has made the need for public-private and public-public partnership more pressing, especially in such a dynamic and volatile environment.”

Referencing the cold-chain public infrastructure in Asia-Pacific, Lim said: “The region is vast, and heterogeneous, including the world’s top two most populous countries – India and China.

RELATED ARTICLES


How South Korea juggles cold chain logistics, amid high Covid-19 test kit demand
South Korea has emerged as one of the biggest producer countries for Covid-19 test kits – here’s how the country meets the high global demand.

Thailand is a positive example when such public-private partnerships go right, according to WHO’s previous case studies on vaccine supply chain and logistics. In 2009, Thailand’s vaccine supply chain and logistics system faced challenges such as wasted and expired vaccine products, inventory control issues, and high costs.

To improve efficiency, Thailand outsourced its vaccine supply chain through a vendor-managed inventory (VMI) system. The system was initially piloted in 28 of 76 provinces and gradually expanded nationwide by late 2010.

The outsourced VMI system streamlined inventory management by reducing from five to three the number of steps that vaccines had to go through in the supply chain. This reduced both the volume of vaccine stock and the length of time vaccines spent in storage.

The economic analysis revealed that in its first year, the VMI system saved nearly one-fifth of the cost of distributing vaccines throughout the national supply chain system. This was achieved through more efficient use of resources, lower logistics costs, and efficiency gains from a reduction of vaccines procured and distributed.

Busch concluded, “Managing such complex supply chains and distribution networks is a demanding task that requires experts to carry them out, and this becomes only more important when talking about highly sensitive products such as vaccines or similar medical products that are crucial to protecting people’s lives.”

“We are convinced that having a go-to logistics partner in place, and most importantly, planning with identified contacts in place ahead of time will go a long way in ensuring stable operations when those are needed most.”

[post_parent] => 0 [guid] => https://lot.dhl.com/?p=8328 [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [custom] => Array ( [thumbnail] => [title] => [excerpt] => [cta] => Read more [linkmail] => [cta_url] => [email_address] => [outbound_email_subject] => ) ) ) ) [4] => Array ( [acf_fc_layout] => wysiwyg [wysiwyg] =>

“Many Covid-related purchases won’t happen again and we eventually expect a global rotation from goods to services consumption as vaccine availability reduces the need for social distancing,” said Louis Kujis, head of Asia economics at Oxford Economics.

According to Jensen, if demand does abate, this will take the momentum out of the spot market and see the removal of surcharges for equipment availability.

However, he warned that carriers would likely show their resolve and reduce vessel capacity matching the decline, meaning rates are unlikely to collapse.

) ) [products] => [customer_sector] => [topic_tags] => Array ( [0] => 5317 ) ) )
		Array
(
)
	
		Array
(
)