AstraZeneca shifts supply chain strategy from air to sea freight shipments

Temperature excursions along the supply chain for cold-chain pharma products often need to be investigated and that takes time, and time is money. That is one of the factors that has led AstraZeneca ($AZN) to move ahead with plans to shift the vast majority of its global shipments to sea freight from air freight.

The strategy was outlined by Julian Wann, the drugmaker's global category manager, freight and logistics, at an Air Cargo News pharma conference in London, the publication reports. He said air freight will remain important but the company intends to shift the majority of shipments to ocean transport from the 40% share it has held in the last two years. "Our business driver, though, is to maintain that growth in ocean freight, and we still intend to get to 70% of volumes by sea in the next 12 to 18 months, if we can."

The company's shift comes even as air carriers and airports around the world have been investing in temperature-controlled cargo handling facilities that can cater to the pharma industry. But for the last 5 years, sea freight companies have been pitching their services, touting cold chain capabilities. And AstraZeneca has been paying attention.

The logistics executive told the group that AstraZeneca has had a 20% increase in shipments in 2015 across all modes to a total of 21,000 ton in the first 10 months of the year. He ascribed that to the opening of two new production sites in North America last year. While those were not identified, the company picked up two plants from Bristol-Myers Squibb ($BMY) when those two companies split up their alliance on diabetes drugs at the end of 2013.

While air freight accounted for 52% of this year's tonnage and 85% on a per shipment basis, Wann told the group that during certain periods in the year, ocean shipments hit 60% of shipped products and that plans are in place to keep that portion growing. It is planning to ship 80% of one new product by sea, he said.

According to Air Cargo News, Wann has criticized air cargo services for shipping drugs, in part because of temperature spikes or 'excursions.' He said the company has invested considerably, working with logistics providers to understand where and why they occur along the supply chain.

What it found was that of 25,000 excursions by air, 7,000 were significant enough to require detailed investigation, compared with 1,700 by ocean, of which 300 required that kind of look. He said AstraZeneca prefers sea freight for many reasons but the tighter control possible on ocean shipments is one important reason.

"We still see a significant amount of excursions [with ocean] but we do not see any product write-offs because of it, which is a big plus for us," Wann said.

- read the Air Cargo News story