Amazon is already affecting pharma supply chains—and not necessarily for the better

The investor community has been all abuzz for the past year over the potential entry of Amazon into pharma distribution—something that has hardly budged since it was first bruited last summer, but which is still influencing business planning and M&A activity in pharma wholesaling and dispensing. But whether or not the buzz becomes a reality, Amazon is already affecting pharma logistics: Speaking on a panel at the just-concluded Health and Personal Care Logistics Conference (Philadelphia, March 26-28), Sebastian Kunze, head of revenue management for Lufthansa Cargo AG, noted that at many European airports, limited staff among airport ground crews translates into significant delays when Amazon Christmas deliveries begin swamping the air traffic system. (The effect undoubtedly occurs at US airports as well, but the business press seems to be more focused on assessing whether Christmas deliveries will be on time.) “The timely delivery of high-value pharma shipments becomes a problem,” he says.

This intermodal (from air to ground transportation) bottleneck isn’t limited to airports: in another session at the HPCLC meeting, David McLaughlin, COO of RoadOne Intermodal Logistics, noted that delays are worsening at many seaports. RoadOne is a national drayage firm—the short-haul trucking from a port to a trucking hub as containers are unloaded. Stricter hours-of-service rules for truckers’ drivetime, bigger container ships that need days to unload, shortages in trained drivers and their equipment are all factors conspiring to slow down intermodal ocean-to-ground. (There has been a significant shift in the past few years from air to ocean transport for pharmaceuticals; shipping rates for the latter are significantly less than the former.) “Shippers (such as pharma companies) don’t spend a lot of time thinking about issues like drayage, but their effects on the pharma supply chain can be significant, especially where temperature-controlled shipping is concerned,” says McLaughlin.

With shipping volumes on the rise nearly throughout the world, problems like these are going to become more severe. A lot of attention has been paid to the numbers of trucks on the road, planes in the air and ships crossing oceans, but the transfer points between them need more attention.