Global supply chain tested as COVID-19 vaccines roll out

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As a global logistics provider, Jonathan Savoir has grown accustomed to the holiday rush.

His Singapore-based company Quincus develops software that enables delivery companies like DHL to track their packages around the world, from Southeast Asia to the U.S., Europe to the Middle East. In November alone, he saw a 30 percent bump in shipments.

This month, he faces the ultimate holiday challenge — getting the coronavirus vaccine safely from the manufacturing floor to hospitals and nursing homes across the globe, as Pfizer (PFE) and Moderna (MRNA) begin the most consequential deliveries in recent medical history.

“Supply chains are most often, fairly straightforward. You're getting something from A to B with a couple of hubs in between. But [vaccine distribution] is increasingly complex,” Savoir said. “When you have to freeze things at minus 70, it's hard to do because the assets are not available, the warehouses are not available, the aircrafts need to be especially fitted.”

The demand is not entirely unprecedented. Cold food chain systems already exist for seafood and ice cream, for example, but the sheer volume to meet the demand of the global distribution of vaccines is where the challenge lies.

For Savoir, the preparation entails developing a system that allows vaccine manufacturers, government agencies, and logistics providers to track every delivery exchange along the way, to ensure that nothing is lost. Pfizer has said the FAA recently approved GPS tracking, which was previously viewed as a security concern, in order to make real-time temperature monitoring possible.

Savoir has spent the last few months building out a digital footprint, for the entire supply chain, an effort that has proven to be a high hurdle, particularly for smaller logistics providers brought in the global distribution network.

“When you look at logistics companies themselves they're very often not technologically advanced. They don't have any really advanced track and trace capabilities, let alone optimization capabilities,” he said. “Now that awareness has really transformed ... mainly because governments as well as health-care companies are imposing these kinds of requirements on logistics companies saying, I want to know exactly where my shipment is rather than just having a status of ‘somewhere in process,” he said.

Savoir’s challenges represent the complexity and scope of a vaccine distribution unlike any other. As Pfizer and Moderna lead a worldwide race to inoculate the most vulnerable patients, every corner of the global supply chain is gearing up to ensure a fast and safe delivery.

Last month, the FAA lifted its standard dry ice limit so United Airlines (UAL) can begin flying chartered cargo flights loaded with 15,000 pounds of dry ice — five times more than normally allowed — to support international distribution of Pfizer’s COVID-19 vaccine. The drugmaker reportedly designed suitcase-size boxes to allow for more flexibility and rapid deployment.

American Airlines (AAL) began its own trial flights from Miami to South America to prepare for its role in transporting the COVID-19 vaccine, stress testing its thermal packaging and operational handling process to ensure the doses are distributed in ample conditions.

Speaking to Yahoo Finance Live, CEO Doug Parker said this represents the largest distribution effort in the company’s history.

“This is a real challenge for our team because some of these vaccines need to be kept at temperatures, well below zero. And there are different circumstances for different vaccines-- some in dry ice, some travel in these containers that are kept at those temperatures throughout the flight,” he said. “We’ve been working with both freight forwarders and with the pharmaceutical companies to ensure that we can indeed transport packages along — all the way from Europe down to Santiago, Chile.”

Similarly, Thermo King, a subsidiary of Trane Technologies, has been working on its chain to incorporate Pfizer’s vaccine. Thought it is not a part of the distribution process yet, it and other food companies anticipate future involvement. The logistics company already transports sushi and other foods at about the same temperature required of the vaccine.

Trane CEO Michael Lamach told Yahoo Finance the difference between food and the vaccine is quantity.

“You’re talking about 12-15 billion doses. We’ve never seen, in the world, this temperature requirement with this sort of mass distribution,” Lamach said, adding that typically in food transportation, anywhere between 20-25% of product can spoil.

“So every single dose that can be saved, you can think about that as potentially saving a life,” Lamach said.

Brandon Daniels, president of global markets at consultancy firm Exiger, said understanding the needs of the new technology and its delivery process is key to introducing more vendors, like food transport companies, into the mix. Currently, large airline carriers and couriers are part of the distribution chain.

“We have to vet them...and we have to vet their technologies,” Daniels, a consultant for the Department of Defense, said.

Once the vaccine arrives at the distribution hub locally, a whole new set of worries arise. While many anticipate the first few batches of the vaccine to fly off the shelves, once the demand slows the amount of time a vaccine can sit on a shelf or require refrigeration is another concern.

At University Hospital in New Jersey, CEO Shereef Elnahal has assembled what he describes as a “tiger team” staff, involving all facets of his operations, from the pharmacy to legal advisers, to ensure the hospital is complying with all guidelines and recommendations from the federal and state government. The team has been conducting stress tests for several weeks now, to ensure that its vaccine distribution plans and cold storage facilities are foolproof, when the actual doses arrive.

“If we find, for example, that a certain percentage of the vaccines failed to be kept at the reliably very cold temperatures in order for them to be effective, then we'll have to adjust, the national timeframe for distribution of the vaccine,” Elnahal said. “We're very keen that we've essentially done a failure mode analysis of what could go wrong ... There's also a human factor part of this. Our staff have to be trained on how to handle these vaccines, every hospital is going to get the initial allocation. We'll have a vaccine coordinator that knows the most about what's happening, but also is reporting everything that he or she can to the state, and ultimately to Operation Warp Speed.”

Long-term use

The new chain of storage and distribution being created is likely going to have long-term use.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said at the Milken Institute Future of Health Summit Monday that mRNA, the technology used by Pfizer and BioNTech (BNTX), as well as Moderna (MRNA), is the future of vaccines.

Lamach said it’s why the company has invested in developing the necessary technologies — and focusing on having backup solutions for rural areas like tribal nations or remote parts of other countries.

“In rural areas, or areas where there’s not enough infrastructure or power requirements, we’re able to put generators, in addition to the short power requirement, and make sure we are able to keep these containers refrigerated at ultra-low temperatures indefinitely,” Lamach said.

But it’s a global learning process, as this will mark the first time a messenger RNA (mRNA) vaccine has made it to market.

“mRNA is still a relatively new solution. We will be better prepared for further distribution whether it’s a pandemic or any other use in the future,” Lamach said.

Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita

Anjalee Khemlani is a senior reporter for Yahoo Finance. Follow her on Twitter @AnjKhem

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