The Friday Report: June 11th, 2021

UPS Leverages COVID Infrastructure Investment to Ramp Up Pharma Cold Chain Service

Building the infrastructure needed to distribute the COVID-19 vaccine, including freezer farms, dry ice production and tracking technology is about to come in very handy for UPS.  With a notable healthcare division available to concentrate on the transportation and logistics of pharmaceuticals, temperature-sensitive reagents and medical-related cargo, UPS plans to leverage its new infrastructure, knowledge, and experience to provide permanent cold chain services.

Through its product UPS Cold Chain Solutions, an end-to-end transportation and logistics offering, the company can now handle the storage, freight, and logistics including tracking temperature diversions remotely from command centers in Louisville, Kentucky, and Amsterdam.  After delivering over 1.1 million shipments containing approximately 196 million vaccine doses to nearly 50 countries and territories, UPS reported a 99.9% on time delivery rate for its premier service.  This is especially notable as the company was handling the Pfizer vaccine which required a proprietary, specially designed insulated box containing dry ice to maintain box temperature at minus 70 degrees Celsius for up to 10 days.

According to the Biopharma Cold Chain Sourcebook, demand for pharmaceutical cold chain services is projected to grow approximately 24 percent between 2020 and 2024.

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Diminished Trucking Capacity Leads to Innovative New Solutions

Trucking companies are ramping up investments in equipment to boost flexibility amidst a market besieged by tight capacity.  The trend known as “power only trucking” has taken hold and continues to spread.  Power only trucking means that the truck driver does not bring a trailer but rather hooks up to and hauls a trailer which is either leased or owned by a shipper or 3PL.   For third party logistics providers, this adds a new element of flexibility to truckload capacity solutions including:

• Dry vans
• Refrigerated trailers
• Flatbed and open deck trailers
• Shipping containers

Leveraging a power-only strategy can help minimize the investment for transportation logistics providers. Shippers tend to anticipate lower line-haul cost and more flexible options with respect to end destination in consideration for the use of the carrier’s equipment.  It is more common for a client to use a carrier for their trucks versus their trailers.

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Wood Pallet Pricing Soars 400% Due to Lumber and Pallet Shortages

Pallet demand arises as grocers and retailers restock their warehouses, distribution and fulfillment centers and is a dynamic issue due to the ramp up in consumer spending over the past year on goods instead of services.  The parent company of CHEP Pallets acknowledged increased demand from customers as inventory levels became elevated.  Pallets are a critical element in moving goods throughout the supply chain.

Part of the shortage involves the proper circulation of pallets.  With trucking capacity tight, pallets may be moving across the supply chain but might not be in the right place at the right time.  For example, industry data in early May indicated that there are approximately eight loads requested for every available dry van truck.  Dwell time has increased for non-perishable inventory indicating that pallets may be lingering longer on loading docks or in warehouses.

The increase in home building and remodeling during the pandemic lockdown, sawmill and manufacturing facility closures have resulted in under supply and costs have soared.  Another problem is the shortage of plastic needed to produce plastic pallets.

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