Image courtesy of SkyCell

What comes next after the deployment of the COVID-19 vaccines to the world? Widely seen as the largest-ever product launch, with 13 billion doses distributed globally, the pandemic created a boom in demand for cargo logistics services that has not waned. On the contrary, the new generation of mRNA vaccines or C&G technologies have temperature requirements (sub-zero refrigeration for production and distribution) that point to, beyond the growing role of technology to match the science, the prevalence of air cargo for high-value pharmaceutical products. Today, pharmaceutical goods represent over 28% of all cargo. For providers able to navigate the complex requirements needed to establish GDP-compliant cold chains, business will boom: The pharmaceutical logistics market, currently valued at US$85 billion, is expected to grow at a CAGR of 8.6% by 2030, according to Precedence Research.

Flying pharma
Post-pandemic, the demand for high-value pharmaceutical products to uphold a seamless cold chain has never been higher, particularly in the US. In that regard, freight has mostly relied on air transportation. Air freight for pharma goods therefore embodies the dilemma of value versus volume. IATA data shows that air freight numbers (with demand measured in cargo tonne-kilometers and capacity in available CTKs) were the strongest in 2023 compared with previous years, despite 80-90% of pharma products being shipped by sea.

The US market will continue to remain an attractive playingfield for air carriers. In the Gulf, major airlines’ cargo branches announced in 2023 new connections with the US, as the size and value of the pharmaceutical industry remain unmatched worldwide. Indeed, IATA numbers indicate that North America makes for over 28% of the total air cargo market share, in second position behind Asia Pacific. Fabrice Panza, manager of global cool chain solutions at Etihad Cargo, who launched a new Abu Dhabi to Boston regular service in March 2024, laid down the fundamentals: “10% to 20% of pharma products is a significant volume and, foremost, is the highest commercial value share. There will always be time-sensitive products in the pharma space, and for these products air shipment will always remain crucial.”

The highly sensitive nature of life sciences cargo means that an uninterrupted supply chain is of paramount importance. To achieve that, beyond maintaining temperature control, air freight carriers must relentlessly invest in new technologies to transport cargo safely across the world. For instance, Emirates SkyCargo invested in cool dollies to mitigate the risk of sensitive cargo being affected while on the ramp on or off the aircraft, where it is most vulnerable. Similarly, Etihad Cargo began the rollout a new temperature-controlled and energy-efficient cool dolly ground equipment, which will be fully operational in 2024.

Cell and gene therapies driving growth, but no room for error
While the cell and gene market is not as large as other well-established therapeutic areas, it is expected to see double-digit growth annually until 2033, due to the exponential progress of the clinical pipeline, coupled with a rising number of regulatory approvals for advanced therapies. The shift towards personalized healthcare places greater demands on the logistics ecosystem to guarantee the accurate transportation of invaluable cargo consistently. For logistics players, cell and gene therapy, clinical trials, and human samples have skyrocketed from approximately 200,000 kg/y five years ago to already exceeding 1.3 million kg/y in 2023.

This segment is in parallel driving opportunity for logistics providers, who see C&G therapies’ extreme temperature sensitivity requirements and high value as growth drivers. Emirates SkyCargo moves on average 2 million kgs of pharmaceutical products weekly. And while C&G therapies do not account for the lion’s share of the distribution now, Julian Sutch, head of global pharma sales, highlighted the dynamics: “Personalized healthcare is the future of the industry, with the market expected to reach US$3.18 trillion by 2025. However, personalized treatments are priceless and often irreplaceable, meaning there is no room for error during transit.”

Indeed, minor temperature fluctuations of just one degree can lead to entire shipments being deemed unusable. A 2023 report from the IQVIA Institute for Human Data Science projected that mishaps in temperature-controlled cold chain logistics have cost the pharmaceutical industry around US$35 billion earlier this year. Packaging solutions providers like Cold Chain Technologies (CCT) have understood that keeping cool is a requirement more than an attitude in this industry and have tailored their thermal services accordingly. As put by Amardeep Chahal, SVP marketing corporate development at CCT: “The zero-failure expectation emphasizes the importance of precise temperature control and timely logistics coordination.”

Decarbonizing pharma logistics
Cutting the carbon footprint of pharma’s supply chain will require a collective effort. Pharmaceutical companies have, for the major part, drafted ambitious “net zero by 2040” targets, with plans to reduce their Scope 1 and 2 (direct) emissions. These GHG emissions can be tackled by leveraging green chemistry, building energy-efficient boilers, or responsibly sourcing raw materials. The real challenge lies in targeting Scope 3 emissions (indirect, outside of pharma firms’ control), which make up around 80% of their carbon footprint. Merck, for instance, reported Scope 3 emissions of 6.6 million metric tons of CO2eq, 79.9% of its total emissions, in 2022, while 93% of GSK’s GHG emissions were indirect in 2023. In that endeavor, cold chain shipping has, for long, been seen as a carbon culprit. But a wind of change is underway.

What will pharma firms’ decarbonization initiatives mean for air freight? Distributing medicine outside the factory into patients’ homes has a significant environmental impact, particularly for certain technologies that are temperature-sensitive (like vaccines, insulin, or cell and gene therapies). And while air cargo accounts for most high-value sensitive medicine shipping globally, cargo players have acknowledged the potential for firms to resort to ocean freight to reduce their Scope 3 emissions. Trevor Caswell, chairman of Pharma.Aero, a collaboration platform bringing together cargo firms and life sciences companies, is aware of the potential shift: “Air shipping contributes to the resiliency of the supply chain, but we also understand that ocean freight will probably become the more dominant mode of transport over the next years due to lower costs, higher volumes that can be shipped, and environmental considerations.”

To set standards to qualify and quantify a green air lane in the life sciences supply chain, Pharma.Aero launched in 2023 the first “Green Air Pharma Logistics” project. “The project focused on defining a green lane to support pharma manufacturers, shippers, and freight forwarders in their sustainability consideration during the lane assessment process and towards their Scope 3 decarbonization targets” detailed Caswell.

Looking ahead, one of the key aspects of pharmaceutical logistics will be defining the value of a ton of CO2. The challenge will lie in balancing emission reduction, efficiency, safety, and regulatory compliance. Because of the complexity of the pharma value chain, where time, temperature, and safety are of the essence, the shift to ocean transport is not without complexity. Swiss company Skycell assists pharma firms in distributing their medicine globally, with a mission to change the supply chains through a combination of hybrid containers, tracking software, and risk management services. Its CEO and co-founder Richard Ettl commented: “Air freight is often considered as the most polluting mode of transport, and can be offset at a reasonable cost of approximately 3-8 cents per vial. Over the next years, the cost of offsetting emissions will become evident in supply chain budgets. Leading companies are already implementing initiatives to mitigate this expense. In the pharmaceutical supply chain, the new formula is Risk + Cost + CO2 reductions.”

Beyond the transportation of cargo, decarbonizing the packaging of pharmaceutical products is also a key effort in making the pharma supply chain more sustainable. With packaging accounting for a sizable share of Scope 3 emissions, suppliers have noted a shift towards sustainable packaging requirements from their pharma customers post-pandemic. Innovation, R&D, and investments to move from single-use packaging to efficient multiuse containers can reduce CO2 emissions by around 50% due to the higher volume efficiency for instance. CCT executive Kristof de Smet emphasized the recent regulatory changes toward sustainability: “In response to increased demand post-COVID-19, spurred by regulatory calls for sustainable packaging, we have introduced innovative products like ‘Natural’, a fully recyclable packaging solution."

The pandemic tested logistics partners’ cold chain capabilities. As global trade continues to grow, the demand for temperature-sensitive products is anticipated to rise, necessitating more reliable cold chain solutions. Furthermore, the adoption of autonomous vehicles and drones for transportation and delivery is expected to expand, offering increased flexibility and speed in pharma operations. Going forward, air cargo and packaging partners alike are presented with a unique opportunity to use sustainable practices to cement their partnerships with pharma leaders.