- For supply-chain managers charged with making sure medicines reach patients amid rapidly shrinking aviation traffic, buying up freight capacity in advance has become critical
- Rising demand for limited cargo space have caused freight rates to doubled, says Janssen’s head of supply chain, Asia-Pacific, warning ‘It is going to get worse’
Hoarding has quickly become frowned upon as the coronavirus pandemic wreaks havoc in the consumer market. But for supply-chain managers charged with making sure medicines reach patients amid rapidly shrinking aviation traffic, buying up freight capacity well in advance is a matter of life and death.
For Chris Ewer, head of supply chain, Asia-Pacific, at Janssen Pharmaceuticals, keeping a cool head and quickly working out distribution priorities was all that mattered in the past two months as the pandemic severely disrupted the global supply chain.
"We had to buy up and secure (freight) routes, especially for cold-chain products such as some for immunology and oncology patients that have to go via aircraft," said Ewer, who is based in Singapore. "The storage facilities have to be controlled at between two and eight degrees Celsius.
Hotels offer half-price packages to attract guests who need to quarantine
"It is important that we continue to predict and simulate what's needed. We are now telling our logistics partners a month or two ahead what we will need in terms of slots in their aircraft."
With around 1,000 supply-chain management staff and US$4.6 billion in annual sales in Asia-Pacific, Belgian drugmaker Janssen is a unit of the world's largest health care company, Johnson & Johnson, based in New Jersey, US.
Global passenger flights have been drastically cut in recent weeks as more countries imposed lockdowns and quarantine measures in an attempt to contain the rapidly spreading virus that has caused the worst public health crisis in a generation.
As of Sunday, Chinese airlines are now restricted to flying just one weekly route to one city per country, and to operating those flights at no more than 75 per cent capacity.
Daily passenger flights in and out of Hong Kong are expected to fall to less than 20 a day in April from around 100 this month and 500 to 600 before the crisis, said express shipper DHL Express (Hong Kong) national customer manager, Royal Leung.
Around half the space inside passenger aircraft can be used to move cargo, he said.
"With rising air freight demand, and much reduced supply even with the deployment of more cargo-only planes, freight rates have doubled," he said. "It is going to get worse."
Air freight capacity is only part of the challenge facing pharmaceutical suppliers. Road blocks have also been causing headaches.
"When the outbreak started in China, we knew we wouldn't be able to restart all operations at our facility in Xi'an after the extended Lunar New year holiday," said Ewer. "We had to prioritise to meet critical needs such as those for patients with HIV, cancer and immunology diseases."
How Covid-19 will prompt Chinese firms to raise their digital game
By working closely with the local government and devising "very prescriptive procedures" " a long list of precautionary measures to minimise workers' infection risks " the company won approval to resume operations five days ahead of the February 10 date given to businesses in the city.
Janssen's manufacturing plant and supply chain "innovation hub" that started operating last June in Xi'an " 780km northwest of the outbreak's epicentre in Wuhan " is equipped with "best-in-class" automation technology, the company said.
But as Wuhan's lockdown on January 23 spread to other provinces in the ensuing weeks, much more than state-of-the-art facilities was needed.
"As the truck got to the border, we had to unload it and load the goods onto a new one across the border, change driver, and provide them with a lot of documents explaining what the loads were and why it was essential to allow these goods through," Ewer said.
While lockdowns in many cities are gradually being lifted, flights in and out of China are set to be cut further. Ewer said it is hard to say if his team has seen the worst of the logistics challenge.
However, two things he is sure of are the lessons learned from the experience: do more crisis management simulation exercises and have more than one supply source for essential pharmaceutical products and their active ingredients.
Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
