Phara goods growth outstrips usual air cargo goods
December 7, 2011
A 12% growth rate predicted for pharmaceutical air freight over the next five years outstrips the 4% anticipated for electronics shipments, traditionally the strongest sector for air cargo demand.
The boom means air cargo carriers and logistics operators are prioritising investment in facilities to cater for this traffic, particularly from Asia’s burgeoning generic-drug industry.
Lufthansa and UPS are among the first operators to react to news that the pharmaceutical logistics segment will be worth €47 billion (US$63 billion) this year as more drugs are made in Asia and other developing markets, according to research firm Transport Intelligence.
Dan Gagnon, UPS European health-care logistics director, said this week: “Just about every airline is looking at this space with interest right now, and as more competition gets into this space, you need to come up with solutions that are more economical, but provide the same level of service.”
UPS, which provides freight services for German manufacturer Merck, has invested in five new pharmaceuticals facilities in the past year and last week purchased drugs logistics company Pieffe Group in Italy.
Lufthansa opened a new cold cargo facility in Frankfurt this week to add to a pharmaceutical hub in Hyderabad, India, which started operations in May.
Transport Intelligence analyst Cathy Roberson said biotech and pharmaceutical products represented the highest value per airlifted pound for any cargo.
She said: “The growth will be driven by emerging markets, in particular India, China and Brazil. Continued outsourcing to these locations, along with changes in government legislation, will drive increases in logistics spending.”
Lufthansa’s cargo unit, whose customers include Ranbaxy, is planning to dedicate six MD-11s by 2015 to handle pharmaceuticals as the five B777s the airline will start receiving at the end of 2013 free-up capacity.
“It has been our most successful product in the past few years,” Andreas Otto, Lufthansa Cargo’s head of sales and marketing, told journalists this week.
UPS is currently tying up deals to improve its Asian facilities, Gagnon said. He expects an announcement in “about a month.”
“Infrastructure for us in India has been quite limited,” Gagnon said. “For our strategic initiatives, that is an area in which we will be investing.” UPS already has a cold cargo facility in Singapore.
India’s pharmaceutical exports are expected to grow 23% annually to 2015 as the quantity of generic drugs produced in the country increases. With more than 100 plants, India is home to more US-approved pharmaceutical manufacturing facilities than anywhere outside the US.
Courtesy of IFW
