Cold-Chain Shipping: Faster May be Less Costly

It may seem counter-intuitive, but investing in faster shipping services can save substantial amounts in cold-chain shipping.

Given the cost of shipping temperature-sensitive products, it is a surprise that so few companies make an effort to control expenditure in this pricey operational area. But a study by UPS and Pharmaceutical & Medical Packaging News in 2015 revealed some startling insights.

The survey indicated that fewer than one in five healthcare manufacturing companies uses custom-engineered packaging, and only about the same proportion build in information about environmental conditions their shipments are likely to encounter on their journeys into the packaging design. That means that there’s a surprising amount of approximation going on, industry-wide. Consequently, many companies are, to some extent, effectively rolling the dice on their cold-chain packaging.

In reality, all too often, cold chain shipping practices are driven by one-off decisions, and not ongoing scientific analysis, as experts recommend. And companies are, in consequence, throwing away potentially billions of dollars in transportation and packaging costs, every year.

It’s common for a packaging audit to reveal that the legacy of current packaging practices involves choices made in moments of financial crisis. For example, an urgent requirement to curtail supply chain costs may provoke a change in shipping practice to scale back from next-day delivery to second-day delivery.

While an understandable choice, the lower costs of more economical shipping services require that the product be better protected for longer transit times, either with more refrigerant, or more insulation in the package—or both. And it’s not unusual for a switch to more economical shipping services to trigger a spike in product spoilage rates.

When that happens, product protection measures may be taken, inevitably raising the cost of shipping because of the additional weight and bulk of additional refrigerant and insulation. The result, particularly after many years of responding to immediate challenges without rigorous analysis, can significantly over-inflate the cost of shipping cold-chain products.

While making the transition from a suboptimal, legacy small-package supply chain to a scientifically optimized one takes a little effort—and a competent shipping partner or packaging consultant—many companies have discovered that achieving efficiency has a remarkable payback rate. In particular, a shift to a faster shipping service can deliver immediate savings in reduced use of packaging and refrigerants, lower spoilage rates, and reduced customer support and re-shipping costs.

In addition, companies who have chosen to reexamine their legacy practices have reported additional benefits such as greater customer satisfaction through improved service, improved brand image and reputation. And more importantly for everyone, optimized cold-chain shipping may also contribute to the most important indicator of all: Better patient outcomes.

Yet, gold-standard, cold-chain packaging analysis and optimization remains far from an industry priority. The 2015 UPS and Pharmaceutical & Medical Packaging News survey revealed that almost half of cold-chain decision makers had no plans to have their packaging audited by an expert.

And that may be cold comfort to healthcare CFOs, manufacturers’ bottom lines—and even patients.

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