Why is it so important for pharmaceutical companies to have a trusted logistics partner?
Marirus Giedraitis: People across this industry agree that pharmaceutical products are most likely to be damaged in transit. It’s not too hard to have various backup systems in the warehouse and keep medicines in the right condition.
However, this is much harder to achieve when they are placed in trucks, aircraft, containers or transit terminals. I believe companies should pay more attention to how their logistic supplier is preparing for unexpected challenges in transit, and even measure that. After all, it might end up saving them time and resources.
What are the greatest challenges in transporting pharmaceuticals by road across Europe?
The main challenges are climactic, such as high summer temperatures in southern Europe and very low temperatures in winter in northern or eastern Europe. There are also problems relating to the rest period of 45 hours allotted to drivers. In this time, many things can happen, including equipment failure, which can cause damaged temperatures, theft, and other accidents, which might be solved with driver alert and on standby.
How does Balux’s transport equipment meet these challenges?
Our alarm system gives a signal to relevant management teams and the driver about anything unexpected, such as temperature deviation, a door being opened, or a power failure. This system works 24/7, and is tested and validated. Additionally, our safe parking network and staff training programme all serve to secure the pharma supply chain. Admittedly, no one can guarantee 100% safety, if someone does, they are lying. Even so, our goal is to reach 99.5% of successful deliveries without temperature or physical damage. Pharma companies need to do their part, and ensure that their insurance is valid and they can cover unexpected damage.
How can special drawing rights (SDR) limits on the CMR convention affect the transportation of pharmaceuticals?
The CMR convention was signed in Geneva in 1956 and is the main law regulating responsibilities and liabilities between the three most important parties in the logistics process: the sender, the consignee and the carrier. Article 23 of the agreement explains liabilities between parties if the cargo is damaged or missing. Part three says that compensation cannot exceed 8.33 SDR per damaged or missing kilogram.
The conversion rate of SDR is fluctuating at around the €11-12 mark. For the majority of cargoes, this can cover the loss, but almost never if cargo is pharmaceuticals. Liability insurance covers only up to 8.33 SDR and the transport company is held liable by the same amount. Everything that is over that line is the customer’s responsibility. Quite often companies simply are not aware of that, and think that the damage will be covered by the transport company. Only after an accident do they look more carefully to the law and their insurance.
How will Brexit affect logistics in the pharmaceutical industry?
We do not know what kind of deal will be reached, which makes forecasting difficult. However, we are researching how we can operate according to different scenarios, as the UK market is very important for our company. Our experience in working with the UK customs services can play a big role in this competitive market.
What is clear is that transit times are likely to be longer, that total price for services will increase, and that the volume exchanged between continental Europe and the UK will diminish. In any case, we expect smart decisions from either side to ensure the best possible deal being reached between the two parties.
