It straddles two worlds. Situated squarely between the East and the West, the Middle East flanks Eurasia and North Africa, two vastly different lands. Although the region has garnered considerable press lately due to political and religious strife, the Gulf is also known for its prime geographical position.
Location has been especially key to earning the region a reputation as a global aviation hub, maintains Emirates Airline’s divisional senior vice president, cargo, Ram Menen.
“With its geographical [setting], the Middle East is well positioned to connect the East and the West,” he says. “It has historically served as a global trading hub, and aviation has added a new dimension.”
Peter Scholten, Saudi Airlines Cargo’s vice president, commercial, projects that it’s a reputation that will only grow with time — particularly in relation to cargo. “In five to 10 years, the Middle East hubs and its cargo carriers will have a significant market share of the world trade lanes such as Asia-Africa, Asia-Europe and Asia-Middle East,” Scholten says. What’s more, he estimates that the Middle Eastern airfreight market will continue to grow at a rate of 5 percent to 10 percent annually.
Equipping Middle Eastern airports to handle the anticipated growth has been no small task. Facilities such as Cairo International Airport have undergone major renovations, while Dubai’s Al Maktoum International Airport opened in 2010 to serve cargo operators worldwide. The latter airport is so large, in fact, that analysts estimate that up to 12 million tonnes will move through its doors each year starting in 2013. Menen credits Al Maktoum International Airport’s proximity to the Jebel Ali Free Trade Zone with propelling growth.
Lauding the United Arab Emirates’ creation of a “multi-modal logistics hub,” Menen says freight forwarders and airlines alike are benefiting from the opportunities afforded by these facilities. And of the goods inundating the Jebel Ali Free Trade Zone, numerous cargo experts point to pharmaceuticals — driven by neighboring India’s prolific pharmaceutical sector — as the commodity to watch.
Addressing the demand
It’s no secret that India has become one of the hottest manufacturers of pharmaceuticals in recent years. Along with housing some of the biggest names in biotechnology, India is also home to one of the fastest-growing pharma sectors, developing at an estimated rate of 10 percent per year. Such proliferation has demanded the deployment of various transportation services, specifically airfreight.
Nowhere is this more evident than among Middle Eastern carriers, numerous logistics experts say. Take Falcon Cargo, for instance, maintains Gulf Air Senior Manager Rory Black. Gulf Air, which launched Falcon Cargo in November to transport high-value freight, regularly sees strong volumes of Indian-manufactured pharmaceuticals on flights, Black reveals. It’s a matter of catering capacity to demand, he explains. “For us, pharmaceuticals are a very interesting product that suits the aircraft we fly and our network,” Black says.
Black expects pharma to become an even bigger business segment for Falcon Cargo as the Indian pharmaceutical market continues to explode; recent projections place it as the fourth largest in the world, according to Black. “We’re close to at least two-thirds of pharma manufacturing through our stations in Mumbai and Delhi,” he says, “so pharmaceuticals are an absolute priority for us.”
Black says the UAE freight carrier also boasts sub-three-hour connection times from Bahrain to East and North Africa, enabling it to deliver Indian pharmaceuticals to some of their key export destinations in a timely manner. After all, Africa, which is home to more than two-thirds of the world’s HIV population, continues to require medical goods at an alarming rate. Again, it’s a case of proximity, Black says.
“Bahrain, through Gulf Air’s Falcon Cargo, is perfectly geographically positioned not only for movements throughout the Middle East, but to serve developing markets like Kenya, Uganda and South Sudan — all markets relying on imports for their pharma consumption,” he says. Black also credits Falcon Cargo’s centrality with bolstering volumes out of Europe, which, he says, is another strong market for pharmaceuticals.
Pharmaceutical demand between Europe and India also led Lufthansa Cargo to establish a pharma hub at Hyderabad International Airport in May, reveals Christopher Dehio, Lufthansa Cargo’s senior manager of global key accounts, temperature control. Officials at Hyderabad encouraged the German freight carrier to set up a facility to address the cool-chain requirements of these goods, Dehio says — a task Lufthansa readily accepted.
Driving this decision was India’s status as one of the strongest export markets for pharmaceuticals, Dehio says. Still, he admits that discrepancies exist in transportation figures. “If you look at the value exported by India in pharmaceuticals, it’s only 2 percent of the total value worldwide, but by weight, India is the second largest exporter of pharmaceuticals, after the EU’s 27 counties,” he says.
Dehio says the rise of generics created this phenomenon. Indian manufacturers have significant market share of the generic-drug sector, he says, leading to high volumes with low yield. But it can be a very lucrative business for cargo carriers, Dehio asserts. “Put it this way, it’s a high-revenue business, but at the same time it’s also a very capital-intensive business,” he says.
Dehio acknowledges that Lufthansa Cargo invested significant capital in Hyderabad last year, including ensuring its pharma hub complied with cool-chain regulations and positioning part of its cold-chain container fleet there. Seven months later, Lufthansa Cargo took its commitment to pharmaceuticals one step further and opened a 4,763-square-meter cold-chain facility at Frankfurt Airport. With volumes steadily increasing, it’s been a good investment so far, Lufthansa officials say.
Falcon Cargo and Lufthansa aren’t the only carriers seeing increased quantities of Indian-manufactured pharmaceuticals on flights, however. Emirates SkyCargo’s Menen says pharmaceuticals are such a hot commodity for the UAE freight carrier that all new flight stations are required to undergo cool-chain training. Geography, he reveals, has played a large part in boosting business.
Infrastructure investments have also helped, Menen says. He points to the Emirates Cargo Mega Terminal in Dubai as an example of this. Featuring “spacious temperature-controlled handling and storage areas and a dedicated cool-chain handling team,” this terminal especially caters to the pharmaceutical sector, Menen says. What’s more, he reveals, Emirates SkyCargo continually invests in cool dollies to prevent pharmaceutical shipments from being exposed to the sweltering temperatures of Dubai.
Mohammed Esa, Agility’s CEO for Dubai and senior vice president for the UAE, Oman and Bahrain, praises such measures, pointing to the problems caused by heat. It’s not uncommon for the Middle East to reach 50-degrees Celsius in the summer, he says, which could potentially compromise the cold chain. “It’s a big concern, and pharma companies are very cognizant of it,” he says. Nevertheless, Esa asserts, measures are being made across the region to ensure products remain in a safe temperature range.
Keeping it cool
Sweltering heat or not, keeping pharmaceuticals cool is freight carriers’ ultimate priority. If product integrity is compromised, Dehio says, it can have very costly consequences.
Suppose, for example, you’re transporting an LD3 unit with a multimillion-dollar agent to screen for breast cancer, he says. “And if you goof up by allowing a temperature deviation
of maybe 3 degrees, then the whole shipment is spoiled and you lose [millions] in value,” he says. There are also a host of legal and moral issues to consider, he adds.
Still, Dehio admits that not all drugs are equal when it comes to temperature-sensitivity. “If India comes up with a new generic drug, it mightnot be as sensitive as the original, and
it might not make [cold-chain] transportation necessary at all,” he says.
Rory Black concurs. He says that up to 80 percent of pharmaceuticals come prepackaged, with only a small percentage requiring a cool-chain solution. In case of lengthier transit
times, however, he says Falcon Cargo’s Bahrain hub offers a 15-degree-Celsius storage room and two refrigerators normally programmed at -5-degrees Celsius and -15-degrees
Celsius. Not that these devices are often mandated, he maintains.
“What our clients are mainly asking for is a high service level and flown-as-booked guarantees,” Black says. “As long as you can deliver fast transit and have adequate backup,
ensuring that the shipment gets to the destination unspoiled, you will be the carrier of choice.”
Menen says paying scrupulous attention to different temperature ranges for storage and transportation is also key. Acknowledging that regulations concerning pharmaceutical shipments are becoming most stringent, he says the focus is now on room-temperature goods; previously, he says, products that keep freight within 2-degrees Celsius to 8-degrees Celsius were all the rage.
Either way, he maintains, it’s important to follow policies to the letter even if slightly elevated temperatures won’t spoil shipments. “Although pharmaceuticals can withstand limited exposure to temperatures outside the optimum range, the aim is always to keep this to an absolute minimum,” Menen says. “A combination of protective packaging
and efficient handling procedures is crucial to protect product integrity.”
Emirates SkyCargo, for instance, maintains product integrity by offering customers its Cool Chain Basic and Cool Chain Premium temperature-controlled services, he says.
The Dubai-based freight carrier also recently rolled out its Cool Chain Advanced solution, with India serving as one of the first test markets. Offering a variety of services is essential, Menen says, since transportation requirements often vary from pharmaceutical to pharmaceutical.
They also vary according to country, Esa says. One of the biggest challenges freight carriers face in regard to pharmaceuticals, he says, is navigating the complex regulatory environment. For instance, Esa says, the UAE contains different legislative requirements than Saudi Arabia, and Jordan and Lebanon have completely disparate Customs processes.
It’s why moving products between these nations can be such a headache, he maintains.
“But part of it is the governments working together to allow that free flow of goods and that true sort of trade zone that allows pharma goods to move freely between these countries,” Esa says. “And part of it is logistics providers actually building and putting the infrastructure in place, both from a facilities and a transport perspective, to meet the
Requirements, he says, that are very different from other industries. “The level of compliance, the level of integrity in product management, the level of detail and quality and trace-and-track, and the management that’s required is much higher because of the risks associated with transporting and storing pharmaceuticals,” he says.
Fortunately, many logistics experts project, the benefits associated with transporting pharmaceuticals far outweigh the risks.