All over the world, scientists are closing in on a vaccine for COVID-19. The disease that has plagued the world for the past eight months has at least six vaccines undergoing final phase three trials. It’s been a record-breaking effort so far. But the most complex logistics challenge since World War II still lies ahead for supply chain practitioners.
Right now, there are another dozen vaccines in phase two testing, and most of them are close to entering phase three. Many, including White House Coronavirus Task Force member Dr. Anthony Fauci, are optimistic that one or more of these vaccines will be effective. In June, the U.S. Food and Drug Administration (FDA) warned that a coronavirus vaccine would have to protect at least 50% of vaccinated persons to be considered adequate and gain FDA approval. This is the required level of effectiveness we are collectively tracking as the results of all phase three trials are released. In the meantime, many pharmaceutical companies have already begun manufacturing these vaccines and stockpiling them ahead of final approval.
An approved vaccine is only half the battle
Having an approved vaccine is one thing. To truly get past this pandemic, we must reach a point where enough people are immune to the disease to slow infection rates. The Centers for Disease Control and Prevention (CDC) has advised a minimum of half of the population must be immunized to achieve “herd immunity” – the threshold where enough people are immune to stop the spread. That is more than 175 million people in the U.S. alone. Furthermore, some of the vaccines in development require two doses to be effective. It’s simple math: the U.S. will need 350 million vaccine doses manufactured and delivered. That’s a lot of shots.
For context, each year, a flu vaccine is developed, manufactured, and delivered via similar channels. According to the CDC, vaccine manufacturers supplied over 169 million doses of influenza vaccine for the 2018-19 flu season. The distribution of the flu vaccine usually runs from August until December. The good news is that we can already deliver millions of vaccine doses. We will just need to plan and scale up the operation by about four times. Oh, and to make the challenge a little more fun, we have between five and six months – more or less the amount of time it takes to deliver the flu vaccine – to get it done. That’s why all companies playing a part in the COVID-19 vaccine delivery effort – from the manufacturer’s loading dock, to the DCs, and down the last mile – must not underestimate the monumental task at hand.
In the U.S. alone, 350 million vaccine doses need to be manufactured and delivered. That’s a lot of shots.
Preparing to deliver the vaccine: the constraints
So what do the many companies manufacturing and distributing the vaccine or one of the specialized delivery firms completing the last mile delivery need to be prepared? It is very likely these first vaccines will be administered the old fashioned way, via a shot to the arm. Moreover, these initial doses will be temperature sensitive; maintaining them at cold and controlled temperatures is critical. This crucial factor demands temperature-controlled warehouses, packaging (i.e., coolers), and vehicles that are temperature controlled, such as refrigerated trailers.
Another constraint will be labor. Of the many significant impacts of COVID-19, one has been an increased reliance on home delivery. The demand for last mile drivers has never been higher. Amazon has reported that, for the past few months, they have been experiencing holiday-level volumes, which typically run for about four weeks from Cyber Monday until Christmas Eve.
There are high hopes that a vaccine will be ready by the end of the year. This means its distribution will collide with the holiday rush. And retailers are expecting this to be the biggest e-commerce holiday season ever. This increase in demand will mean companies responsible for the last mile delivery of these vaccines will be fighting for capacity – in the form of drivers, vehicles, and warehouse space, with other courier and parcel delivery companies.
And, let’s not forget, refrigerated trailers are always in high demand. They are used to transport many sensitive items such as produce, meat, poultry, fish, dairy, and – yes – pharmaceuticals. However, these trailers aren’t only in high demand during warmer months. In the winter, refrigerated trailers can protect cargo from significant environmental swings, for example traveling in cold climates. The insulation built into these trailers can protect goods that are sensitive to outdoor freezing temperatures. In some regions of the country, the refrigerated trailer supply already runs low during the winter months. So vaccine distributors will need to compete with other shippers who also need these specialized trailers to move their goods.
Mobilize your assets and develop a plan
Physical delivery of the vaccines will be a significant undertaking. It will be essential for companies to establish a plan and prepare for the wave of demand that is on the horizon. Last mile distributors should take time now to develop a model with estimated demand and shipment volumes. They can use this model to determine the warehouse space they need to handle this spike in business and the capacity they require from their fleet or their carriers.
Using their capacity model, they should first look to national carriers (i.e., FedEx, UPS, USPS). These carriers can provide an excellent foundation for a delivery operation. However, they, like any company, have a finite capacity. So it is important to also look for additional capacity and capabilities from regional and local carriers. Typically, regional carriers cover groups of states (i.e., the Southeast), while local carriers only cover specific metro areas. These carriers provide more personalized service instead of national coverage, and they have a greater ability to adapt to daily changes or demands.
For manufacturers and 3PLs with a private or dedicated fleet, they will need to compare the projected number of deliveries with the capacity of their fleet. Even if they are running an efficient fleet today, it is very likely they won’t have enough trucks and drivers for tomorrow’s demand. They should develop a plan for adjusting their private fleet to handle the inevitable spike in volume. Possible remedies include hiring more drivers, contracting out the added volume to a third party carrier, or a combination of the two.
The final part of this plan must include the security and operational requirements for handling these high-value pharmaceuticals and targets for theft. Any capacity added to the fleet should be required to meet all guidelines for handling this sensitive freight. A “perfect order” process will arguably never be more critical than for the delivery of the vaccine – delivering to the right place, with the right product, at the correct time, in the ideal condition, in the prescribed package, in the ordered quantity, with the proper documentation, to the designated customer, at the right time. As a part of your plan, measure perfect orders on a regular cadence (daily or weekly) to ensure that the product is doing more than just getting out the door.
Build-in flexibility: have a process for adapting the plan
Every plan must be adaptable. Once the vaccine is approved for distribution, it will be critical to maintain strict oversight of day-to-day operations. Carriers must be held to their capacity commitments and the transportation capacity forecast adjusted based on daily metrics.
The last mile companies distributing the vaccine need to hold themselves – and their carriers – accountable by conducting daily morning meetings to review the previous day’s performance and current day’s projections. By monitoring and examining total daily loads against capacity commitments (exposing where daily needs consistently outpace the committed capacity), they will quickly identify potential problems with carriers who may be struggling to cover all the loads, resulting in delays. The sooner they can alert carriers to their need for more capacity, the better they can fill the gap.
In a delivery surge like the one we will soon see, it is easy to get behind on deliveries, especially when demand is the highest. Now is the time for companies to be setting their last mile strategy to stay in front of the wave and avoid long-term negative implications.
If you’re one of the many companies preparing to take on the last mile delivery of COVID-19 vaccines, you’ll need help readying your operation for a surge of historic proportions. Reach out to us; we’re here to help. Chainalytics’ combination of top supply chain talent, proven methodologies, and exclusive market intelligence consistently puts our clients ahead of the curve.
Bryan Wyatt is a principal in Chainalytics’ Transportation practice with over 20 years of experience and expertise in transportation operations, strategic sourcing, data analysis, logistics planning, and logistics/supply chain change management.
