Logistics firms reap "vaccine economy" benefits as EU gears up for roll-out
By John Miller
ZURICH (Reuters) - Joern Schneemann thought he would help manage the logistics for the 2020 Tokyo Olympics this year. Then the COVID-19 crisis stepped in and pushed the event back to 2021.
Instead, the head of the European Expo & Events department of the Swiss logistics company Kuehne + Nagel set up vaccination centers in congress and sports facilities in the North Rhine-Westphalian state, the most populous country with 18 million inhabitants.
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Snowman's Pandemic Pivot shows how logistics companies like Kuehne + Nagel, Deutsche Post DHL, Danish DSV Panalpina and Spanish Grupo Logista have turned the disruption of COVID-19 into an opportunity by seizing part of the burgeoning "vaccine industry" and at the same time mastered record demand in traditional companies.
"Because of the pandemic, things went very differently than planned," Schneemann told Reuters from his German offices. "And it turned out well."
Neither North Rhine-Westphalia, which will start its vaccination program in nursing homes on Sunday in line with the rest of Germany, nor Kuehne + Nagel have announced the order value.
The company, which has received other undisclosed government contracts, will manage the launch of millions of vaccines, including Pfizer and German partner BioNTech's, which received European approval on Monday.
It has to coordinate shipments in warehouses filled with cooling containers that can supply the vaccine storage needs at minus 70 degrees Celsius at 53 locations across the state.
Europe is expected to receive 12.5 million doses of the Pfizer / BioNTech vaccine by December 31st. Germany expects up to 4 million doses by January, which is enough to vaccinate 2 million people with the two-shot treatment.
"The temperature is also electronically monitored and recorded during transport," said Axel Birkenkaemper, spokesman for the North Rhine-Westphalian Ministry of Health.
Rival Deutsche Post DHL has similar deals in Lower Saxony and Baden-Württemberg to store and deliver part of the first tranche of the 300 million potential cans Germany has ordered.
"It is certainly more urgent and complex," said John Pearson, DHL Express CEO. "But we are used to handling such deliveries. We do it every day."
In general, shippers have weathered the pandemic in good shape after online sales soared during the lockdowns.
The profit of Kuehne + Nagel in the third quarter slightly exceeded expectations, DSV described the market conditions as "better than expected", and Deutsche Post DHL, which also delivers COVID-19 vaccines to Israel, benefited from a further increase in the advance E-commerce Christmas.
It will take billions of doses to vaccinate the world over the next 12 to 24 months, but COVID-19 shots will only account for a fraction of the global shipper volume in 2021.
And they're optimistic about the ability of logistics networks to handle the load, despite major challenges like Pfizer / BioNTech's Antarctic cooling requirements, whose shipments are also running in the US, UK, Switzerland and parts of the Middle East.
The Geneva-based global trucking organization International Road Transport Union (IRU) estimates that 8 billion vaccine doses could be moved in less than 100,000 truck trips, or less than 0.00001% of the total annual amount.
"We don't see any problems," said IRU spokesman John Kidd. "Road transports over 80% of all overland goods, including ... quantities of food and medicine to retail stores."
Still, the delivery of COVID-19 vaccines can give a boost to airlines whose passenger numbers have plummeted as they expand cargo fleets or reuse idle passenger jets.
While U.S.-based shippers like FedEx and UPS, who can move smaller quantities quickly, may have an advantage during the 2020 rollout of 70 million doses of Pfizer / BioNTech and Moderna vaccines, DSV Panalpina expects deliveries to be accelerated at next year.
"DSV will not become active in distribution until April, when the mass roll-out begins," said the Copenhagen-based mail order company.
Pfizer and Moderna forecast more than 1.8 billion doses in 2021. Other vaccine developers hope to add to this if their candidates are approved as expected.
Kuehne + Nagel's sales department is based in Liège, Belgium, where the European vaccine center is being prepared.
From here, shots are transported to Europe or loaded onto cargo planes or "freighters" at nearby airports for long-haul journeys to Africa, where vaccines are obtained as part of humanitarian programs.
"We can send a freighter out and bring four or five of these countries back to Liege in a milk-like manner," said Rob Coyle, head of the pharmaceutical logistics sector at Kuehne + Nagel.
Coyle estimates that 5,000 to 6,500 trucks or about 1,000 large freighters are required to produce 11 billion doses of vaccine. While some types of transportation will be busy, shippers can manage the volume as vaccines are introduced, Coyle said.
"Other industries, aerospace, automotive, have less volume," Coyle said. "We're already in talks with airlines to get some of their planes out if we (have to)."
(Reporting by John Miller in Zurich, Jacob Gronholt-Pedersen in Copenhagen and Matthias Inverardi and Tom Kaeckenhoff in Düsseldorf; editing by Kirsten Donovan)
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