India’s pharmaceutical logistics sector: navigating challenges, solution and seizing opportunities

hanuman

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India’s pharmaceutical industry is on a promising path, with a vision to reach a staggering $130 billion by 2030 and $450 billion by 2047, according to a report by Ernst and Young. This growth is fueled by a thriving pharma industry that has already exported over 300 million vaccine doses as of July 2023 and impressive growth with $668.9 million worth of medical devices shipped to the US alone in FY 2022-23. The ambitious goal of 2047 hinges on a robust logistics network, the backbone for delivering critical medical supplies across countries. However, a perfect storm of challenges threatens to disrupt this growth trajectory.

Cost Surge Strains Supply Chain: Sea freight, the lifeblood of pharma logistics due to its affordability, is experiencing a price explosion. The Drewry World Container Index paints a grim picture, with the composite index jumping 11 per cent to a staggering $3,511 per 40-foot container this week alone. This marks a jaw-dropping 104 per cent increase compared to the same period last year. The ripple effects are significant, impacting manufacturers and ultimately pushing healthcare costs upwards for consumers.

Geopolitical Turmoil Disrupts Delivery Timelines: Beyond the cost surge, global instability is throwing a wrench into delivery schedules. The ongoing war in Ukraine, the recent Israel-Hamas conflict, and the Red Sea crisis have sent shockwaves through global supply chains, with the pharma sector feeling the brunt. Pre-pandemic lead times for sea freight from China to India averaged around 10 days. Now, estimates suggest a two-week wait, jeopardising the timely delivery of essential medicines. Adding to the woes, CMA CGM Agencies India has informed customers of delays in vessel berthing due to power issues, further disrupting planned arrivals.

Container Crunch Creates Bottleneck: Compounding the problem is a global shortage of shipping containers, particularly affecting shipments originating from and to China. This scarcity translates into delays and inflated prices for securing space on cargo ships. The India-US trade route is also feeling the pinch, with container space at a premium due to the ongoing Red Sea crisis.

Volatile Air Freight Adds Uncertainty: While air freight offers a faster solution, its high cost makes it unsuitable for routine deliveries. The current volatility in the Middle East, a crucial airfreight hub, adds another layer of uncertainty to the already strained logistics landscape.

Navigating the Challenges: A Multimodal Approach: Despite these formidable challenges, there are solutions within reach. Experts advocate for a multimodal approach, strategically integrating road, rail, and air freight depending on urgency and cost considerations. This flexibility can ensure efficient and timely deliveries while mitigating reliance on a single, volatile method. Additionally, some logistics companies are offering hybrid Sea/Air solutions to strike a balance between cost and speed. Furthermore, strategic hubs like Dubai can be leveraged for transshipment, a crucial tactic during disruptions like the Red Sea crisis.

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