In recent months, we have seen incredible successes with vaccine development for COVID-19. Now, with the mass rollout of vaccines, we are facing the monumental goal of getting those vaccines into the arms of as many people as possible.
This part of the process — the shipping of a product to the consumer — is known as the last mile in the logistics chain, said Terry Esper, associate professor of logistics in Ohio State’s Fisher College of Business.
And it’s this aspect that is the most difficult and most expensive component.
Regular products are shipped through a long supply chain of manufacturers, distributors and warehouses to get to a local distributor and then to your home. The last-mile shipment from the distribution center to your home, he says, makes up 53% of all logistical expenses from initial production to delivery.
Here, Esper shares what makes the last mile difficult and his view going forward.
The vaccines — and the nature of them as a product — have elements we don’t like to see from a logistics perspective. For one, we are talking about a critical product that is addressing a public health crisis. In and of itself, the product is very sensitive — and that increases the importance of making the logistics’ execution flawless.
The vaccines to be distributed are perishable. That means the products must be moved with a level of precision and a level of speed that go beyond typical logistics requirements for general shipments. And, of course, that means the product must be temperature controlled.
By adding criticality and perishability, that means you will likely need to use air freight, the most expensive way of moving product through the logistics infrastructure.
From a pure logistics perspective, a standardized plan from the federal level to at least the state level is an important part of how you get a more effective and efficient logistics operation.
This has led, at this point, to Ohio distributing the vaccine differently from Arkansas, differently from Colorado, differently from Michigan. This stew of complexity is definitely a logistics quandary.
The vaccine distribution rollout has faced the challenge that some communities simply are more accessible than others. Shipping a product to Small Town, Ohio, for Amazon, for example, is more expensive and requires more touchpoints than shipping to the heart of Columbus. So there is the urban versus rural issue.
In addition, certain communities don’t receive the same level of “service.” We see some communities of color may not get next-day service and other communities might. It’s the same story happening with the vaccine rollout. I think the goal here will be to make sure companies are targeting certain communities and particularly those that need the vaccine.
Another interesting facet is the cold chain requirement. A supply chain refers to all the linkages to get a product to the market and ultimately to the consumer. The cold chain is the same phenomenon but for products with temperature-control requirements — food, vaccines, pharmaceuticals.
Prior to the pandemic, only about 15% of cold chain shipments were associated with anything pharmaceutical. Of that 15%, only 35% was for vaccines. The other was for drugs and other treatments. So it’s been a small slice of the pie for the cold chain business until now.
But where do we get the extra capacity for vaccines to help with the public health crisis?
Airlines are not exactly where they need to be. I think the food distribution space is where you are going to see the biggest hit overall. For example, I think about the smaller companies, such as Jeni’s and Graeter’s, that rely on dry ice for packaging and what’s going to happen.
There’s also a broader economic story here. With limits to the number of planes and the amount of dry ice available, only so much dry ice can be put on a plane. On a good note, there was a recent petition to the government to allow more dry ice packed products onto airplanes — and it was granted.
Some elements have done very well. The air freight business, for example, with UPS and FedEx stepping up to partner and provide their expertise, has been phenomenal. We are seeing a lot of intricate discussions involving Amazon or Walmart, so we’re still grappling with execution at that last level.
The first two vaccines require two encounters of a specific time frame between doses. That further amplifies the complexity.
Relatively speaking, I think the vaccine rollout has been going well in the grand scheme of things. A lot of movement and coordination has taken place. Yet it’s still frustrating to the average consumer or patient because it takes time to get through online or calling to make appointments. When you experience that, it can be difficult to see that the process is going quite well considering the scope and magnitude.
In time, we will see the reduction in complexity of every aspect. This will help us to enhance our abilities to distribute the vaccine to everyone. When the logistics operation runs flawlessly, people tend to not be aware of it. So there is something to be said for the vaccine no longer being a new thing. It will eventually become more commonplace in our lives, like the flu vaccine.
There also will be more air freight capacity as airlines increase their schedules. The more product that is moved to air freight from UPS and FedEx, for example, there is more capacity to distribute the vaccine. And the warmer spring and summer weather will help keep processes moving forward.