Pharmaceutical Shipping: Tips to Lower Transport Spend

People across the country receive more mail and email this time of year. Tangible and virtual boxes are both filled with bills, delayed holiday cards, and businesses canvasing consumers with promotions to spend their tax refund on. In addition, advertisements from pharmacies are flooding in to convince individuals to opt for home-delivery prescriptions.

As many companies push for this change and commitment to a business, it leaves less capacity for typical pharmaceutical chains—especially pharmaceutical companies that do business in the last mile of residential delivery. With a new calendar on the wall, businesses need to stay vigilant and strategic to keep pharmaceutical costs in check. By learning about ways to minimize spending on pharmaceutical shipping, companies can better compete in the evolving market.

The State of Shipping Pharmaceuticals in the U.S.

As the country begins to find its new normal in the wake of Covid-19, supply chain trends are becoming a regular headline. After two years filled with delays of materials, FDA approval, and properly conducted clinical trials, companies have the breathing space for manufacturing again. Fewer lockdowns make this possible and also provides room for more consumers to get back to their regular doctor's visits, however, there are now several online pharma companies, like Hims and Keeps, that have grown in popularity many consumers are getting accustomed to utilize. Together this creates a skyrocketing pharmaceutical supply and demand.

Unfortunately, this growing supply and demand trend coincides with a severe capacity crunch due to labor shortages, inefficient port systems, and more. These problems are especially unhelpful to a burgeoning industry that covers vast distances. Yahoo notates the vital role of pharmaceutical distributors in the national health care ecosystem, sharing that "Distributors handle 92% of pharmaceutical sales and add efficiency and order to a supply chain that connects two highly fragmented markets: 1,300 manufacturers and 180,000+ points of dispensation."

The demand for pharmaceuticals in tandem with all e-commerce demand means little available capacity and higher costs for pharmaceutical shipping. Association for Accessible Medications (AAM) reported in 2021 that a "survey of AAM's generic and biosimilar drug manufacturers revealed that travel and transport costs have skyrocketed 224% on average, with at least one manufacturer reporting as much as a 413% increase in shipping expenses compared to the same costs before the crisis." These types of increases expand operating costs and minimize profit margin substantially.

The 2022 general rate increases are affecting every mode of shipping. By now, most news sources have shared the areas of concern and delays with road and maritime transportation. On top of that, the GRIs are now affecting air transportation too. As ebbing restrictions and country lockdowns impact international air travel, significantly fewer flights can transport pharmaceuticals with the available cargo space. Despite the obstacles facing pharmaceutical shipping, the country is still in a climate marked by medical needs. It is important for medicine and medical supplies to arrive at their destinations in full and on time consistently. A business's working capital does not need to be drained to make this happen. Keeping shipping costs low to those at the core of the pharmaceutical industry allows profit room to invest in drug innovation, pay employees a fair wage, and much more. So what steps can shippers take to make this reality?

How Shippers Can Lower Transportation Spend

Pharmaceutical companies are not in control of the supply chain trends. Nonetheless, decision-makers of said companies can intentionally use knowledge of the trends to their benefit. By leveraging expertise and strategy, companies can discover options that maintain the integrity of the materials while streamlining shipping costs.

1. Know the Laws Regarding Pharmaceutical Shipping

Although the outsider may only consider pills and liquids as pharmaceuticals, insiders to the field understand that pharmaceutical shipping loads can even contain chemicals or human organs. Because some loads may be classified as hazardous material, it's important to be well versed in local and federal laws regarding hazmat shipping. Companies knowledgeable of these laws can avoid unnecessary fines and disruptions to their transportation process.

2. Obtain All Necessary Licenses

Applying and securing licenses is an additional vital step to shipping pharmaceuticals. This process is done directly through the local department of state health services. Businesses new to this can consult Harbor Compliance's Pharmaceutical Licensing Compliance Guide that covers all 50 states for a thorough list. Operating with these required licenses is a second way to avoid shipping disruptions that can be costly.

3. Think About Your Fulfillment Model

As 2022's market continues to reveal a drive for parcel home delivery, companies should consider which fulfillment model is the most cost-effective with the most capacity. Carrier network optimization may reveal LTL as the best option in some circumstances. In other situations sending medication parcels from a central pharmacy is better than from local stores. Zone skipping is another option to consolidate multiple parcels by ground in larger LTL and FT moves. Using data can also identify the best ship from location by ship to zip, in addition to multicarrier strategies. Analyzing familiar and innovative fulfillment models is a great way to consider efficiency and cost.

4. Ensure Temperature-Sensitive Pharmaceuticals Are Tracked Properly

Cold chain logistics often need to be considered in pharmaceutical shipping. Some products can become dangerous if the temperature changes by even one degree, making transporting some materials more fragile than glass. To minimize lost and damaged materials, businesses should implement transportation requirements to regularly confirm the temperature of the space housing these items. Implementing these pharma shipping best practices in the time of COVID can even protect the vaccine itself due to its requirements to be stored at 40°F. And, of course, protecting products protects profit. While looking at cost saving strategies shippers can look at adding additional cold packs to select a cheaper service that would incur cost savings even when including the additional weight of the shipment or package size. Finding the best strategy that works for your company should always be backed by data.

5. Properly Document All Activities and Share Such Information in RealTime

Documentation is essential for all business transactions. In pharmaceutical shipping, shippers must have a method to track the location and protocols for a shipment in real time, including signatures, photographs and receipts at every step. Some may consider this over-communicating, but doing so leaves a trail to track down problems in the system should packages arrive altered in any way.

6. Know When to Ship by Ground, Air, or Train

Deciding which mode is best for pharmaceutical shipping, it's important to consider various things. Shipping costs in 2022 will likely play a massive role in these decisions, but sometimes the cheapest route is not always the best. While sadly, all items can be subject to theft, specific ones are especially valuable to thieves. For high-end items, it's important to consider which option provides the least amount of stops.

7. Use Digital FBAP to Keep Costs in Check

A freight bill audit and payment (FBAP) system provides a centralized location for essential business moves that promote efficiency. By outsourcing this to a digital system, companies can get insight into freight payment types to choose the most appropriate ones for their needs at the least cost. FBAP can be impactful using small parcel auditing software or reducing total container shipping costs on a large scale.

8. Leverage Analytics to Understand Your Costs

At the end of the month, people worldwide often ask, "Where did the money go?" With data more accessible today than ever before, businesses can invest easily in analytics. Doing so provides an understanding of operational costs and overall business function. This actionable data insight can even optimize shipping costs across all modes in pharmaceutical shipping.

Improve Pharmaceutical Shipping Costs by Working With Intelligent Audit

Operational costs are enormous in industries as large as pharmaceuticals. Grandview Research writes, "The global pharmaceutical manufacturing market size was valued at USD 405.52 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 11.34% from 2021 to 2028." As the industry grows globally and nationally, pharmaceutical companies need to make choices that optimize their individual growth in the field. Companies can cut pharmaceutical shipping costs considerably by partnering with those versed in strategy and analytics . Sound appealing? Start a conversation with Intelligent Audit today.

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