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How 3 Industry Leaders Are Aiming to Meet the Evolving Challenges of Healthcare Logistics

adminAugust 13, 2024

The ongoing rivalry between FedEx and the United Parcel Service (UPS) made headlines earlier this year when FedEx lost its 20-year contract with the United States Postal Service (USPS) after negotiations failed, the contract expired, and UPS happily stepped in to fill the void.  

Recently, FedEx was in the headlines once again — this time about its growing momentum in the healthcare sector. According to Supply Chain Dive’s Max Garland, EVP and Chief Customer Officer Brie Carere announced on a July earning’s call that in fiscal year 2024, the company had secured more than $500 million in related “quality agreements.” 

After providing further details, Garland gave a nod FedEx’s rivals in this sector, namely UPS and DHL: “FedEx faces steep competition in the healthcare logistics space. Rival UPS aims to double its annual healthcare revenue by 2026 after boosting its capabilities in the sector through acquisitions like MNX Global Logistics and an expanded network. DHL rolled out a new cold chain service last year used by Siemens and Eli Lilly that allows perishables to be transported with less packaging.”

Here, we’ll take a look at why the healthcare supply chain creates such a logistical challenge — and how these three companies are aiming to meet it. 

“Transformative change” in the healthcare supply chain

In an overview of its recent report, Delivering Next-Level Healthcare, DHL says the life sciences and healthcare sector is undergoing “transformative change” that’s creating new challenges for healthcare logistics. The organization identifies “six major trends in healthcare supply chains” that are driving such change.

  1. Patient-centric healthcare: “… Personalized treatments require closer links between pharmaceutical manufacturers and patients. And patients now expect the same choice and convenience in healthcare that we know from the commercial marketplace…”
  2. Advanced therapies: “… Complex cell and gene therapies are developed in small batches that require tightly controlled two-way supply chains. Biopharma products need to be handled carefully at every stage in the supply chain…”
  3. Digital healthcare: “The pandemic fueled an explosion in remote healthcare, including ‘decentralized clinical trials’ where shipments of urgent, sensitive, and temperature-controlled medications are replacing the movement of patients. …”
  4. New ecosystems: “… Accelerated timelines have led some large healthcare providers to turn to third- and fourth-party logistics providers to handle the critical flows of medicines and devices throughout the supply chain.”
  5. Sustainable solutions: “… Carbon-neutral warehousing, alternative fuels, closed-loop returnable packaging and container systems, and optimized inventory and delivery models can ensure high levels of availability while minimizing waste and helping the industry meet its emissions goals.”
  6. Resilience: “… The desire to avoid future disruptions [post COVID-19] has led to a ‘great supply chain rethink,’ including more localized supply chains for essential healthcare products and insourcing of critical pharmaceuticals, active ingredients, and medical supplies.”

DHL says each of these trends either makes healthcare supply chain management even more complex than it already is — or requires the development of a completely new model. In this context, the company says logistics providers should prioritize eight key areas: 

  • Cold chain capacities
  • White-glove service
  • Direct-to-X delivery models
  • Supply chain optimization
  • Inventory optimization
  • Digital technology
  • Sustainability 
  • Compliance

For more detail, please see the full report.

Now let’s take a quick look at how the three companies are tackling all of these challenges. 

FedEx 

As Garland noted in his July 1 Supply Chain Dive article, FedEx’s growing momentum in the healthcare sector includes increased use of its FedEx Surround® platform by its healthcare clients. 

“We have over $1 billion of healthcare-related revenue that comes from customers who utilize FedEx Surround,” FedEx’s Carere reportedly said on the earnings call.

According to the company’s website, FedEx Surround is a “monitoring and intervention suite” that provides customers with “next-level control and visibility” of their shipments. 

The company says FedEx Surround offers customers the ability to:

  • “Get near real-time data about your shipments, including predictive delay alerts”
  • “Prioritize your most critical or time-sensitive shipments ahead of others in the FedEx network” 
  • “Manage your shipments and request intervention when you need to, or have FedEx experts do it proactively, 24/7”
  • “Use weather alerts to make informed, proactive decisions and mitigate risk”
  • “Keep customers informed about potential delays and make backup plans”
  • “Reduce the time, money, and effort you spend manually tracking shipments”

Citing Carere, Garland says that over the past year, additional ways FedEx has strengthened its position in the healthcare sector include:

  • Giving customers “the ability to select service options such as temperature requirements at the individual package level”
  • Providing new “specific healthcare identifiers for each Express shipment so it can intervene with more speed and precision”
  • Opening the company’s “first European Life Science Center in the Netherlands,” which provides “temperature-controlled shipping and storage services and connects to most European Union countries within 24 hours”

On July 16, FedEx announced that Nick Gennari, senior vice president of sales, would be assuming leadership responsibilities for the healthcare vertical and serve as president, global healthcare effective the same day. 

“FedEx is making supply chains smarter for everyone – including pharmaceutical, global clinical trials, and medical device shippers,” said Brie Carere, executive vice president and chief customer officer. “I am confident Nick’s extensive expertise positions FedEx to continue delivering unmatched global services, end-to-end solutions, and scalability to healthcare customers of all sizes.”

 “I am truly excited about what’s next for the FedEx global healthcare portfolio,” Gennari said. “Today, healthcare customers expect end-to-end solutions, supply chain insights, and quality oversight to support the day-to-day movement of their shipments. With recent enhancements, FedEx is exceptionally well positioned to meet and exceed those customer needs.”

For more, see the FedEx page: Healthcare shipping solutions.  

UPS Healthcare

Like DHL, UPS Healthcare describes the rapidly evolving landscape of the healthcare sector: “Healthcare is changing faster than ever with medicines and therapies being personalized, care moving to the home, and the once thought to be impossible becoming a reality.”

Here are highlights from the UPS timeline related to its growing footprint in the healthcare sector: 

  • 2000: Acquired Livingston Healthcare Services Inc., “which specialized in supply chain management for healthcare, biotechnology and medical device companies.”
  • 2005: Built the Louisville, KY Healthcare Campus, “expanding its largest dedicated healthcare space to provide third-party logistics services.”
  • 2011: Opened healthcare distribution centers in Asia, Europe, Canada and the U.S., “designed to serve pharmaceutical, biotech and medical device manufacturers.”
  • 2014: Acquired Polar Speed, “a United Kingdom-based provider of temperature-sensitive supply chain solutions to hospitals, pharmacies, wholesalers, surgery centers and end patients.”
  • 2016: Acquired Marken, “a global provider of supply chain solutions to the life sciences industry and a leader in clinical trials, material storage and distribution.”
  • 2019: Launched UPS® Premier, “enabling precise visibility of critical healthcare shipments worldwide.”
  • 2020: UPS Healthcare is launched “as a dedicated healthcare and life sciences vertical.”
  • 2021: UPS Healthcare completed “the delivery of over 1 billion COVID-19 vaccines to more than 110 countries with 99.9% on-time delivery.”
  • 2022: Acquired Bomi Group, “enhancing its end-to-end global healthcare logistics capabilities, footprint and expertise throughout Europe, Latin America and the rest of the world.”

The following announcements provide a glimpse at what UPS Healthcare has been up to more recently:

More information about specific offerings from UPS Healthcare can be found at UPS Healthcare: What We Do.

DHL

DHL says that through its various offerings, it is “well-positioned to support customers to ensure the delivery of next-level healthcare.”

“With the largest global healthcare logistics network and more than 20 years of experience, we see it as our responsibility to take on challenges that will transform healthcare logistics and enable a new generation of life sciences and healthcare services,” the company says. 

DHL offers a wide range of services across the five verticals listed on its website: 

  • Pharma: “End-to-end pharmaceutical supply chain management and orchestration, from in-bound manufacture through to direct-to-patient delivery”
  • Medical Device Logistics: “Full suite of end-to-end lifecycle supply chain services for Medical Devices, including inventory optimization and visibility solutions”
  • Clinical Trials: “Fast, secure, and compliant logistics services to cover all your needs from pre-clinical to commercialization”
  • Consumer Healthcare: “Consumer healthcare logistics focused on maximization of operational efficiency and product availability”
  • Aid and Relief: “Effective logistics support for government health agencies, NGOs, relief organizations, and international aid services” 

Recent announcements from the company regarding its growth in healthcare logistics include: 

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