Cold Chain Shipping of Medical Devices, Challenges and Solutions

During my twenty years of supply chain experience in Medical Devices, the talk about cold chain and temperature control shipping of has never been like today. No doubt, the global climate change contributed to cold chain shipping challenges, where no spot on earth is immune against a hot summer with temperature degrees reaching non precedented levels.

Who would predict that temperature degrees reach 30+ Degrees Celsius in hubs like Brussel and Hamburg? Europe, the main provider of medical devices, is the fastest warming continent in the world nowadays, according to the World Meteorological Organization and the European Copernicus network. In addition to these natural factors, the evolving traceability and monitoring technologies are increasing regulatory authorities’ appetite to stipulate more controls on the shippers and importers of medical devices. But can the requests of regulatory authorities always be met? And if yes, can this happen immediately? Certainly, there are significant challenges, especially in the medical devices industry that have multiple stakeholders, so what are these challenges?

Before writing the challenges, let us list some definitions that will allow non-medical devices professionals to understand the article. What is a Medical Device?

As per World Health Organization (WHO), Medical Device can be any instrument, apparatus, machine, appliance, implant, reagent for in vitro use, software, material or other similar or related article, intended by the manufacturer to be used, alone or in combination for a medical purpose.

So, when we say medical devices, this does not include only machines, instruments or equipment like the majority perceives, it encompasses anything related to medical purpose like cosmetic contact lenses that allows correction of myopia or Hyperopia. Like drugs, and as per global regulations, cold chain should be applied on the shipping of medical devices to assure temperature control on goods from factory to the end user. So, how can we define Cold Chain?

Cold chain is a branch of supply chain dedicated to perishable goods like medical devices, that assures temperature control of goods during transportation, distribution and storage stage. When applying cold chain, goods’ warmth should remain within the shipping and storage temperature ranges recommended by the manufacturers and clearly printed on the product.

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Who assures that cold chain is applied for medical devices? Answer is Regulatory authorities, and this leads us to the next definition.

Regulatory Authority is an agency, usually governmental, that sets up standards to protect consumers, or patients in case of medical devices and medicines. Most popular regulatory authority is Food & Drug Authority (FDA) in USA.

As a summary after these definitions, the sketch looks like as below:

We have Medical Devices that should be shipped in a Cold Chain manner as per instructions of Regulatory Authorities.

But what are the challenges that hinder the smooth implementation of cold chain shipping?

1- Lack of Cooperation from Suppliers

Complying with cold chain regulations in the buyers’ country may contradict the shippers’ or suppliers’ internal processes for packing and shipping of the goods. For instance, as per regulations in United Arab Emirates, any medical devices that have shipping temperature below 30 Degrees Celsius, including research only products, should have Temperature Data Recorder (Data Logger), while the process of the supplier located in USA clearly states that no Logger is required for research only devices.

Automation may be a main reason for suppliers’ reluctance to cooperate, especially suppliers that invested heavily in technology and infrastructure for the full automation of the process. Back to Temperature Data Logger example, adding such device to the pack requires human intervention, while process was automated by supplier to remove any human contribution, also applying changes to comply with a specific single customer will be costly due to the complexity of an automated system.

Another instance of hindrances caused by automation is shipping documents. Regulatory Authorities at certain countries may require adding extra data on invoices, packing lists, or airwaybills, like the serial number of data loggers, whilst supplier system is automated to generate the documents in one format for all countries without any customization.

You may think that changing the process by supplier is an easy part but believe me it is the most complicated one. Commercially wise, bear in mind that the level of cooperation of any supplier is determined by the suppliers’ evaluation for your market in terms of volume, revenues and P&L.

?2- Packing/Repacking Cost

?We have two types of cooling in cold chain shipping:

?I. Active Cooling: Cooling of goods is done through powered refrigeration units with proper energy source. Exactly Like putting the goods inside a refrigerator connected to an electric current.

II. Passive Cooling: On the other hand, passive cold chain logistics relies on insulated packaging and temperature-controlling materials such as gel packs and dry ice. These materials stabilize the temperature of the package and don’t require any external power or energy source during transportation.

Contrary to containerized shipping, all air freight is done based on passive cooling bases, for cost reduction considerations. ?Passive shipping may require repacking of goods to include temperature controlling materials, which is seldom provided by the supplier. This will push the buyer to request repacking service from the forwarder, which ends up with high shipping cost that may be equal to cost of goods, especially for low value products.

3- Absence of Stability Studies

As we had defined at the beginning of this article, temperature control shipping purpose is to retain the shipping temperature of the products within the intervals recommended by the manufacture. But what if the temperature goes above or beyond the recommended intervals during shipping? Shall we dispose or damage the goods? The answer is not often!! In this case, the importer should request a Stability Declaration from the manufacturer.?

Stability Declaration is a quality document issued by the supplier which includes research proof data about the highest and lowest temperature excursion that products can undergo whilst remain valid for use. For example, if you ship a medical device that has recommended shipping temperature between 2-8 C, and upon arrival of goods, data logger shows that warmth reached 25 C for six consecutive hours, you can still use the goods in case Stability Declaration mentions this clearly.

Why do temperature excursions take place? In cold chain shipping, we have multiple parties involved, starting with the shipper, ground handling agent at the shippers’ airport, freight forwarder, airlines, ground handling agent again at the buyers’ airport, transporter and many others to add. Retaining temperature while shipment moves among all these parties is sort of non-doable, so this is why your supplier should always have stability studies.

Temperature excursions are usually tracked through Data Loggers devices included in the shipments, which reveals when and where the excursion exactly took place during the trip.

4- Insurance Clauses for Temperature Control Shipments

?The evolution of insurance clauses that handle cold chain of medical devices was not at the same pace as temperature control regulations. Till date, Majority of Insurance policies cover cold chain shipping for medical devices through Food Clause which stipulates twelve hours of continual damage for the refrigerating compressor, an incident that can happen only for active cooling, which keeps your passive cooling shipments outside any coverage. ?Despite both food and medical devices are perishable, the difference in stability and mode of shipping between both types create a grey area which is for the interest of Insurance Companies.

5- Availability of Temperature Control Facilities at Airports

?Not all airports have facilities required for temperature control products, like chillers, cool storage area, or a refrigerated dolly for the load and offload of goods. Challenges increase in the case of non-direct shipments, where parcel stops at different hubs or airports. Imagine your refrigerated shipment includes dry ice that depletes in 72 hours, and it stopped at Minneapolis airport for 48 hours as a transit, who will be replenishing the dry ice on your behalf? What if one of the airports does not have cool storage area, should you keep goods with your forwarder till flight is booked, and how much will it cost? One of the solutions may be land shipping of goods to another airport, but again, what are the hidden costs of such a step? Choosing a good forwarder is a must in this case, and it should be based on specialization and not only cost.

6- Regulatory Authorities Employees

As we had defined before, regulatory authorities’ main responsibility is to enforce laws, means their only references are laws, ministerial circulars, decrees or any sort of governmental instruction. They are book-reliant or book-bound as pr definition. This book reliance, in addition to lack or product knowledge, may prevent regulatory representatives at any customs crossing, to precisely evaluate the actual stability and usability of products in a received parcel, which may lead to decisions like destruction, re-export, or severe clearance of goods as a best-case scenario. Back to insurance challenges, the regulatory authority’s rejection criteria may not comply with supplier’s and insurance assessment for the shipment, which may lead to lack of compensation.

Multiple challenges have been listed in this article, and many others can still be included, but we came across what supply chain professionals face regularly in their cold chain shipping.

These listed challenges have suggested solutions for sure, however, keep in mind that you are dealing with lifesaving products, so any solution should be legitimate, genuine and satisfy the end patient while complying with regulations.

Below is what we can suggest based on daily incidents we face and deal with.

1-Value & Stability Matrix

High freight cost is one of the biggest cold chain shipping challenges, and type of packing contributes mainly to this cost, so what is the recommended criteria to choose optimal freight and packing option?

Freight cost threshold is determined by the value of goods in the shipment, while shipping temperature limit is determined by the stability of these goods. The best balance between Value & Stability will bring the shipment to your warehouse in an ideal situation at minimal cost. For this purpose, we are suggesting efficient tool, Value-Stability Matrix, which consist of four quadrants:

I.?High Stability/Low Value Goods:

A cheaper freight option can be applied here for low value goods due to high stability. For example, if the shipping temperature of a product is 2-8, while it is stable at 45 Degrees Celsius for seven days, you can ship at room temperature and save cost.

II.?High Stability/High Value:

The Green Quadrant. Goods falling within this quadrant are the safest. High value of goods increases freight cost threshold, while high stability gives wider pool of freight options.

III.?Low Stability/Low Value:

We call it Bottleneck Quadrant. Goods are low in value, while not stable enough to go for cheaper shipping alternatives. Oftentimes, the cost of insurance claim may be higher than value of goods in this quadrant, while freight cost may reach 100%. ?If products of this type are mandatory for business, you need to live with the high shipping cost and include it in your Profit & Loss calculations, else you can give a try for cheaper shipping options while getting benefit of low loss magnitude compared to value of goods.

IV.?Low Stability / High Value:

We considered this as Red Quadrant due to the magnitude of loss for High Value goods. The low stability stipulates shipping alternatives at a higher cost which we cannot avoid, but still the fraction compared to the cost of goods is acceptable. Proper risk assessment is the key factor in this case. For instance, if you have shipment valued 500,000 Euros, that should be shipped at 2-8 during Summer, and the goods are stable till 20 Degrees Celsius for 48 hours only, we cannot take the risk of shipping at 15-25 Degrees Celsius, but instead we go for extra passive shipping with gel packs at higher shipping cost that may reach 20 to 30% of goods value.

For this matrix to be applied, some criteria need to be defined. For example, when do we consider a shipment as High Value one? Is it for nay shipment above 5000 Euros for example? Same applies for stability, what do we mean by High Stability shipment? For example, during summer in GCC, a highly stable shipment is any shipment that is stable at 50 Degrees Celsius for three consecutive days.

Before proceeding with any shipment, just ask “in which quadrant does my shipment fall?”.

?2-Choose The Proper Incoterms for Your Shipments

?If any supplier is reluctant to help, then negotiate with him to apply CIP or CIF incoterms for the parcels they ship. In CIP/CIF Incoterms, the shipper’s insurance will be liable to compensate any damage that happens to the goods, including those that result from temperature excursion, which will mitigate the magnitude of loss on the importer. EXW usually gives the importer more control over freight cost and shipping, whilst risk moves to the buyer the moment the goods are ready, and with the absence of suitable insurance clauses as we had stated before, the probability and magnitude of loss is higher. Importers should analyze the pros and cons of each Incoterm, taking the type and cost of their goods into consideration.

3-Choose Direct Flight and Proper Service

Direct flight for goods means that parcel departs from shipper’s airport directly to the importers’ airport without stopping at any hub or station. Though it comes at additional cost, direct flights mitigate the risk of loss or physical damage, it also increases the efficiency of passive control materials due to shorter travel time and a smaller number of involved ground handling agents. In addition to direct flights, you can request airlines to provide Pharma or Medical shipping service, to guarantee that goods are stored and handled in facilities dedicated to such sorts of goods.

If you are confused when you should go for direct flights and special services, refer to Value/Stability matrix to determine in which quadrant your shipment falls, and decide accordingly.

4-Insurance Providers & Insurance Clauses:

It is not only about the premium, but also about specialization. Choose carefully your insurance provider, and most importantly make sure that your policy includes the proper wording that covers the subtle nuances of temperature control shipments. An insurance policy should define temperature control shipment, damage criterion, minimum number of excursion hours, type of temperature controlling materials in case of passive shipping (Ice Gel Packs, Thermal Blankets for example) and break down period of refrigerating machinery in case of active cooling.

5-Building Rapport and Frequent Communication with Regulatory Authorities

Regulatory authorities, like Governments, are vital stake holders in any cold chain or supply chain process. Regular participation in workshops and conferences held by these authorities will ease communication at later stages and help in resolving any disputed regulatory terms. Keep in mind that building rapport begins by full compliance with regulations, keeping a violations free record, then leading the discussion with the authorities. Make sure you have Internal Compliance Controls and Standard Operating Procedures in place to prove to these authorities that you are a partner in improving patients’ health.

6-Invest In Data & Visibility

It is the era of big data, the more visible data you have, the faster and more accurate your decision and proactive actions will be. Why should you wait till you receive a shipment with temperature excursion to request stability data from supplier? Make sure that every SKU on your system has stability data, shipping temperature, storage temperature, Material Safety Data Sheet (MSDS), DG UN Number, and any other data that helps with building shipping strategies and plans. Back to Value-Stability matrix, one key success factor is data visibility. It may be a tiring exercise to build such a data pool, but you can update your SOP to mandate acquiring these data upon onboarding any new supplier. For SKU’s that already exist on system and require update, you can increase your data checkpoints to include warehouses, fulfillment centers, logistics and procurement departments, where each checkpoint fill any SKU missing data once detected.

?#Logistics #Supplychain #Coldchain #Stability #Freihgt

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