As Charles Dickens reminded us in “The Tale of Two Cities”, “It was the best of times; It was the worst of times”……………… The holiday season of 2020 will long be remembered as one of the busiest, saddest, most exhausting, and most stressful of any in recent memory, as every action we have taken has been in the shadow of the Covid-19 pandemic.
On a positive note, on-line purchases will reach a record high this year, as consumers try to maintain a holiday frame of mind, while staying out of retail stores and avoiding personal shopping. (Black Friday in-store purchases were down by 52% from last year.) U.S. consumers spent $10.6 billion on-line, 15% over last year, according to Adobe. Thanksgiving and Black Friday sales were up 22%. This has been a major challenge for the small parcel carriers as they attempt to deliver everything on time. FedEx expects the 2020 peak season to be 22% over 2019. UPS is experiencing similar increases; and while on-time performance has not been perfect for either carrier, it is running in the mid-90s for both, which is not bad considering the volume.
This season will also be one of the saddest, as thousands of people in the U.S. continue to develop the virus, and deaths are increasing dramatically. Right now, over 3,000 people are dying daily. There is hope on the near horizon, however. Beginning last Wednesday, small parcel carriers are being faced with the ultimate test – continuing to deliver holiday purchases within a reasonable time frame while at the same time, performing a service that will save thousands of lives as they distribute the first approved vaccine for Covid-19.
On Friday, December 11, the U.S. Food and Drug Administration (FDA) approved a Covid-19 vaccine co-developed by Pfizer and BioNTech; and shipments began leaving Pfizer’s Kalamazoo plant Sunday morning. (The first air shipment arrived at the FedEx hub in Memphis at 11:00 a.m.) Initially, 2.9 million doses will be distributed, and another 2.9 million held in reserve for the required second shots. Approval of a second vaccine from Moderna is expected this week. The effort is being coordinated by the government program identified as Operation Warp Speed (OWS), working closely with Pfizer and five other manufacturers developing vaccines. The Department of Defense (DOD) has referred to itself as the “lead provider”, a term familiar to supply chain managers. They have selected McKesson Corp, as their primary “third party”, and FedEx and UPS as primary carriers.
Getting the vaccine and supporting materials to final users is a two-step process. McKesson is building kits containing syringes, needles, and alcohol wipes that will be paired to vaccine doses. UPS starting moving these kits on December 9, in anticipation of FDA approval of the vaccine. They were moved to 600 locations located in 64 vaccine districts nationwide, designated by individual states. At these points, they will be paired with vaccine doses. While both FedEx and UPS will move vaccines, UPS is responsible for the kits. For the vaccine, working with its two carrier partners, OWS has divided the country into two regions, with FedEx handling the western United States, and UPS the eastern half of the country. Each shipment and every individual dose will be tracked and monitored for temperature, location, and visibility. Initially, this plan will apply only to Moderna and the other manufacturers working on vaccines. Pfizer is retaining control of their distribution, shipping directly to end users, utilizing as they put it, “trusted transportation providers”. They did not identify these trusted carriers, but FedEx and UPS no doubt, will be two of them. Regardless of how the doses get to their destination, they will be paired to the kits upon arrival.
The product itself will be the real challenge. The Pfizer vaccines will be transported in special containers packed with 50 pounds of dry ice. They must maintain a temperature of -94 to -112 Degrees. (The Moderna product will be less problematic, requiring only a -4-degree temperature.) This will be the first time vaccine temperatures have ever been maintained by dry ice.
Huge amounts of dry ice are not readily available, and UPS has built a dry ice plant in Louisville which can produce up to 1200 pounds per hour. Other third-party dry ice providers are located in Louisville, Dallas, and Ontario, Canada; but vaccines will share the demand with food shippers, no doubt placing a strain on supply. In addition to the initial 50-pound shipment, on the day after arrival, UPS and/or FedEx will deliver another 40 pounds for each container in case extended storage times are necessary. As if supply wasn’t problem enough, dry ice is a solid form of carbon dioxide; and when it breaks down, the vapors are poisonous. Caution must be exercised in planning loads, especially when shipping by air.
FedEx and UPS both have indicated they can handle all the holiday volume while giving priority to vaccine shipments; and if all goes well, as you are reading this, Americans are being vaccinated. It should be remembered that FedEx and UPS are not the only efficient carriers available that have the knowledge, capacity, and efficiency to handle the vaccines. United, Delta, and especially American have vaccine experience.
To say this endeavor is historic would not be an exaggeration, as government and industry work together for the common good. As other vaccines come on line, the DOD will continue to play a major role in planning and maintaining visibility to every single dose. Initially however, I believe Pfizer’s retaining control of their own distribution is very smart. They have the most to lose if any significant issue arises.