The coronavirus pandemic exposed a fatal flaw in the delivery industry that existed long before the hampered vaccine rollout: an inability to scale fleets quickly and affordably during demand surges.
COVID-19 created an immediate change in not just our everyday lives, but the everyday way we shop. In a normal January, delivery demands drop about 30-40% after the holiday crunch. This year, volume has fallen just 5%.
Venerable brands that couldn’t keep up have shuttered their doors for good. Others are still scrambling for delivery solutions so they can survive.
With the added pressure on the carriers now to deliver the vaccine and vaccine supplies, the situation we find ourselves in today is nothing less than daunting. It’s been said that this is the biggest logistical operation the world has seen since World War II — and it’s going to take innovative thinking, strategic partnerships and leveraging the best technology to overcome the challenges stacked against logistics teams.
There are many challenges to getting the vaccine out as expeditiously as possible. The biggest issue is the volume of boxes that must be moved. We’re talking an incredibly huge amount. This will require extraordinary numbers of labour, trucks, and resources in a very concentrated way. This vaccine and supplies needed to administer it — such as syringes, needles, face shields and alcohol wipes — are going to fill up the trucks that usually deliver everyday goods, so this deployment is going to impact daily business for everyone. The system is already stressed and over capacity, so something’s got to give. But how?
FedEx Corp. and United Parcel Service Inc. began delivering vaccines in December on top of their usual inventory of millions of boxes and packages that must be delivered to addresses every single day. Add to that the booming retail and construction industries needing to get their goods and materials shipped daily, fueled by the largest amount of online buying the world has ever witnessed.
Need for Speed
The biggest difficulty right now is making the chain to the customer, and that last mile to get products physically into the hands of the right person. Medical and healthcare officials want to distribute the vaccines in a very short period, ideally within days of arrival in warehouses. It’s literally a life-or-death situation. People are becoming sick in large numbers every day, and the sooner we get them the vaccines, the more lives we can save. That means trucks must get those vaccines into congested urban areas as well as far-flung rural communities, where some of the most vulnerable populations reside. One positive is that the vaccines are going to hubs versus individual homes, which makes for a much more efficient type of delivery. So that makes a difference and will help.
Pfizer Inc.'s vaccine, most notably, must be kept at a frosty minus-70 degrees Celsius (that’s colder than winter in Antarctica, folks). The pharmaceutical companies plan to professionally package the vaccines to keep them optimally insulated for safe delivery, but that deep-cold requirement adds a whole layer to delivery logistics. The carriers will need to transport the Pfizer vaccines as quickly as possible and keep warehouse storage time minimal. Special delivery vehicles, typically used in the distribution of temperature sensitive goods, will most likely be requisitioned to support this effort. In Canada, Chapman's Ice Cream Ltd. is helping with cold storage. Also, as timing would have it for us up here in Canada, chilly winter temperatures hover around 0 degrees Celsius or much lower this time of year, but couriers in places like Florida or Texas will have to contend with finding temperature-controlled vehicles more so than other areas.
The situation is around limited supply of trucks coupled with large demand. Some of the transport companies work on a fixed-based asset model with a finite capability — meaning, if you have 100,000 trucks, you have 100,000 trucks, period. Therefore, the vaccine carriers will need to tap supplemental fleets to pick up the slack with additional vehicles and use third-party (3PL) and fourth-party (4PL) delivery partners to optimize and supplement their existing fleets. For example, if carrier trucks are doing vaccine delivery, last-mile delivery partners can focus on the everyday products that need to get delivered while they are doing it.
And finally, there are geographical consequences and implications. It’s not likely delivery will simply go east to west, but instead around what policymakers decide needs to happen. That will affect inventory decisions and the logistical nature of getting the vaccines to the source. One step further into logistics and it gets complex.
For instance, let’s say a large truck is driving from Chicago to Houston. It gets to a delivery hub in Houston but from there it must get to hospitals, schools and to care homes. Now what? Companies will have to sort, segregate, and refine down to the cargo van level to get those units delivered. Urban delivery requires sophisticated routing, planning, and scheduling around real-world variables. This is a precious supply, but there’s traffic, congestion and infinite variables that can get in the way of delivery.
With the use and help of delivery partners, another business change is the need for companies to swiftly invest in and implement real-time visibility platforms that connect to e-commerce, ERP or POS platforms, giving them control and insights. These types of technologies allow businesses to respond to delays in transit in real-time, so they can make different decisions around those goods being delivered, the costs affiliated, service levels, truck utilization and the ability to proactively inform customers on delivery status.
There’s no doubt that this entire vaccine delivery effort will lead to system-wide improvements. The contracted vaccine carrier will likely draw on their global reach and make efficiency gains. This effort will support other parts of their business and improve optimization. In fact, any supply-chain business should now be asking: How do I bring this into what I do every day, so that it is not more costly, but makes us more efficient?
Out-of-the-box thinking combined with smart partnerships and technology can make this work. Let’s face it, the industry was ready for transformation and COVID-19 has proven that the current delivery system needs a new model to service this rapidly growing delivery-first world. This will be our big test. And there will be some unique learnings that will come from it.
Brad Rollo is CEO of GoFor Industries.