By Lewis King
At an airfreight conference held last fall in Budapest, Marcel Fujike, senior vice president of products and services, global air logistics, for Kuehne + Nagel, commented during a post-roundtable Q&A session about the effectiveness of the growing CEIV standard for pharmaceutical handling. At one point, he remarked, “If we really want to move the industry forward, IATA needs to step up.”
The sleepy conference hall exploded into unexpected applause. Apparently, Fujike had touched a nerve about the state of pharma standards – and this was not the first time.
Back in 2013, criticism was running high over the lack of sufficient industry standards. Airfreight was hemorrhaging high-margin pharma freight to rival transport modes, due to millions of dollars’ worth of pharmaceuticals that sat cooking on airport tarmacs or languishing in warehouses outside of required temperature ranges. Consulting firm Seabury said that airfreight’s market share of the global pharma industry had fallen from 17 percent in 2000 to just 11 percent in 2013. One voice, in particular, stood out – that of Fujike, who famously declared at a Lisbon air cargo handling conference that the pharma business in air cargo was “a nightmare” and “chaos,” and that, all the while, “IATA is sleeping.”
Cut to five years later – IATA is clearly wide awake about the issue. Galvanized by the criticism, IATA consulted with its airline members in 2014 and launched its Center of Excellence for Independent Validators (CEIV) program, an amalgamation of IATA’s own temperature-control guidelines, the European Union’s Good Distribution Practices (GDP) and local and regional guidelines, into what the organization said were global and universal standards – the perfect fit for the varied conditions of the global airfreight business.
Over the subsequent years, the program has taken off. As of June 2018, IATA said more than 200 assessments had been made under CEIV-Pharma and at least 160 logistics companies have earned the rigorous certification. IATA has even expanded the program this year to cover Live Animal transport, and there’s talk about another cert in the works for Dangerous Goods.
However, Fujike is still holding IATA’s feet to the fire today. The industry’s progression towards universal pharmaceutical handling standards, he said in Budapest, has not moved fast enough. And where IATA is making progress, the application is still spotty. If we want pharma shippers to trust logistics companies, Fujike said, we need them to trust everyone in the supply chain.
Fujike is not alone in his criticism. “We were approached by a smaller forwarder looking for help attaining IATA’s CEIV-Pharma certification, because they couldn’t figure it out on their own,” said Stan Wraight, president and CEO of Strategic Aviation Solutions International (SASI). Wraight is an industry veteran, and he’s tired of the status quo. “If a freight forwarder thinks they need to hire a consultant in order to get CEIV-Pharma certification, there’s something wrong,” he said.
And, while it’s easy to point fingers at IATA, there are plenty in the industry willing to defend the certification, as well. It’s a complex picture. Pharma transport is unlike any other sort of freight, and even minor mistakes can cost millions of dollars, or even lives, making this debate critical to airfreight’s future.
So, as CEIV celebrates its fourth birthday this year, the question remains: Is IATA’s approach to achieving universal cargo handling standards working, and if so, is there still room for improvement?
There are several outstanding criticisms being leveled at IATA’s CEIV-Pharma program. Some say that it’s too complex and expensive, which excludes smaller players, while others point out that its focus on airfreight limits its scope. Finally, there’s the argument that IATA’s pharma certification is redundant.
For at least one critic, the issues are systemic. “The biggest problem I have, personally, is a for-profit mentality overcoming the good of the industry,” said SASI’s Wraight, who has his own ideas for cost-cutting. He said he wants IATA to send companies a detailed set of instructions and requirements for certification, for a nominal fee, and once the required measures are implemented, Wraight wants IATA to conduct an audit, all for a few thousand dollars.
This isn’t the first time IATA has heard proposals of this nature. “Sometimes they ask about doing a ‘lighter version’ of certification,” said IATA’s assistant director of cargo/ground handling, Ronald Schaefer, who runs the CEIV program. “But if we create different kinds of programs here, we would lose credibility.” Schaefer contended that the CEIV standard is ambitious. “Anything else would be rejected by the pharma shippers,” he said. “It’s all about rebuilding trust with them.”
Schaefer explained that removing steps would not be fair to companies that already underwent certification. “We need to be consistent,” he said. “The approach needs to be the same for everyone.”
While it’s possible to criticize the financial structuring of certification, there’s a more stubborn obstacle in the way of certification – the infrastructure upgrades required to properly handle and store sensitive pharmaceuticals. It’s like this. Formula 1 cars cost tens of millions of dollars, and cheaper cars simply won’t do. That means that many aspiring racecar drivers are priced out of the game. The same principles apply to pharma transport, with the price tag for upgrades sometimes being quite steep, especially when facilities need to be built from scratch.
“You have to commit a pretty good amount of money to temperature-controlled infrastructure, and obviously you can’t do that everywhere,” agreed Brandon Fried, executive director at the U.S. Airforwarders Association (AfA). “It can be an expensive niche, and that’s probably why you don’t have a lot of smaller freight forwarders jumping into it.”
Even for bigger companies, such as Swissport Cargo Services at Frankfurt, CEIV-Pharma certification can take a while – in their case, almost two years. The ground handler’s station manager Philip Roodenburg explained that much of that delay was due to the time required for reviewing their existing processes, designing new ones, and looking for partners for mapping and monitoring. “The biggest challenge was to get the construction permit from the local authorities and our existing two-to-eight degrees Celsius cool room,” Roodenburg said.
K+N’s Fujike agreed, calling it an “economic question, plus one of capabilities.” He raised another criticism, asking whether the current CEIV-Pharma standards are too narrow.
Explaining that most forwarders are multimodal, Fujike complained that CEIV was only designed for airfreight. “Shippers are looking for a logistics standard for all modes, and that’s what we are still missing,” he said. “There is no seafreight, overland, warehousing and airfreight industry standard for moving pharma goods now. For the shippers, and even for us, it’s still not doing the trick because it’s only covering a certain portion of the supply chain.”
And it’s not just the costs, time and scope. When Emirates SkyCargo opted instead for GDP certification for its pharma transport infrastructure in 2017, the media wanted to know why. “It made perfect sense,” said Emirates SkyCargo senior vice president for cargo, Nabil Sultan. GDP was “what customers wanted.”
More than a year later, Emirates SkyCargo’s position is unchanged. “We chose GDP following a quick question round with forwarders and pharma companies in early 2015 and they all pointed at GDP,” explained Henrik Ambak, senior vice president for cargo. “Logically, GDP is an E.U. regulatory framework for logistics underpinning GMP [good manufacturing practices] for the manufacturing of pharma.”
Ambak added that Emirates SkyCargo achieved full customer recognition with GDP certification and had, “no plans to add CEIV-Pharma.”
Nathan de Valck, cargo manager at Brussels Airport, has a different opinion, saying that GDP standards are a good basis and foundation for any pharma program, but that they are not a good standard for airfreight. “If you limit yourself to the straight interpretation of GDP because it’s for storage, it doesn’t focus on transportation. It’s also not consistently implemented – it’s not always transparent. There’s no real checklist [and] you cannot validate the program.”
Is IATA doing a better job? Yes, said de Valck. By starting with GDP standards and building from there, IATA arrived at what de Valck calls, “GDP++.” He added that, IATA’s CEIV standards, “actually take GDP standards and translate them to actionable items for our industry.”
Moving the conversation forward
De Valck is a staunch advocate for CEIV-Pharma standards, but even he agrees that air cargo is not “there” yet when it comes to shipping pharma, but it is improving, according to shippers. “When it comes to execution, a lot of things still go wrong,” de Valck said. What is needed, he says, is a “pharma mindset.”
Before turning to solutions, it’s important to note that even IATA’s toughest critics are often its fiercest defenders. “Looking at CEIV today, IATA did a great job establishing a standard for the airfreight industry,” admitted K+N’s Fujike. IATA has taken a multimodal approach, including road, and is now looking at similarities with other modes of transport, such as oceanfreight. The organization says that talks are already taking place.
“IATA’s done a pretty good job of stepping up to the plate,” agreed the AfA’s Fried. From carriers to forwarders, certified companies say that the investment is quick to pay off. Clearly IATA is doing something right.
IATA’s Schaefer pointed out that CEIV-Pharma was, first and foremost, a response to the industry’s demands. The program, Schaefer explained, was crafted in response to the unique requirements of the airfreight industry, and the fees they charge for certification are necessary to cover costs. The program is not intended to require infrastructure build up, but instead to conduct risk assessments on what companies have vs. their service offering.
IATA has also grappled with eliminating interpersonal training from the program and other cost-cutting measures, but Schaefer maintained that doing so is fraught with risk. “If you have a book out there, people might take a look at it, and do some training,” he said. “But you can’t really ensure that companies are really complying. With CEIV-Pharma, we are creating a standard, we’re creating a training program.” For Schaefer, the red CEIV symbol is a guarantee that companies are actually following that standard.
But what about the smaller companies? What steps could IATA take to bring them on board, and in doing so, make pharma-handling standards truly comprehensive and universal?
Schaefer has his own proposals to lower the cost of certification, starting with creating communities. “If you have five or six business partners that you work with in handling pharmaceuticals, you can create your own community and then apply the same approach as the airport took.”
Here, Schaefer is referring to the increasingly popular airport communities model, which he says can reduce certification costs by up to 30 percent.
But while the community model leverages economies of scale to cut costs, it doesn’t really address the criticism leveled by Wraight, who wants the certification process simplified.
This debate won’t be settled on these pages, but other observers put forward suggestions that seem to bridge this divide. IATA maintains that sending a how-to manual hasn’t worked in the past, and that the training and implementation process is too complex to do without interpersonal guidance.
Currently, IATA’s CEIV training program involves a lot of transport and lodging costs and in-person training. The AfA’s Fried pointed to the internet as a solution. “Heck, I got my MBA online,” he said, “and still worked my rear-end off. It’s entirely possible.”
IATA is open to suggestions from industry stakeholders. And while saying that “the technology isn’t there yet” to take CEIV certification online, Schaefer acknowledges that new technology might one day allow for that. “We should actually challenge the industry to do more: Communicate, collaborate, connect and create for the common good of the industry and not just yourself.”
After all, when you’re online, it’s a little harder to hear the crowd’s applause when Fujike voices his concerns at the next IATA conference.
Lewis King is a former associate editor of Air Cargo World.