Exclusive - Who is Willing to Pay a Fair Price?

We publish in this week’s edition of CargoForwarder Global what we see as an interesting view by some of the air cargo handlers with regards to the apparent lack of willingness by the shippers and especially the freight agents community to pay fairly for high-class services related to the handling of pharmaceuticals and other sensitive cargo.

Handling agents complain that many forwarders are not willing to pay adequate prices for premium services they get, like special care given to temperature critical items.
Handling agents complain that many forwarders are not willing to pay adequate prices for premium services they get, like special care given to temperature critical items.

It´s a couple of years ago now that some already 20% of Pharmaceutical Shipments have shifted back from air freight to sea freight. The main reason for this step was that shippers did not have enough confidence anymore in the cool chain offered by the air freight industry!

So, action was desperately needed to stop the leakage. IATA initiated a brand new idea of setting up a controllable cool chain in order to serve the pharma shipper with a better/safer and quicker solution compared to sea freight. The Center of Excellence of Independent Validators (CEIV) was born. A brilliant idea, which has caught on and is being applied for and implemented step-by-step by more airport handlers worldwide.

Some players in the chain were joining this move with enthusiasm. Airport communities like Singapore and Brussels were the first to start with this IATA CEIV certification, though one should notice, as a COMMUNITY.

Handling companies, airlines, trucking companies, forwarders and airport authorities were intensively working together to establish a fine, oiled machine to handle temperature sensitive pharmaceuticals in a proper way, resulting in a much faster transportation and at superior quality standards compared with sea freight. 

So far so good. Meanwhile we know that airports like Frankfurt and Amsterdam are joining forces to get certified as communities in the months to come.

When expensive and often urgently needed medicines are transported by air, one (the shipper), we assume is looking for the best transport and handling quality and pays for the best. The puzzling factor is that our air freight industry, and mainly the handling companies, are confronted with pharma shipments which need special attention, like costly cooling facilities, supply chain demands according to the specifications in the booking process, special air way billing and labeling - all of which it seems cannot bear more than a mere general cargo handling fee.

Is the system fair?
Those responsible for the correct handling and distribution tell us that it is well known, that offering your clients a dedicated pharma handling service based on the IATA CEIV Regulations, is accompanied with a very costly operation in terms of hardware (cool facilities) and training of your staff. Furthermore, after 3 years the re-certification must be achieved, which in turn needs a system that is time consuming and expensive.

Is it such a strange thought, that when you ask for a better service you might consider that you have to pay more for this service?

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The message we receive from various established handlers in this field is that some players have obviously turned a deaf ear to those demands.

Of course, the handling community is barred from speaking openly together about a fair distribution of costs. Big brother in this respect is watching you, but in all honesty is it not again about time to re-think about the handling companies and what great work they deliver every day. And, the cost involved!

A streamlined handling of such sensitive cargo can only be achieved by investing in warehouses, equipment and last but absolutely not least the training of handling staff at every level in an organization. Is it unfair to ask clients for a fair repayment of high investments taken by the handlers to optimize the flow of temperature critical and high value goods according to IATA CEIV standards? We think not!

After listening to some very valid opinions, we feel that the shippers and freight agents should or could be more receptive to the costs and infrastructure that handling agents and airlines have had to create in order to guarantee a seamless and safe supply chain for these goods.

After all, surely it would be the pharmaceutical companies who possibly would face severe claims from end-users of their medicines if they were not to arrive in their homes in perfect condition, having not being handled or transported properly.

Just food for thought?

John Mc Donagh

Write a comment

Comments: 2
  • #1

    Guido Henke (Tuesday, 29 November 2016 10:05)

    Congratulations! Excellent article. In summary you get what you pay for. And if you are not prepared to pay the price for a quality product, do not expect a quality product, or be prepared for the consequences.
    We as the industry have to defend together that if a better service is to be offered and is related with higher cost´s, those costs cannot be absorbed by the handler, the airline or the freight forwarder.

  • #2

    John Mc Donagh (Tuesday, 29 November 2016 18:21)

    Dear Guido, Many thanks for your comment. We feel its about time that there is an open discussion on the pros & cons for the handling industry on this subject. Hopefully others will also recognize this.
    John Mc Donagh