How Will Coronavirus Vaccine Distribution Affect the Transportation Supply Chain?
December 21, 2020
One question is circling around the boardrooms of transportation professionals: How will the emergency distribution of the coronavirus (COVID-19) vaccine affect my transportation network? How will this influence truckload capacity? Will it cause linehaul rates to increase? These are all valid questions that can be answered by data and insights surrounding the vaccine distribution.
We believe vaccine distribution will be dispersed across multiple modes of transportation and equipment types, and therefore, is not likely going to significantly disrupt the heavy-duty full truckload market.
For interested parties, however, we thought it would be valuable to highlight distribution plans for both the Pfizer/BioNTech vaccine and the Moderna vaccine. We hope this can provide insight into the vaccine supply chain and we encourage you to reach out with any information or experiences on the topic.
How will the vaccine be transported?
Both the Pfizer/BioNTech vaccine and the Moderna vaccine will use multiple modes of transportation (MoT) and equipment types depending on where the vaccine in traveling to and how fast it needs to get there. Both vaccines have short expiration dates, and the Pfizer vaccine needs to be held at extreme freezing temperatures. Some pharma experts believe there will be spoilage rates between 5 and 20 percent.
Air freight is the most common MoT. This will move the vaccine quickly across the country or internationally. According to the International Air Transportation Association, we would need 8,000 fully-filled 747 cargo planes to distribute a single vaccine dose to the world’s 7.8 billion people. Both vaccines approved for emergency use currently require two doses, which doubles the amount of air capacity needed.
The vaccines will also need to travel via over-the-road transportation in parcel vans, 20’ trailers, and 53’ trailers. For many shippers in the full truckload space, the 53’ trailers are the only equipment type that they will compete with for capacity.
Primary carriers hauling the vaccines come from only three fleets—FedEx, United Parcel Service (UPS), and Boyle Transportation. Outside of the three primary fleets, only fleets with defense contracts and specialized equipment can haul the vaccines. It is expected that the U.S. will need just 12 trucks per day to transport the Pfizer/BioNTech vaccine out of Kalamazoo, MI for the remainder of 2020. In 2021, it is expected that just 53 trucks per month will be needed for both the Pfizer/BioNTech and Moderna vaccines.
How Long Will it Take to Distribute the Vaccine?
To illustrate how capacity will be affected, it is important to dig into each of the vaccine’s specific distribution plans.
Pfizer/BioNTech Vaccine Distribution Strategy:
Raw materials must travel from St. Louis, MO and Andover, MA to Kalamazoo, MI where the final vaccine is manufactured.
Vaccines are packaged in trays the size of pizza boxes, which hold up to 195 vials or about 1,000 doses.
The trays go inside a special container, roughly the size of a suitcase, each holding up to 5,000 doses with dry ice.
Containers ship via air freight throughout the country to distribution hubs operated by FedEx, UPS, and DHL where they are temporarily stored. Pleasant Prairie, WI houses additional vaccine storage and a source of dry ice manufacturing.
From here, the vaccines are transported via refrigerated trucks (a variety of MoT and equipment types can be used). Step 5 is where vaccine distribution could disrupt the heavy-duty market.
For international transportation, the vaccines fly into Chicago and are then distributed to Memphis, Louisville, and other regional distribution hubs. The complete timeline and destinations for vaccines are unclear due to security reasons.
Moderna Vaccine Distribution Strategy:
Vaccines must fly from Portsmouth, NH to McKesson distribution facilities in Irving, TX and Olive Branch, MS.
Vaccines will be paired with needles, syringes, and alcohol swabs (this process is known as “kitting”).
Final packages are then sent to regional distribution centers or hospitals with refrigerated storage capacity (a variety of MoT and equipment types can be used). Step 3 is where vaccine distribution could disrupt the heavy-duty market.
Finally, vaccines are sent to the administration site (hospital, senior living facilities, pharmacies, CVS, Walgreens, Costco, Walmart, etc.).
Will the Vaccine Disrupt Truckload Capacity in the Breakthrough Network?
The implications of the vaccine distribution are expected to be very minor for the heavy-duty over-the-road market. Across Breakthrough clients, only 3 percent of shippers utilize UPS, FedEx, or Boyle Transportation in their heavy-duty network. Of this small subset of shippers, the three primary carriers charged with distributing the vaccine make up less than 1% of shipment miles for their national network.
Above is a freight flow map showing areas that are typically over-supplied or in excess demand. Blue shading indicates that more trucks bring shipments into that area than those that leave (over-supplied) and red represents the opposite relationship.
Additionally, both Kalamazoo, MI and Irving, TX typically experience a balanced or slightly over-supplied capacity market. The slight over-supplied market in these areas leads us to believe there is no reason for greater concern for capacity constraints in these markets.
As the national pandemic response continues to evolve, it is important to understand how the vaccine supply chain will interact with your network—or how it will remain independent of your operations. Having data to inform your strategies moving forward will ensure you make better strategic procurement decisions.