The big three integrated parcel and logistics carriers are aggressively targeting the high-margin health care vertical as a profit center, with DHL on Monday announcing a $2.2 billion investment over five years and FedEx expecting to capture $400 million in business from new health care customers.
Not to be outdone, UPS (NYSE: UPS) in January acquired Frigo-Trans and sister company BPL, which provide temperature-controlled warehousing and transportation in Europe for pharmaceutical and biotech companies.
The companies are interested in health care because the high technical and compliance requirements allow for lucrative value-added services beyond basic parcel transportation. The health care logistics market is estimated to reach $152 billion next year, up from $130 billion in 2023 as an aging global population needs more drugs and biological medical products to deal with chronic disease, according to industry experts.
DHL Group (DXE: DHL) on Monday said it planned to invest $2.2 billion to upgrade logistics capabilities and footprint in the life sciences and health care sector. Half of capital expenditures will be allocated to the Americas, with the balance split between Asia-Pacific and the Europe, Middle East and Africa region. (DHL on April 14 said it will deploy $11.4 million of the $568 million Asia budget towards a new pharma hub in Singapore.)
The investment is part of DHL’s recent strategy to double health care logistics revenue to $10.8 billion by 2030, with an extensive temperature-controlled network, first- and last-mile specialty courier coverage, and integrated service offerings. Last week, DHL agreed to acquire Nashville, Tennessee-based CryoPDP, a specialty courier that provides logistics services for clinical trials, biopharma, and cell and gene therapies, for $195 million.
Investments will concentrate on improving infrastructure and technology from factory to patient, including temperature-controlled storage, order fulfillment, distribution, global shipping and last-mile delivery. DHL said the enhancements will allow it to deliver integrated health care solutions, while improving delivery speed and reliability for pharmaceutical, biopharma and medical device customers, as well as patients.
DHL, headquartered in Bonn, Germany, recently created DHL Health Logistics to serve as an umbrella brand for end-to-end capabilities available across the DHL Express, Global Forwarding and Supply Chain divisions. Life sciences and health care contributed more than 5 billion euros ($5.4 billion) in revenue to the group in 2024.
A significant part of the investment will be budgeted for new cross-divisional pharma hubs for transporting multitemperature shipments, expanding cold chain capacity in existing facilities, ordering new temperature-controlled vehicles and enhancing insulated and refrigerated containers, DHL said.
With growing demand in critical areas such as clinical trials, biopharma, and cell and gene therapies, DHL is also investing in specialized cooling infrastructure to accommodate low and ultra-low temperature ranges. Additionally, the Group said it will implement sophisticated IT systems that provide real-time status updates to ensure that sensitive medical products have not been compromised.
DHL Group operates nearly 600 locations in almost 130 countries dedicated to life sciences and health care logistics, encompassing a total of more than 27 million square feet of temperature-controlled warehouse space.
FedEx tools support health care business
Meanwhile, FedEx’s (NYSE: FDX) efforts to build capabilities in health care logistics are paying off. The company is in the process of onboarding nearly $400 million in new annualized health care revenue during the next 90 days, said Chief Customer Officer Brie Carere during the third-quarter earnings presentation on March 20.
FedEx’s latest technologies to help track and monitor temperature-sensitive life science shipments are attracting pharmaceutical and medical companies, Carere said, putting the express logistics company on track to finish the fiscal year ending May 31 with about $9 billion in health care revenue.
Carere highlighted how FedEx is dual-purposing its parcel returns platform for health care customers, such as laboratories and medical providers, with recurring two-way shipping. “This process enables a simpler shipping process with more visibility, allowing shipment recipients to staff more appropriately and efficiently,” she said.
FedEx is also continuing to roll out FedEx Surround, a tool that combines advanced sensor technology with an AI-powered dashboard that provides continuous monitoring and proactive intervention for shipments worldwide.
The compact sensor transmits precise package location data every two seconds via Bluetooth short-range wireless systems to Wi-Fi access points or established gateway devices in the FedEx network. Packages equipped with the SenseAware ID sensor are tracked hundreds of times versus dozens of times with traditional package scanning protocols, according to FedEx. Features include predictive delay alerts and the ability to prioritize the most critical or time-sensitive shipments ahead of others in the FedEx network.
FedEx Surround is now available in more than 40 countries. The enhanced visibility and control is especially important for customers transporting high-value or sensitive goods, Carere said.
UPS last year said it plans to double revenue in health care logistics to $20 billion through organic growth and acquisitions by 2026.
(This story was updated on April 14.)
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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