The Department of Defense tapped FedEx Express on Sunday to make the second flight for Operation Fly Formula and deliver another tranche of Nestle baby formula from Ramstein Air Base in Germany to the U.S. as the Biden administration races to stem a nationwide shortfall.
FedEx (NYSE: FDX) will deliver the shipment to Washington Dulles International Airport. FedEx’s trucking network will then deliver the urgent shipment to a Nestle facility in Pennsylvania, the White House said.
The shipment of 114 pallets of Gerber Good Start Extensive HA will take place early this week.
The White House also announced President Biden has authorized the first two priority orders under the Defense Production Act, which he invoked last week to prioritize ingredient supplies for formula manufacturers.
FedEx is a long-standing cargo transport provider to the Defense Department, which assigned the mission to the integrated logistics provider under an existing contract vehicle.
The first portion of the initial order of Nestle formula for 1.5 million 8-ounce bottles of baby formula arrived Sunday in Indianapolis aboard a U.S. Air Force C-17 freighter. The Agriculture Department worked with Nestle and the U.S. Transportation Command to organize transport of the Alfamino Infant, Alfamino Junior and Gerber Good Start products from Zurich. The hypoallergenic brands are designed for infants who can’t tolerate cow’s milk.
Federal officials said using a military cargo jet for the first flight was necessary because the shipment was medically urgent and a commercial partner couldn’t be lined up quickly enough. The specialty formulas are in even shorter supply than regular formulas and the flights are designed to quickly provide nutrition for at-risk babies that can’t switch to other types of food.
Administration officials said the initial Indianapolis shipment will provide enough formula for 9,000 at-risk babies and 18,000 toddlers for one week.
The Biden administration opted for a military airlift to expedite delivery of certain formula types that are in critical short supply after Abbott Nutrition’s largest formula plant in Sturgis, Michigan, went offline in February because of quality control failures that raised fears of bacterial contamination. Four infants became ill and two died in February, but no clear link has been found between the formula they drank and the contamination discovered at the Sturgis facility.
Nestle has been utilizing extra air cargo to import additional infant formula since the shutdown, which exacerbated shortfalls caused by months of supply chain disruptions.
Industry estimates put the current average out-of-stock rate for formula at about 50%.
Defense Production Act
Abbott Laboratories agreed with regulators on a conditional plan for reopening the plant soon, and the company says it could begin operating within a month. Infant formula would take another six to eight weeks to reach store shelves.
Formula makers Abbott Nutrition (NYSE: ABT) and Reckitt will now be able to add legally binding language to their orders with suppliers that give them priority over other customers. Abbott can now receive priority orders of raw materials such as sugar and corn syrup for infant formula, the White House said. Global supply chain constraints have meant that Abbott has only been able to procure about 75% of its normal allocation. By allowing Abbott to receive its full allotment of needed raw materials, the company will be able to quickly increase production by one third from where it stands today at its other plants.
Reckitt, which owns Mead-Johnson, is also authorized for three months to obtain priority on select purchase orders of single-use products such as filters used to produce infant formula. This will also allow Reckitt facilities to operate at maximum capacity. The authorization requires Reckitt to provide an update on material constrains in about 60 days to reassess the need to continue using the authorization to assist with Abbott’s production.
“We are working around-the-clock to do what we can to rapidly increase the safe supply of infant formula – from coordinating the logistics for the incoming international flights to strengthening the supply chain of essential ingredients and materials,” said Dawn O’Connell, Health and Human Services assistant secretary for preparedness and response. “We will continue to evaluate additional Defense Production Act opportunities as needed to help deliver formula to families faster and stabilize the commercial supply chains.”
The Biden administration has taken a series of steps in the past week to get more formula into the market, including issuing guidance to provide more flexibility importing foreign-made formula.