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How COVID vaccine transport will reshape freight tech

Hint: Don’t rush in, but keep an eye on broader pharmaceutical logistics market

(Photo credit: Jim Allen/FreightWaves)

  • The coronavirus pandemic has boosted demand for digital freight solutions.
  • COVID-19 vaccine transport may do the same for pharmaceutical logistics software and hardware.

The massive undertaking that is COVID-19 vaccine transport raises questions about how the historic event might impact freight-tech companies that have already pivoted and rebranded in response to the pandemic and other disruptions that have shaped the goods movement markets over the past few years.

But don’t start writing code for new temperature-monitoring algorithms just yet, experts caution.

While there are “huge opportunities” in vaccine distribution, few of those opportunities will fall in the laps of new companies built to solve that problem, said Jake Medwell, founding partner of 8VC a venture capital firm that invests in new technologies, including digital freight platforms. (Disclosure: 8VC is a FreightWaves investor.)

That is not to say that the vaccine won’t hasten innovation in freight tech. Building on emerging cold chain solutions and burgeoning interest in pharmaceutical logistics, new and existing players are ramping up GPS and temperature-tracking technologies to deploy in vaccine transport and beyond.

“You can’t just spin up a company like that overnight,” Medwell said. “What you’re going to have is a lot of companies that already provide temperature monitoring on a certain scale now figure out how to do it on a much larger scale.”

Among the key legacy players is UPS (NYSE: UPS). Charged with transporting millions of vaccine shipments, the logistics giant is monitoring the doses in a newly dedicated 24/7 Healthcare Command Center that collects data from all sources, a spokesperson told FreightWaves.

These include tracking sensors and temperature sensors on the exterior and interior of the vaccine packages, each of which carries a UPS-exclusive active tag, according to the spokesperson, providing visibility in the network.

The tag, part of the UPS Premier solution launched a little over a year ago to improve smart tech for health care and life science customers, uses RFID technology to provide location information to the Command Center. 

Internally UPS has designed software that can detect network disruptions before they occur and recommend countermeasures in real time, the spokesperson added. (He declined to provide the name of the company supporting the RFID solution.)

IoT providers see opportunity 

For some time now, IoT companies have been providing visibility and tracking solutions to fleets, starting with ELDs and expanding to applications including GPS tracking, trailer tracking, video, fuel efficiency — and cold chain.

One of the more established new IoT entrants, Samsara, has been creating cold chain solutions for more than four years, and its technology is currently being used by customers for vaccine distribution as well as industries like food and beverage, Neel Sheth, Samsara’s director of product management, told FreightWaves in an email.

The system consists of environmental monitors that detect temperatures from minus 40 to positive 60 degrees Celsius in real time, as well as integrations with companies like Thermo King, where Samsara technology allows for remote reefer monitoring and control.

Since COVID struck last spring, Samsara has seen an increase in interest for a variety of remote monitoring solutions, Sheth noted.

He said he expects temperature monitoring to “follow a similar pattern,” as demand for vaccine delivery expands “and delivery networks need to start reaching further out from cities to more remote locations.”

Sheth added that for customers involved in vaccine distribution, temperature monitoring is just one part of the solution. 

Other factors that need to be accounted for include planning and handoffs between pickups and drop-offs to ensure on-time delivery under time and temperature constraints, and being able to log historical temperature data to ensure quality and compliance.

“For this reason, customers are looking for full platform solutions that can keep up with the increasing demand and pressure,” said Sheth.

Biopharmaceutical shipments: The next big thing

The pharmaceutical drugs and biologics logistics market reached a value of nearly $69 billion in 2019, and is expected to is expected to grow at a compound annual growth rate (CAGR) of 7.3% from 2020 to 2027. In addition to the COVID-19 crisis, factors fueling the booming market include demand for prescription home delivery and other vaccines and blood products that require cold chain shipment.

So while there may be limited opportunities for new startups to tap into the  COVID vaccine-specific transport market, pharmaceutical transport writ large is another story. 

Medwell, for one, is bullish. “It’s one of the spaces I’m most excited about,” he said, noting that while the logistics industry as a whole is “very low margin and very large,” health care and cold supply chain are much more detail oriented and much higher-margin areas.

“That’s where entrepreneurs should probably be focusing,” he commented. “Higher margin means more to work with, more to capture.”

Small but determined

While the established players may have certain advantages in this space, some early-stage startups appear to be moving in that direction nonetheless, with COVID vaccine transport as a catalyst.

Two years ago, a couple of ex-Walmart veterans founded a digital freight matching platform, Hwy Haul, for fresh produce that connects shippers (farmers, distributors, wholesalers and retailers) directly with truckers. The platform also provides real-time load tracking, temperature and humidity monitoring.

Now the team sees another possible application.

Temperature control monitoring is going to be the most important aspect of vaccine logistics across the world depending upon each vaccine’s temperature threshold, Hwy Haul co-founder Syed Aman said in an email. (Notably, the first vaccine to be shipped, the Pfizer vaccine, needs to be stored at minus 94 degrees Fahrenheit.)

Moreover, Aman added, the vaccines are transported in specialized containers designed to maintain low temperatures. Those containers get transported from trucks to planes and then back to trucks before they reach distribution centers.

“We see an opportunity to create an integrated solution to report temperatures not only from trailers,” Aman commented, “but also from the containers to be shown to all the parties involved on a real-time basis.”

Krenar Komoni, CEO of Tive, a supply chain visibility platform that closed a $12 million seed round this month, said its current line of tracking devices can measure temperatures down to minus 40 Celsius, but the startup is now investing in a new product that will measure temperatures down to minus 100 Celsius.

Two global logistics companies that will be engaged in vaccine distribution are testing Tive devices, according to Komoni.

Wide open market

They and other players large and small may  — for now at least — find the room they need to maneuver.

Unlike many freight-tech sectors, the pharmaceutical logistics space is not particularly crowded right now, according to Medwell, reiterating the attention to detail needed to execute in this area.

Plus, the pandemic has compressed the timelines pharmaceutical companies are working with, opening up opportunities for innovation in transporting therapeutics.

“For the first time these corporations are partnering for innovation as they don’t have the bandwidth, expertise, or capability in-house to meet demand,” said Medwell, noting that he has spent the past couple of years in conversation with pharmaceutical firms to understand their internal processes.

“ COVID-19,” he said,  “has created a new urgency.”

Linda Baker, Senior Environment and Technology Reporter

Linda Baker is a FreightWaves senior reporter based in Portland, Oregon. Her beat includes autonomous vehicles, the startup scene, clean trucking, and emissions regulations. Please send tips and story ideas to [email protected]