Airfreight logistics is playing an increasingly important role in rushing desperately needed infant formula from overseas production facilities as the U.S. copes with shortages caused by the shutdown of a major domestic plant and supply chain bottlenecks.
A spokesperson for Nestle Health Science confirmed Thursday that the company has ramped up air shipments of its Gerber Good Start Extensive HA brand from the Netherlands and Alfamino formula from Switzerland.
The White House on Wednesday took action usually reserved for wartime to relieve the crisis for many families, ordering the Defense Department to direct commercial cargo airlines to transport formula to the U.S. from other countries. President Biden also invoked the Defense Production Act, requiring suppliers to prioritize delivery of ingredients to formula manufacturers over other customers.
U.S. Transportation Command said it is coordinating “Operation Fly Formula” with the departments of Health and Human Services and Agriculture on requirements for formula that meet U.S. health and safety standards before leveraging existing commercial transportation contracts to accelerate the importation of infant formula.
“Once we have identified a manufacturer that has available formula, we work with them to secure the specifics,” a senior administration official said Thursday during a White House background briefing for the media on steps to address the infant formula shortage. Aircraft will land at airfields close to the overseas manufacturing facility and be delivered to one of the company’s domestic facilities where the product must be inspected by the FDA.
“And then we will, from there, work through vendors and retailers to come to that manufacturing facility to pick it up and hopefully get it out to the communities that are most in need,” said the official, who is not allowed to be named.
Nestle turned up the air imports soon after Abbott Laboratories (NYSE: ABT) in mid-February recalled powdered baby formulas made at its Sturgis, Michigan, plant, which the Food and Drug Administration subsequently ordered closed because of suspected bacterial contamination that caused illness in four babies. Taking the largest U.S. formula production facility offline exacerbated months of pandemic-related shipping delays for ingredients and final products that made it difficult to sufficiently replenish retail stocks.
“We prioritized these products because they serve a critical medical purpose as they are for babies with cow’s milk protein allergies. We moved shipments up and rushed via air to help fill immediate needs,” the Nestle spokesperson told FreightWaves.
Abbott Labs’ nutrition division also has increased its reliance on air cargo in recent weeks, shipping millions of cans of powdered baby formula from its plant in Cootehill, Ireland, on a daily basis, to help fill the void.
Nestle was already importing both products so it was able to act quickly to increase the shipping tempo, the spokesperson explained.
Air cargo is typically used for speed when supply chain disruptions cause shipping delays, or for high-value and perishable products, because it is much more expensive than other freight transport modes. The explosion in ocean shipping rates during the pandemic, however, has narrowed the gap to some degree.
Removing red tape
Strict import and safety rules have kept the bar high for foreign-made baby formula entering the U.S. and made it difficult for companies to quickly replace domestic shortfalls with overseas products. FDA requirements for nutrition labeling, certification of overseas dairies and long waiting periods for sales authorization are expensive to comply with and dampen interest from overseas suppliers, according to trade experts.
The FDA this week moved to cut red tape related to the import process in an effort to increase the availability of infant formula across the country. Under relaxed rules announced Monday, the agency will not object to the importation of certain infant formula products intended for a foreign market or distribution in the U.S. of products manufactured here for export to foreign countries. It also said it may provide room for domestic companies that manufacture infant formula for export to shift more production for sale in the U.S. market.
Other steps the FDA says it has taken in recent months to increase formula supplies include expediting certificates to allow already permitted products from abroad more flexibility moving into the U.S. and streamlining the import entry review process for certain products coming from foreign facilities with favorable inspection records.
On Thursday, the FDA went a step further, saying in a guidance document for the infant formula industry that it “intends to temporarily exercise enforcement discretion with respect to certain requirements for infant formulas that may not comply with certain statutory and regulatory requirements and is seeking information from manufacturers regarding the safety and nutritional adequacy of their products.”
Nestle is “reviewing the guidance and assessing where we may be able to tap into the Nestle global nutrition network to help,” the spokesperson said.
Abbott Laboratories and the federal government have agreed on a plan that could have the Sturgis plan reopen within two weeks. Company officials say it could be up to two months before new baby formula reaches store shelves.
Estimates of the out-of-stock rate for formula vary between 21% and 43%, but many babies require specialty formulas that are made in smaller batches that are extremely difficult to find now.