Prime Distributor: Persistent Transportation Challenges Highlight the Value of Distribution

August 2022 – The Journal of Healthcare Contracting

By Elizabeth Hilla; Senior Vice President, Health Industry Distributors Association

Prior to 2020, most of us in the healthcare industry didn’t know much about how medical products made their way across the globe to our loading docks or warehouses. Today, after experiencing the many shipping delays and other challenges that have emerged since the beginning of the pandemic, we know that understanding transportation issues is essential to supply chain success.

Here’s a little of what we have learned over the last two years about the new challenges facing the medical supply chain – both globally and domestically.

For many medical products, the supply chain begins in Asia. More than 60% of masks and gowns are made in China, while over three-quarters of medical gloves are made in Malaysia. A variety of factors are inhibiting the free flow of goods globally:

  • Worker Shortages: Malaysian medical glovemakers are facing a shortage of up to 12,000 workers, and are expected to lose $700 million in revenue this year if the labor shortage persists.
  • Port Delays: COVID lockdowns in China, especially at the Port of Shanghai, have spawned additional supply chain delays. Drivers from manufacturing centers in neighboring provinces have been reluctant to make deliveries due to quarantine fears.
  • Consumer Goods Competition: Medical distributors expect to see a shipping surge of medical supplies competing for delivery alongside increased shipments of school supplies, Halloween costumes and holiday toys. These increased delays would coincide with a surge of cold, flu, and COVID-19 cases in the fall and winter months.

Approximately 80% of global trade goes by sea. As medical supplies cross the Pacific, additional challenges wait for them on the U.S. West Coast.

  • Over 60% of medical products imported from Asia arrive at the Ports of Los Angeles and Long Beach.
  • Prior to the pandemic, it normally took cargo
    7-10 days to berth at a port, transfer onto freight rail and transit to a distribution hub. Since COVID, those numbers have skyrocketed.
  • According to data compiled by HIDA, the cumulative shipping delays for medical supplies have risen to 27-37 days, with little sign of dropping back to pre-pandemic levels.

After disembarking from port, medical supplies traverse the United States by rail and truck, where they face a unique set of obstacles.

  • Chassis Shortages: Logistics experts estimate it will take until 2023 before there are enough marine chassis available to handle the surge in import containers congesting our ports.
  • Truck Driver Shortages: The American Trucking Association estimates a shortage of at least 80,000 drivers. Long-haul drivers are in especially short supply.
  • Rail Congestion: Port bottlenecks are spreading from the docks to our country’s freight rail networks as far away as Chicago, raising costs and adding new shipping complications.

COVID-19 has permanently and fundamentally altered the way medical products are manufactured, distributed and consumed. Fortunately, distributors have led the way in adapting to this new normal, using their considerable expertise with these evolving supply chains to choose the best shipping methods, better track products in route, and expedite products to their destinations. 

At the national level, my organization is working with Congress, federal agencies, ports, and other leaders to find ways to alleviate chokepoints in the supply chain, and to fast-track medical products through the transportation system. HIDA and its distributor members will continue to work together with providers to ensure the timely and reliable flow of medical products.

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