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How logistics took the spotlight...

How logistics took the spotlight from transporting Covid-19 vaccines to dealing with the aftermath of the Economic state of affairs
Photo: Shutterstock

How logistics took the spotlight from transporting Covid-19 vaccines to dealing with the aftermath of the Economic state of affairs

Pandemic Outlook: Where are we with the pandemic and what are the expectations?

Pandemic Outlook: Where are we with the pandemic and what are the expectations?

How logistics took the spotlight from transporting Covid-19 vaccines to dealing with the aftermath of the Economic state of affairs
Photo: Shutterstock

Few countries in the world have received the bulk of vaccines. Currently 35% of the world population (and counting) has been fully vaccinated with a Covid-19 vaccine while another 12% has received at least one shot. Interesting to note that the top 10 countries have received 75% of all Covid-19 vaccines (China, US, India, Brazil, Japan, Germany, UK, France, Turkey, and Italy).

Least vaccinated are countries with low-income. Africa has seen more than 7.7 million Covid-19 cases and nearly 200,000 fatalities – but the true extent of the pandemic in many African countries is not known as testing rates are low. South Africa, with more than 2.7 million cases and 80,000 fatalities, is the worst affected country on the continent, according to official figures, quoted from a BBC article. From the beginning of the pandemic it was known that Africa will have the hardest access to Covid-19 vaccines. As most vaccines are produced in Europe, United States and Asia it was evident that most of the vaccines will have to be shipped to Africa and Latin America. If we zoom in on Africa, as per September only 2% of the total population of 1.2 billion people have been vaccinated.

COVAX, a global facility comprised of GAVI, CEPI, UNICEF and WHO, have made a commitment to procure and supply Covid-19 vaccines to enable access to safe and effective vaccines in a fair, transparent, and equitable way to over 190 countries. COVAX has committed to ensure participants readiness to receive vaccines and support with procurement. The COVAX ambitions to distribute 330 million vaccines in the first half of 2021 are somewhat missing target as they have delivered about 230 million so far by September, with the ambition to deliver another 1,1 billion by the end of 2021. At the moment, while trying to meet ambitions targets, COVAX has faced some headwind due to export restrictions from the Serum Institute of India, scale-up challenges at vaccine manufacturing sites, as well as timing issues due to regulatory approval for some new candidate vaccines. The initial ambition to deliver 2 billion doses by the end of 2022 has been revised to close to 1.5 billion due to challenges in acquiring sufficient funding and vaccine supplies. The challenges COVAX will have in the next quarter are of great magnitude and their ability to deliver will be crucial to fight the Covid-19 pandemic.

Who has been vaccinated geographically and the use of a 3rd dose?

Only 20% of people in low- and lower-middle-income countries have received a first dose of vaccine compared to +75% in high- and upper-middle income countries, according to a COVAX statement. Some of the reasons according to the statement is that most vaccines have been bought up by wealthy nations despite the fact that COVAX has secured more than USD 10 billion in funding and has agreements to purchase 4.5 billion vaccines. Consequently, we see the most vulnerable in the world still unvaccinated (as not given the opportunity to be vaccinated) while others in wealthy nations (Israel, Canada, France, Germany, and more) have started promoting booster vaccines.

Who controls vaccine procurement and has supply outpaced demand to meet global needs?

We are 10 months down the road since the first vaccine was produced and there is still vagueness about how everybody in the world would have an opportunity to get vaccinated. There are challenges where vaccines would be produced, as we see lack of available capacity on a global scale, challenges in equitable distribution paired with difficulties in regulatory approvals and complex restrictions, including funding challenges. Furthermore, we have seen manufacturers prioritizing customers, and many health ministries are not able to receive appropriate doses and administer them for the whole population according to a COVAX supply forecast.

On top of having sufficient supply, local administration of vaccines will be challenging as not every country has the capacity to scale vaccination. The challenge is increased with the lack of peripheral equipment, cold chain capacity, healthcare workers and proper systems to keep track of who has been vaccinated. Very often we hear that “vaccines don’t save lives, vaccination does” which applies in this case. It is great that vaccines are being donated to Africa, but when random unpredicted supplies are sent their way as a last resort it is always hard to absorb adequately compared to when properly planned in advance.

If one looks more specifically at Africa, where the ambition by COVAX is to supply 800 million doses in the next 6 months, barely only 135 million are on the way, which is less than 17%. The region is currently about 2%-4% vaccinated. While we will see many air freight deliveries despite the very few airports that can receive, store and distribute Covid-19 vaccines, one of the questions will be if we can see the first ocean shipments of COVID vaccines to Africa and if the region can distribute/administer the vaccines at scale. Distribution efforts for the rest of the world by COVAX are not particularly better advanced so we are still to see most of the distribution take place in the next 6 months, at much bigger scale compared to what has happened over the past 10 months.

Taking a wider perspective: Covid-19 vs. the world’s deadliest pandemics

The current Covid-19 pandemic took us by surprise and has to a large extend steered our lives for the past year and a half but how does it compare to other pandemics in history. Learning from history we can see that pandemics in the past have left quite the impact to shape today’s society. While quite significant for us at the moment, the Covid-19 pandemic ranks only 8th on the list of biggest pandemics in history. Topping the list is the Black Death with fatalities of 200 million in the 1300s, Plague of Justinian, 40 million in 500s, and Smallpox 56 million, in 1500s. Some of the most significant pandemics we have seen in the past century are The Spanish Flu, HIV/AIDS, and the Asian Flu. This illustrates that pandemics are constant, and it will question what we learn from Covid-19 and how we can prepare for the next one. Perhaps something to address in a separate piece.

Logistics Expectations

Global Trade Outlook

As the pandemic started in the beginning of 2020 there was quick stagnation in the global economy and global trade took a small dip. However, the situation quickly recovered when we saw stimulus money being injected in the economy and customer spending quickly started to pick up. By the end of 2020 global trade was exploding, driving up both demand and supply. During that time is when the logistics industry received particularly a lot of attention, partly to its ability to distribute the Covid-19 vaccine. There were some obvious challenges in the ability to distribute 2 shots of vaccines to every person in the world in a short time. Additionally, due to the unexpected spike in global goods demand, including many operational constraints due to the Covid-19 pandemic and the Suez Canal, paired with production issues in Asia, brought supply chain issues. In the same time demand continued to grow as people wanted to receive their goods on time. As a result of the Covid-19 pandemic, if we double click on the operational issues we can see that warehouses are full as everybody is increasing stock levels, ocean containers are being held  for longer time at origin and destination to secure space capacity, trucks capacity is exhausted both due to high demand but also due to Covid-19, resulting in overloaded terminals with low productivity due to Covid-19. The latter resulting in delay in terminal activities, vessels sitting idle outside of ports, lack of extra vessel capacity, all in all causing huge delays in end to end logistics and spiking up transportation rates. As global demand is spiking, while supply chains are running into major issues we see somewhat a spike in inflation, an increase in prices for products like production parts and consumer goods that is putting an additional pressure on the global economy.

Production and shipping challenges caused to a large extend by the global Covid-19 pandemic are expected to continue well into 2022 and will lead to consumer goods shortages already forecasted a while back. We see that more and more manufacturers are having shortages of key components and higher raw materials costs are being incurred. Limited capacity to transport goods has led to bidding wars to get space capacity, pushing rates to records and encouraging some to raise prices and others to simply cancel shipments altogether as described in a Bloomberg article. The article also touches on how increasing production cost and increasing cost of logistics will “continue to drag on the global recovery by slowing production and pushing up costs”.

Summary: Solving Covid-19 through collaboration on a genuine level to secure vaccine production and access for everybody

Understanding some of the vaccine production and distribution challenges, knowing that only 35% of the world is vaccinated as it stands today, we see that Covid-19 vaccines distribution will remain a multi-year concern, with current production and distribution forecast plans spanning well into 2022. It is also important to note that the current vaccination plans do not even address all vaccinate so far in 2021 that will also be re-vaccinated in 2022. Given that Covid-19 vaccines production and distribution is carried out sufficiently as forecasted, it would be interesting to see if scale of distribution can be achieved, leveraging best practices and collaboration in the industry, or we will still see fragmented distribution, for few of the low to middle class societies, as so far. Once we start seeing better vaccination rates in the developing world compared to the developed world, we could expect stabilization in the logistics sector and the social and economic situation for all. Sitting in Copenhagen, Denmark it’s a bit surreal to think that the Covid-19 pandemic is still affecting people lives. In a relatively high vaccinated society for the last month we have had no restrictions at all, not even mask requirements, which technically means we have almost forgotten all about the pandemic. Would this continue, or change soon or later, we are still to see, however we are lucky to live in a privileged vaccinated society. On the other side, the Covid-19 pandemic is still very much a reality and a challenge many are trying to solve through collaboration, partnerships, and solidarity.

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