Supply chain companies optimistic about Covid-19 vaccine distribution
Despite cold chain challenges, companies say early vaccines can be distributed this year, if approved, as the logistics supply chain works to ship at scale in 2021.
It won’t be easy, but supply chain companies say it’s possible that early Covid-19 vaccines will make their way to some of the U.S. population this year if cleared for emergency use, and that the logistics outlook is even better for distribution of additional vaccine candidates at scale in 2021 and beyond.
“Our members are preparing now,” said Jessica Daley, vice president of strategic supplier engagement at Premier Inc., a North Carolina-based healthcare management and group purchasing organization (GPO). “They are working on their plans, solidifying their processes. It may take a couple of months, it may take a couple of weeks … There’s a good deal of hope we will have a vaccine as early as next month, but it’s hard to say.”
The biggest hurdle will be the cold chain, which has limited capacity to transport and store the earliest vaccines due to their aggressive cold chain requirements. The issue is complicated by the sheer scale of the vaccination effort worldwide and the daunting task of prioritizing who is able to get it first, and how successive waves will play out.
“We’re going to need to vaccinate pretty much the world … [To do that] we’re going to need about three times what we have in current capacity,” in the supply chain, said Bindiya Vakil, founder and CEO of California-based supply chain risk management technology firm Resilinc, which works with manufacturers, purchasing organizations, and others in the health care supply chain. “That’s the biggest issue.”
But like Daley, Vakil says logistics and supply chain companies are already laying the groundwork for that process.
“The supply chain has to prepare months in advance. In order to meet Christmas season demand, for example, [planning] actually starts in March. There’s a lot of work that happens early on,” Vakil explained. “In order to be able to ship vaccines at scale sometime next year, we are ramping up our planning process now.”
Resilinc is working with its customers to evaluate capacity and identify bottlenecks in their supply chains. Premier is likewise working with its supply chain partners to prepare for both early and long-term vaccine distribution. Top priorities include making sure Premier’s hospital and medical center members have access to resources such as ultra-cold freezers and dry ice, key elements in transporting and storing some of the earliest vaccines, which have to maintain temperatures as low as -70 degrees Celsius (-94 degrees Fahrenheit).
“We are working with our suppliers to make sure our members have access to what they need,” Daley explained. “I think what we’ll see is the manufacturers and suppliers of the vaccines are taking a hard look at this as well—[they have] created solutions that are unique and address challenges around transportation and [so forth].”
Joseph Battoe, CEO of Chicago-based cold chain technology firm Varcode, agrees. Varcode makes smart tags that measure time and temperature, and can track and trace products throughout the supply chain, including pharmaceuticals and food and beverage products. Varcode is working with several vaccine manufacturers and distributors on customized solutions for monitoring Covid-19 vaccines; Battoe says the small company is fielding requests for big orders as vaccine makers prepare to distribute at scale.
“We consider [requests] for a million [of our products] as a big order. These guys are talking about billions,” he said.
Battoe added that he’s confident the cold chain will be able to support distribution to some of the largest urban areas first, but that the biggest challenges lie in getting vaccines to less populated, rural areas.
“I’m really optimistic about the big medical centers and the big urban areas getting this right at this point. So much time, attention, and money [has been] put into this,” he said, citing the Trump administration’s Operation Warp Speed effort to fast-track vaccine development and distribution. “My opinion is that the cold chain is ready to deliver massive quantities of these vaccines in large cities to big point-of-care facilities. They’ve been gearing up for this for months.”
Large urban facilities are more likely to have the proper vaccine storage requirements in place along with the critical mass of patients ready for vaccination. Daley cautions that despite those advantages, many questions still linger, including how much of the vaccine will be available right away and how the federal government will allocate vaccines to the states. But she agrees the building blocks are well on their way to being put in place. So does Vakil, who emphasizes that planning and innovation are hallmarks of the supply chain.
“Within the last six to nine months, we’ve innovated on all fronts—it’s just incredible,” she said. “We’ve identified drugs that are doing a better job, we have better testing … This is the fastest timeline to a vaccine that the world has ever seen. There are still things that could go wrong. We don’t have all the data. But where we are nine months into this, it’s phenomenal.”
Logistics and transportation companies are responding with added capacity for vaccine distribution. As one example, DHL Global Forwarding, the air and ocean freight division of transportation giant DHL, announced last week a $650,000 expansion of its life sciences and healthcare facilities in San Juan, Puerto Rico. Upgrades will include a new deep-frozen cool room, with a temperature range of -18 degrees Celsius (-4 degrees Fahrenheit) to -30 degrees Celsius (-22 degrees Fahrenheit), according to the company.
Vaccines slated for release in 2021 are expected to have less stringent cold chain requirements than the first vaccines announced this month from pharmaceutical firms Pfizer and Moderna, but they will still be dependent on cold chain capabilities. Varcode’s Battoe notes that the Covid-19 vaccines continue a current trend in pharmaceuticals that has been driving demand for cold chain logistics in recent years; he says about 80% of new drugs require temperature-controlled logistics, according to World Health Organization (WHO) data.
That creates big challenges and opportunities up and down the supply chain.
“We’ve seen throughout the pandemic there have been waves of challenges … and the supply chain, everyone, is coming together and working together to find solutions,” Daley said. “Vaccination will be a unique challenge that will really stress all the parts of the supply chain and all of our collective efforts to manage it. This is definitely going to be one of the biggest challenges that our healthcare system has ever faced.”
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”
It’s getting a little easier to find warehouse space in the U.S., as the frantic construction pace of recent years declined to pre-pandemic levels in the fourth quarter of 2024, in line with rising vacancies, according to a report from real estate firm Colliers.
Those trends played out as the gap between new building supply and tenants’ demand narrowed during 2024, the firm said in its “U.S. Industrial Market Outlook Report / Q4 2024.” By the numbers, developers delivered 400 million square feet for the year, 34% below the record 607 million square feet completed in 2023. And net absorption, a key measure of demand, declined by 27%, to 168 million square feet.
Consequently, the U.S. industrial vacancy rate rose by 126 basis points, to 6.8%, as construction activity normalized at year-end to pre-pandemic levels of below 300 million square feet. With supply and demand nearing equilibrium in 2025, the vacancy rate is expected to peak at around 7% before starting to fall again.
Thanks to those market conditions, renters of warehouse space should begin to see some relief from the steep rent hikes they’re seen in recent years. According to Colliers, rent growth decelerated in 2024 after nine consecutive quarters of year-over-year increases surpassing 10%. Average warehouse and distribution rents rose by 5% to $10.12/SF triple net, and rents in some markets actually declined following a period of unprecedented growth when increases often exceeded 25% year-over-year. As the market adjusts, rents are projected to stabilize in 2025, rising between 2% and 5%, in line with historical averages.
In 2024, there were 125 new occupancies of 500,000 square feet or more, led by third-party logistics (3PL) providers, followed by manufacturing companies. Demand peaked in the fourth quarter at 53 million square feet, while the first quarter had the lowest activity at 28 million square feet — the lowest quarterly tally since 2012.
In its economic outlook for the future, Colliers said the U.S. economy remains strong by most measures; with low unemployment, consumer spending surpassing expectations, positive GDP growth, and signs of improvement in manufacturing. However businesses still face challenges including persistent inflation, the lowest hiring rate since 2010, and uncertainties surrounding tariffs, migration, and policies introduced by the new Trump Administration.
As U.S. businesses count down the days until the expiration of the Trump Administration’s monthlong pause of tariffs on Canada and Mexico, a report from Uber Freight says the tariffs will likely be avoided through an extended agreement, since the potential for damaging consequences would be so severe for all parties.
If the tariffs occurred, they could push U.S. inflation higher, adding $1,000 to $1,200 to the average person's cost of living. And relief from interest rates would likely not come to the rescue, since inflation is already above the Fed's target, delaying further rate cuts.
A potential impact of the tariffs in the long run might be to boost domestic freight by giving local manufacturers an edge. However, the magnitude and sudden implementation of these tariffs means we likely won't see such benefits for a while, and the immediate damage will be more significant in the meantime, Uber Freight said in its “2025 Q1 Market update & outlook.”
That market volatility comes even as tough times continue in the freight market. In the U.S. full truckload sector, the cost per loaded mile currently exceeds spot rates significantly, which will likely push rate increases.
However, in the first quarter of 2025, spot rates are now falling, as they usually do in February following the winter peak. According to Uber Freight, this situation arose after truck operating costs rose 2 cents/mile in 2023 despite a 9-cent diesel price decline, thanks to increases in insurance (+13%), truck and trailer costs (+9%), and driver wages (+8%). Costs then fell 2 cents/mile in 2024, resulting in stable costs over the past two years.
Fortunately, Uber Freight predicts that the freight cycle could soon begin to turn, as signs of a recovery are emerging despite weak current demand. A measure of manufacturing growth called the ISM PMI edged up to 50.9 in December, surpassing the expansion threshold for the first time in 26 months.
Accordingly, new orders and production increased while employment stabilized. That means the U.S. manufacturing economy appears to be expanding after a prolonged period of contraction, signaling a positive outlook for freight demand, Uber Freight said.
The surge comes as the U.S. imposed a new 10% tariff on Chinese goods as of February 4, while pausing a more aggressive 25% tariffs on imports from Mexico and Canada until March, Descartes said in its “February Global Shipping Report.”
So far, ports are handling the surge well, with overall port transit time delays not significantly lengthening at the top 10 U.S. ports, despite elevated volumes for a seventh consecutive month. But the future may look more cloudy; businesses with global supply chains are coping with heightened uncertainty as they eye the new U.S. tariffs on China, continuing trade policy tensions, and ongoing geopolitical instability in the Middle East, Descartes said.
“The impact of new and potential tariffs, coupled with a late Chinese Lunar New Year (January 29 – February 12), may have contributed to higher U.S. container imports in January,” Jackson Wood, Director, Industry Strategy at Descartes, said in a release. “These trade policy developments add significant uncertainty to global supply chains, increasing concerns about rising import costs and supply chain disruptions. As trade tensions escalate, businesses and consumers alike may face the risk of higher prices and prolonged market volatility.”
New York-based Cofactr will now integrate Factor.io’s capabilities into its unified platform, a supply chain and logistics management tool that streamlines production, processes, and policies for critical hardware manufacturers. The combined platform will give users complete visibility into the status of every part in their Bill of Materials (BOM), across the end-to-end direct material management process, the firm said.
Those capabilities are particularly crucial for Cofactr’s core customer base, which include manufacturers in high-compliance, highly regulated sectors such as defense, aerospace, robotics, and medtech.
“Whether an organization is supplying U.S. government agencies with critical hardware or working to meet ambitious product goals in an emerging space, they’re all looking for new ways to optimize old processes that stand between them and their need to iterate at breakneck speeds,” Matthew Haber, CEO and Co-founder of Cofactr, said in a release. “Through this acquisition, we’re giving them another way to do that with acute visibility into their full bill of materials across the many suppliers they work with, directly through our platform.”
“Poor data quality in the supply chain has always been a root cause of delays that create unnecessary costs and interfere with an organization’s speed to market. For manufacturers, especially those in regulated industries, manually cross-checking hundreds of supplier communications against ERP information while navigating other complex processes and policies is a recipe for disaster,” Shultz said. “With Cofactr, we’re now working with the best in the industry to scale our ability to eliminate time-consuming tasks and increase process efficiencies so manufacturers can instead focus on building their products.”