By John Miklus, President, American Institute of Marine Underwriters (AIMU)
While it’s not a panacea, a vaccine for COVID-19 is expected to go a long way toward reducing the number of cases and slowing transmission of the virus. Development and testing is moving at a frenetic pace, meaning that in the not too distant future a fully-approved vaccine will need to be shipped in unprecedented volumes.
Experts predict it will take anywhere from 8,000 to 15,000 fully loaded flights to transport 20 billion doses around the world. While air is often the preferred method for shipping pharmaceuticals because of time sensitivity, it’s likely that large ocean transport companies will take on some of the load.
Once a COVID-19 vaccine is approved and manufactured, cargo insurance will be imperative to ensure speedy and safe distribution. Insurance coverage for pharma products, which encompass vaccines, is widely available and written by a number of AIMU’s member companies.
When one considers the infrastructure required to ship billions of doses from manufacturing facilities to hospitals and clinics around the world, this could be one of the biggest logistical challenges in modern history. Pharma shipments such as vaccines present a number of unique underwriting challenges, including:
- High valuations: According to one industry analyst, the market for COVID vaccines is estimated at $100 billion, with $40 billion in profits. Shipping companies will handle a lot of valuable inventory and pharmaceutical companies have a lot at stake. A single shipment could be valued into the millions of dollars.
- Time and temperature sensitivities: Vaccines currently under development require precise handling. Some need to be stored at temperatures as low as -80C (-112F), which will require special refrigerated containers, along with rigorous temperature monitoring and quality control.
- Careful packaging and handling requirements: The vaccine will require special packaging such as cold-resistant vials and boxes to hold multiple vials. Dry ice may be required, along with syringes and protective equipment for healthcare workers administering the vaccine. Besides pharmas, the vendors who supply these products will also have skin in the game.
- High theft exposure: Pharma companies plan to use everything from GPS to track their product to fake shipments to confuse criminals. One glassmaker plans to use black-light verification to prevent counterfeiting. Since the start of the pandemic, tests, masks and other gear have gone missing, so it’s not a stretch to think professional thieves and cargo theft gangs will want to get their hands on a precious and valuable vaccine.
The involvement of experienced loss prevention experts is vital to provide advice on proper packaging, proper handling and storage, setting standards and procedures for transportation providers, and recommending security measures to ensure safe delivery. AIMU member companies believe in the old saying that the best loss scenario is preventing one from ever occurring.