Kenco Solves Transportation Problem for Large Pharmaceutical Customer
Recently, Kenco helped solve a problem for one of our integrated warehousing and transportation customers in the pharmaceutical industry.
Early in 2018, the customer’s Quality Assurance team changed its policy so that a certain product was now required to be temp-controlled to a range of 2-8 degrees Celsius during transport. (Previously it could be shipped in ambient trailers for up to 24 hours.) Because of the service-level needs of end-customers such as Walgreens and CVS, this product is often shipped one pallet at a time, so it wasn’t cost-effective to ship the product in reefer trailers.
Thus, Kenco’s Chattanooga DC started building specialty fiberboard boxes packed with Styrofoam and icepacks to ship single pallets of this product. Once received at the customer DCs, these expensive boxes were thrown away. While this was cheaper than shipping in reefer trailers, the additional warehouse labor and non-reusable materials were still not ideal from a cost perspective.
Working collaboratively, Kenco’s transportation and warehousing teams developed a solution to reduce the cost of meeting this new quality requirement. We engaged a manufacturer of reusable cold-storage shipping containers called Cold Boxes to provide these containers on a monthly rental basis.
The Cold Box is a metal container that can hold a pallet of product and has a long enough battery life to keep the product within the required temperature range during transport. We worked with carriers and end-customers to ensure the Cold Box was unloaded properly and shipped back to our DC in a timely manner for reuse. This reduced not only the labor, materials and freight costs but also improved end-customer satisfaction, as this new solution made it easier to unload the product and didn’t generate any waste. Being the customer’s integrated warehouse and transportation provider made it much easier and faster to design and deploy this solution for our client.
- Cost of insulated shippers is $1,500 (EA)
- Must be returned to CDC and some are lost or damaged
- The labor cost of prepping and packaging an insulated shipper is $50 and takes two hours to complete (one person)
- Relies solely on temperature data records placed inside the box
- More risk of loss or theft than the Cold Box
THE COLD BOX
- The cost of the cold box is $900 per trip
- The Cold Box remains plugged in and conditioned until ready to use (no packing out)
- Takes the same amount of time to load as a typical LTL shipment plus 2 minutes to load the Cold Box
- 365/24/7 in-transit visibility/temperature monitoring/on-call personnel
- Downloadable temperature data readout
- Alarmed security features
The savings on the actual units (insulated shipper vs. cold box) is $600 per unit.
The savings on TL rates for the insulated shipper vs. the cold box is an average of $1560 per lane per trip.
Total estimated savings in one-years’ time is over $50K for 4 lanes.