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February 25, 2021 4:15 PM, EST

UPS Expects 40% Jump in Vaccine Doses Next Week, Peak in May

A UPS truck exits a distribution center in Chicago in November 2020. (Christopher Dilts/Bloomberg News)A UPS truck exits a distribution center in Chicago in November 2020. (Christopher Dilts/Bloomberg News)

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UPS Inc. and FedEx Corp. are ramping up vaccine distribution, with plans for additional gains if Johnson & Johnson’s inoculation is cleared by U.S. regulators.

The couriers are handling about 10 million doses a week on a combined basis and that number is set to climb to 14 million next week, said Wes Wheeler, chief of UPS’s health care unit. That doesn’t include the Johnson & Johnson single-shot vaccine, which hasn’t yet been granted an emergency use authorization but has been found by U.S. regulators to be safe and effective.

Peak vaccine distribution probably will occur in May when other manufacturers, such as Novavax Inc., begin to ship their products, Wheeler said. The volume now is about a third of the expected peak level, and there’s plenty of capacity to handle the surge, he said. Even when UPS reaches the maximum distribution level, the company estimates that vaccines will account for about 6% of the 24.7 million packages it delivers worldwide every day.

“We made sure that even during the peak periods that we would have enough capacity in our network to be able to prioritize all vaccines,” Wheeler said.

Distribution Points

Deliveries also are fanning out as the couriers add more pharmacy chains and the Federal Emergency Management Agency. Distribution points have climbed to 100,000 on a combined basis for UPS and FedEx from about 14,000 at the beginning.

FedEx has made vaccine distribution a priority, and employees have taken it personally, said Don Colleran, chief of the company’s overnight Express unit. Thomas Gregory, a pilot who was stricken with COVID-19 and recovered, flew the first vaccine shipment in December to FedEx’s hub in Memphis, Tenn. Now the company is gearing up to include the Johnson & Johnson shot in its network.

“It’s a big deal for us,” Colleran said. “We’re ready for this additional vaccine and any that follow.”

 

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With the Biden administration, little has changed from the logistics team that has been planning the vaccine roll out since April, Wheeler said. Gustave Perna, a U.S. Army four-star general, continues to head up the effort, he said.

The blast of arctic air that dumped snow and ice on Texas and other states created some temporary bottlenecks, and UPS had to hold some vaccines until inoculation sites reopened, Wheeler said. The disruptions lasted only a few days and the distribution effort is caught up, he said. Indeed, storm-related disruptions appear to be easing, according to Bloomberg’s Vaccine Tracker.

Freezer Farms

UPS invested in freezer farms in Louisville, Ky., and the Netherlands to help manufacturers store vaccines. So far, those haven’t been needed as the Moderna and Pfizer products flow steadily from the factory to the point of use in an average of 20 hours.

 

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“That gives you an idea of how smoothly this has all gone because the contingency storage has not been needed,” Wheeler said.

But the so-called cold-chain investments won’t go to waste even if they aren’t needed much for COVID-19 vaccines. The trend in pharmaceuticals is toward biologic drugs made with large molecules that require refrigeration, as opposed to pills.

“The shift from what we call small molecule to large molecule is accelerating very, very quickly,” he said. “The need for us to build out cold chain, freezer farms, cryogenic packaging centers around the world has been there since this market has really started to take off and the whole COVID pandemic has accelerated that.”

UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It ranks No. 2 on the Transport Topics Top 50 list of the largest logistics companies in North America. FedEx ranks No. 2 on the for-hire TT100 and No. 15 on the Top 50.

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