Why Investing in Cold Chain Makes Sense

November 11, 2016

Kuehne + Nagel unveiled its Singapore Logistics Hub (SLH) early this year, a 50,000 sqm built-to-suit facility located in west of Singapore. The company said this is its largest investment outside of Europe as part of its regional expansion plans to support its fast growing supply chain clientele operating within Singapore and the ASEAN countries.

 

But with high investment comes great expectations. With more than 40 per cent of the new logistics hub furnished with chilled storage, redressing and postponement facilities for cold chain, Kuehne + Nagel’s latest facility is specifically designed for pharmaceuticals and healthcare companies operating in Asia.

 

But what is the company’s strategy behind its strong focus on pharmaceuticals? And why does Singapore play such an important role in expanding its operations in the region?

Booming pharmaceuticals scene

The pharmaceuticals and healthcare industry is currently growing at an exponential rate globally. Asia Pacific has the highest share of the global pharmaceuticals market next to North America. Adding to that, Singapore is developing a strong pharmaceuticals and biomedical sector, which currently faces increasingly complex logistics needs due to the global escalation in regulatory compliance requirements.

 

Thanks to the country’s commitment in research and innovation, local talent base and trusted regulatory environment, Singapore is frequently referred to as a pharmaceuticals hub in Asia, made evident by the number of global pharmaceuticals companies setting up their regional headquarters in the country.

 

With the government strongly committed to continue investing in biomedicals research and development efforts, the pharmaceuticals industry is expected to further blossom in Singapore. For example, on top of investing S$77m to enhance its antibiotic manufacturing facility here, GlaxoSmithKline, the UK-listed drugmaker,has also designated Singapore as its new global headquarters in Asia and will shift some of its US and UK staff to the city-state.

 

Takeda Pharmaceuticals, a top Japanese pharmaceuticals company, has also relocated its emerging markets business from Japan to Singapore. With more pharmaceuticals and healthcare companies growing and settling down in the city-state, logistics service providers, like Kuehne + Nagel, can tailor their services to meet this increase in demand.

Build it, and they will come

Kuehne + Nagel’s strong presence in Singapore has stretched to its 46th year, so it is not surprising that the firm considers the country a central part of its regional expansion plans and sees no qualms in investing when necessary.

 

While Mr Laurent Simon, who will be taking up the Managing Director post in Kuehne + Nagel for Singapore and Malaysia as of April 2016, admitted that while Singapore itself is a relatively small market, its domestic and international political stability, as well as open-armed strategy to foreign businesses make it an ideal point of regional distribution and control tower for global companies, many of which are part of the company’s clientele.

 

The investment in the SLH does not only represent a long-term commitment to Kuehne + Nagel’s customers; it also tackles logistics integration challenges through its control tower services supporting supply chain transformation projects as well as providing high level of control and visibility over the different modes of transportation.

 

By having a special focus on pharmaceuticals industry, Kuehne + Nagel believes it is positioning itself to stay ahead of its customers’ needs.

 

“More than any other industry, pharmaceuticals companies are looking at end-to-end capabilities, especially with regards to cold chain management and product integrity. Biologics boom with stricter temperature requirements amplify the above trend,” added Mr Simon, who is based in Singapore.

 

Relating this to a typical scenario, he mentioned that most logistics providers adopt a reactive approach to the industry’s requirements, which means facilities are built ad-hoc upon the customer signing a contract. But Kuehne + Nagel is initiating a proactive approach by building the required facility first.

Optimising end-to-end supply chain services

With the Centre of Excellence for Logistics Innovation integrated into Kuehne + Nagel’s end-to-end supply chain services, the firm is constantly updating its technology and strategy to stay ahead.

 

“Three years ago, we launched the award-winning KN PharmaChain solution, offering door-to-door temperature control, a 24 hour alert system, optional wireless temperature measuring and Best Practice (GxP) standards for facilities, working processes and training programmes. The status of a customers’ shipment is just a call away, 24/7. The SLH complements Kuehne + Nagel’s regional offering to provide end-to-end supply chain solutions for the industry,” explained Mr Simon.

 

What sets SLH apart from other facilities in the market are the temperature mapping during air, ocean and overland transportation and inventory management. In addition, Kuehne + Nagel aims to set the highest standard within the logistics industry, with its IT solutions offering visibility throughout the entire supply chain.

 

Kuehne + Nagel also takes environmental sustainability seriously, which is a cause that many of its current (as well aspotential) customers take to heart. The company ensures that its SLH fulfils the benchmarks set by the Green Mark certification standards through green features such as:

  • Lighting system with motion detectors 

  • High standard isolation to reduce usage of air-con

  • Rain water re-use

  • Building materials with good recycled content

  • Shuttle buses and encouragement to use public transportation 

  • Solar panels on the roof

Furthermore, Mr Simon is convinced that the quality standards provided in the facility are beyond Singapore’s minimum requirements to offer their customers a superior, world class environment. Together with its logistics learning hub and the Kuehne + Nagel Asia Pacific centre of excellence for logistics innovation, the company is fully equipped to power the industry forward.

 

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