COVID vax: Snowman logistics CEO warns on two key distribution hurdles

While at least three potential COVID-19 vaccines have shown encouraging trial results, Snowman Logistics Ltd. sees two key hurdles.

“The challenge that we have at hand is not only of the vaccine, but logistics is going to be quite complex,” Sunil Nair, chief executive at the cold-storage service provider, told BloombergQuint in an interview. Two things are very critical: the volume to be distributed and the time constraint to provide the shots, he said.

COVID vaccines being developed by Pfizer Inc. and Moderna Inc. have shown encouraging late-stage trial results. AstraZeneca Plc’s shot developed by Oxford researchers, and being prepared by India’s Serum Institute for developing nations, is another contender to potentially contain the pandemic that has infected 55.3 million people globally, including 1.33 million deaths.

India’s preparedness

Nair said India is prepared to face the challenge, provided there is clarity on the volume and timelines, and with private players pitching in. “We are talking about distribution of around two billion doses of vaccine throughout the country,” he said. “With the current immunisation programme of the government, 20-25% can be distributed. For the rest, private contribution will be required where companies like ours come in with pan-India warehouses and refrigerated transportation services.”

Temperature control is another challenge, he said. “For instance, Pfizer’s vaccine requires storage at -70 degrees Celsius which is not possible for many countries. Moderna’s vaccine requires -20 degrees for which lot of facilities are available and Snowman can maintain up to -30 degrees.”

Nair expects the infrastructure on ground to be quite manageable if Indian players come up with vaccines that can be transported at 2 to 8 degrees Celsius.

Another hurdle is storage capacity. While there is good enough capacity in major cities, space might be a challenge for remote places, Nair said. “We have 1.05 lakh pallets capacity of which 12,000-15,000 is available immediately,” he said. “We can offer [to transport] around 300 million vaccine doses immediately.”

This, he said, can be achieved through existing capacity of 100 million vaccines units, while there’s additional capacity for 100 million and partner network can add another 100 million units.

If there is clarity on the volume and timelines, the company can scale up even more, he said. “We can create more space in existing premises itself, taking it up to 400-500 million units.”

Snowman expects the profitability in fiscal 2021 to be better than the previous year, Nair said, adding that if the vaccine comes, there will be a “dramatic change” in numbers. “Any incremental business is going to be much profitable for us with almost all the fixed costs covered in the existing operations with 85% utilisation.”

The company seeks to be part of the government’s immunisation programme and participate in the distribution process, he said, without commenting on pricing. –BloombergQuint

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