Quality & Complaint Management in the Cold Chain Geneva, November 2010
Introduction LifeConEx is the only industry specific Lead Cold Chain Solutions Provider (LCCSP) of end to end temperature controlled transportation solutions systematically integrating, and rigorously measuring all supply chain partners to ensure the proper storage, handling and distribution of temperature-sensitive medicinal products delivering fewer delays, less cycle time, less temperature deviations, less damage, and far fewer claims than typically experienced by shippers. 1. To check, monitor, or verify by evidence 2. To eliminate, prevent increase, or minimize risk of 3. To adjust to a requirement; regulate Mission We Connect People with Life! Vision Be the World s Most Wanted Temperature Control Solution Provider! [ Learn more online at: www.lifeconex.com ] [ 2 ]
A Matter of Degree How much risk are you able to afford? Successfully meeting cold chain transportation requirements is not a random process, it is achieved by detailed planning, supporting resources, leveraging infrastructure, competence and ability to execute. LifeConEx, as the Lead Cold Chain Solutions Provider (LCCSP), understands that quality and control in the cold chain logistics industry are critical and can affect your company and patients directly. THIS IS WHAT PEACE OF MIND FEELS LIKE Reduction in Temperature Deviations Regulatory Compliance Faster Product Release Cost Optimized [ Learn more online at: www.lifeconex.com ] [ 3 ]
LifeConEx At-A-Glance Our Clients Life Sciences companies such as pharmaceuticals, biotech, vaccines, diagnostics, medical devices, testing laboratories, clinical trials enterprises partner with LifeConEx for a comprehensive and more reliable transportation solution to be assured of safe and regulatory-compliant deliveries. Our Services We deliver our clients sensitive products to the right place, at the right time, and in the right condition regardless of package types (passive insulated boxes, active cool containers, all sizes and weights), product temperature requirements (+2ºC to +8ºC, deep frozen, controlled room, etc.), and transportation modes (air, ocean, ground, and combinations). Our Expertise Employees Life Sciences Industry Dedicated Specialists in-depth industry competence. Reach Covering more than one hundred countries on all continents, LifeConEx provides reliable solutions for intercontinental, intra-us, intra-european, and Caribbean trade lanes with customized solutions for China, India, Japan, Middle East and Latin America. +300 Qualified Global Trade Lanes; +60 origin and +100 destination airports; +50 Airlines; +300 Logistics Partners including airport ground handlers Millions (kgs) & Billions ($) of product values managed annually [ Learn more online at: www.lifeconex.com ] [ 4 ]
Did you know? Every fifth drug is temperature-sensitive 20% of the world s best selling pharmaceuticals are temperature sensitive $ 250 billion of the total pharmaceutical market ( about $ 830 billion ) is represented by temperature sensitive products. The share of temperature-sensitive products will rise the next years Biological s + 15 % Chemical based + 10% Nearly 100 % of all vaccines and 68 % of all products sold by biotech companies need to be stored and transported between +2 to 8 ºC 43 % of all diagnostics and about 11 % of all products from large pharmaceutical companies have to be handled with the same precautions. There is a correlation between product price and temperature-sensitivity and that some biological s, vaccines and hormones can reach a package price of up to $ 6000.- or you can fill a LD3 Container with up to $ 20 million of product value. Source: Movement Market Research Study for LifeConEx [ Learn more online at: www.lifeconex.com ] [ 5 ]
Cost structure A Typical Cost Structure in Macro View R&D: With development costs for new drugs reaching more than 1B USD, R&D costs are average >16% of sales Marketing and Sales: Costs for sales forces as well as classical advertising campaigns can even exceed 30% of sales* In Contrast Distribution: Distribution costs are estimated to range from 1% to 3% of sales*** Transportation costs account for approximately 40-50% of the overall distribution costs* *Pharmaceutical Research and Manufacturers of America Industry Profile, 2008 **Annual Reports of Pharmaceutical Companies ***Interviews and Transportation Journal Jan 2005 [ Learn more online at: www.lifeconex.com ] [ 6 ]
What are the risks? Main causes for airline claims of PTSPs (example with 12662 claims weighted by claim value) Our/your experiences? Long cycle times / delivery delays Temperature deviations Damages due to rough handling Product loss due to theft / pilferage Lack of visibility & control during transit and at points of hand over Source: Germanischer Lloyd (2006) [ Learn more online at: www.lifeconex.com ] [ 7 ]
End-to-End Risk Management Pre Shipment During Shipment Post Shipment Consultation & Development of Quality Agreement/SOP Consultative assessment by tailoring a customized process to suit the customer s global transport needs Comprehensive implementation including all suppliers Selection & Knowledge Base of Preferred Carriers Knowledge database for 40+ airports and preferred carriers (continuous updates, on-site compliance checks) Training & awareness building Global Proactive Process Management Dedicated team providing 24/7 customer service Active, real time end-to-end monitoring of all shipments (prealert, tracking matrix, key event time stamps) Intervention management (ex. offloads, misrouted shipments, improper documentation, damaged or malfunctioning cool containers, wrong temperature setting, trucking arrangements, etc.) Detailed in-transit notifications to the customer Post Shipment Analysis All deviations reported to quality for root cause analysis and performance reports Special Customer Reports Track & trace information, documented milestones for all shipments including physical data and temperature information Ongoing Continuous Improvement Corrective action plan, adjustment of Quality Agreements and follow up Quality Reporting & Investigations [ Learn more online at: www.lifeconex.com ] [ 8 ]
Risk Assessment & Identifying Critical Points Understanding local reality including airport infrastructure, customs, ground handlers, cool rooms, etc. Moving across global climate zones Managing language & cultural barriers (holidays, lost in translation, etc.) Clearly defining responsibilities & accountability at each key milestone Implementing communication guidelines Establishing contingency plans [ Learn more online at: www.lifeconex.com ] [ 9 ]
Real-time quality assurance with all partners Verify SOP compliance at each touch point (phone, email or provider system information) Report all agreed-upon metrics with accurate records Real-time data wherever possible Storage locations and conditions Active container temperature readings All process deviations and potential threats to the product Timely intervention when required to protect the product Post shipment management of process deviations (internal & external) Regular performance reviews among all parties [ Learn more online at: www.lifeconex.com ] [ 10 ]
Managing customer complaints Complete root cause analysis Clear responsibilities (no finger pointing required but clear identification of error) Corrective actions implemented to avoid reoccurrence (re-training, SOP process amendment, etc.) Ensuring full implementation of CAPAs both internally and externally Controlling results and verifying effectiveness of CAPAs Within a reasonable time frame (target completion date) Official document signed and dated [ Learn more online at: www.lifeconex.com ] [ 11 ]
Cold Chain Quality & Risk Management Active interventions Historical data (Logistics + Temperature related data from a system) Evaluating the partners (for renewal of industry quality certifications) Continuous improvement Reduction of the current temperature related damage and claim ratio Additional business by improving current services and developing new creative high yield services Win-win for all parties! [ Learn more online at: www.lifeconex.com ] [ 12 ]
Thank you for your attention! Nina Heinz Head of Quality LifeConEx Office +33 1 4090 3187 Mobile +33 6 0875 2286 nina.heinz@lifeconex.com
Avoiding Liability for Perishable Cargo? Perish the thought! Presented by: DAN SOFFIN 6 th IATA Cargo Claims and Loss Prevention Conference Geneva, 10-12 November 2010
Outline The Legal Framework Operational Issues Claims Handling
The Legal Framework Warsaw Convention 1929 and Hague Protocol 1955 Montreal Convention 1999 IATA Resolution 600b: The Air Waybill IATA Recommended Practice 1601: Conditions of Carriage For Cargo Extra-contractual Terms & Conditions / Obligations Law of the local jurisdiction
Art 10: Warsaw / Hague Consignor responsible for correctness of particulars of cargo in Air Waybill Art 11: Air Waybill prima facie evidence of receipt of cargo and contract of carriage Art 16: Consignor must furnish such documents necessary to meet formalities of customs, octroi or police, before cargo delivered to consignee
Warsaw / Hague Art 18: Carrier liable for damages sustained in the event of destruction or loss of, or damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air Art 19: Carrier liable for damage occasioned by delay in carriage by air of...baggage and cargo
Warsaw / Hague Art 20: Carrier not liable if he proves that he and his servants and his agents took all necessary measures to avoid the damage or that it was impossible for him or them to take such measures Art 21: If carrier proves that damage was caused or contributed to by the negligence of the injured person, the Court may, in accordance with the provisions of its own law, exonerate carrier wholly or partly from its liability
Warsaw / Hague Art 23: (1) Any provision tending to relieve carrier of liability or to fix a lower limit than that which is laid down in this convention shall be null and void. (2) Paragraph 1 shall not apply to provisions governing loss or damage resulting from the inherent defect, quality or vice of the cargo Art 25: Limits of liability do not apply if shown that carrier acted recklessly or with intent to cause damage
Art 26: Written Notice of Complaint Warsaw / Hague Receipt of cargo by consignee without written notice of complaint is prima facie evidence that cargo was accepted in good condition and in accordance with contract of carriage In case of damage to cargo, written notice of complaint must be made within 14 days of receipt of cargo In case of delay, written notice of complaint must be made within 21 days from which the cargo was placed at his disposal Failing to complain within stipulated time frame means no action can lie against carrier BUT NB different jurisdictional approaches
Art 30: Warsaw / Hague In case of successive carriage, each carrier who accepts...cargo is subjected to the rules set out in this convention and is deemed to be one of the contracting parties to the contract of carriage insofar as the contract deals with that part of the carriage which is performed under his supervision Art 31: Consignor has right of action against first carrier Consignee has right of action against last carrier C or / C ee may sue the carrier responsible for the LDDD All carriers jointly and severally liable Combined carriage: Convention applicable only to carriage by air
Montreal Convention 1999 Art 6: Documents relating to the nature of the cargo Art 10: Responsibility for particulars of documentation Art 11: Evidentiary value of documentation Art 16: Formalities of customs, police or other public authorities
Art 18: Damage to cargo Montreal Convention 1999 Carrier liable for damage sustained in the event of the destruction or loss of or damage to cargo upon condition only that the event which caused the damage so sustained took place during the carriage by air. Carrier NOT liable if and to the extent it proves that destruction, loss, or damage resulted from one or more of the following: inherent defect, quality or vice of that cargo; defective packing of that cargo performed by a person other than the carrier or its servants or agents; an act of public authority carried out in connection with the entry, exit or transit of the cargo. The carriage by air comprises the period during which the cargo is in the charge of the carrier. Substitution of carriage without consent deemed to be carriage by air
Art 19: Delay Art 20: Montreal Convention 1999 Carrier liable for damage occasioned by delay No liability if carrier took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures Exoneration If the carrier proves that the damage was caused or contributed to by the negligence or other wrongful act or omission of the person claiming compensation... the carrier shall be wholly or partly exonerated from its liability.
Montreal Convention 1999 Art 31: Timely notice of complaints Art 36: Successive carriage Art 38: Combined carriage Art 47: Invalidity of contractual provisions
Air Waybill Conditions of Contract IATA Resolution 600b It is agreed that the goods described herein are accepted in apparent good order and condition (except as noted) for carriage SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. ALL GOODS MAY BE CARRIED BY ANY OTHER MEANS INCLUDING ROAD OR ANY OTHER CARRIER UNLESS SPECIFIC CONTRARY INSTRUCTIONS ARE GIVEN HEREON BY THE SHIPPER, AND SHIPPER AGREES THAT THE SHIPMENT MAY BE CARRIED VIA INTERMEDIATE STOPPING PLACES WHICH THE CARRIER DEEMS APPROPRIATE
2.2: Air Waybill Conditions of Contract IATA Resolution 600b To the extent not in conflict with the foregoing; carriage and other related services performed by each carrier are subject to: 2.2.2: Carrier s conditions of carriage and related rules, regulations...and tariffs...the carrier s conditions of carriage include, but are not limited to: 2.2.2.1: limits on the Carrier s liability for loss, damage or delay of goods, including fragile or perishable goods; 2.2.2.2: claims restrictions, including time periods within which shippers or consignees must file a claim or bring an action against the Carrier for its acts or omissions, or those of its agents; 2.2.2.3: rights, if any, of the Carrier to change the terms of the contract; 2.2.2.5: rights of the Carrier and limitations concerning delay or failure to perform service, including schedule changes, substitution of alternate Carrier or aircraft and rerouting.
4: Air Waybill Conditions of Contract IATA Resolution 600b For carriage to which the Montreal Convention does not apply, Carrier s liability limitation for cargo lost, damaged or delayed shall be 19 SDRs per kilogram unless a greater per kilogram monetary limit is provided in any Convention or in Carrier s tariffs or general conditions of carriage 9: Carrier undertakes to complete the carriage with reasonable dispatch. Where permitted by applicable laws, tariffs and government regulations, Carrier may use alternative carriers, aircraft or modes of transport without notice but with due regard to the interests of the shipper. Carrier is authorised by the shipper to select the routing and all intermediate stopping places that it deems appropriate or to change or deviate from the routing shown on the face hereof.
Air Waybill Conditions of Contract IATA Resolution 600b 10: Receipt by the person entitled to delivery of the cargo without complaint shall be prima facie evidence that the cargo has been delivered in good condition and in accordance with the contract of carriage. 10.1 In the case of loss of, damage or delay to cargo a written complaint must be made to Carrier by the person entitled to delivery. Such complaint must be made: 10.1.1 in the case of damage to the cargo, immediately after discovery of the damage and at the latest within 14 days from the date of receipt of the cargo 10.1.2 in the case of delay, within 21 days from the date on which the cargo was placed at the disposal of the person entitled to delivery. 10.3 Unless a written complaint is made within the time limits specified in 10.1 no action may be brought against Carrier. BUT NB different jurisdictional approaches
Air Waybill Conditions of Contract IATA Resolution 600b 12: No agent, employee or representative of Carrier has authority to alter, modify or waive any provisions of this contract.
Article 3.1: Conditions of Carriage for Cargo Cargo acceptable IATA Recommended Practice 1601 Transport, export, import, not prohibited Suitable packing Proper documents Carrier s right to refuse carriage when circumstances so require Article 3.3: Packing and marking of cargo Shipper responsible for ensuring that cargo is packed in an appropriate way
Article 3.4: Cargo acceptable only under prescribed conditions Article 3.5: Responsibility of non-observance of conditions relating to special cargo Article 3.6: Carrier s right of inspection Article 3.7: Unit load devices Conditions of Carriage for Cargo IATA Recommended Practice 1601
Conditions of Carriage for Cargo IATA Recommended Practice 1601 Article 4: Documentation Article 4.3: Apparent condition / packing of the cargo Article 4.5: Responsibility for particulars Article 4.6: Alterations
Conditions of Carriage for Cargo IATA Recommended Practice 1601 Article 6: Shipments in course of carriage Article 6.1: Compliance with Government requirements Article 6.3: Schedules, routing and cancellations Article 6.4: Certain rights of carrier over shipment in course of carriage
Conditions of Carriage for Cargo IATA Recommended Practice 1601 Article 8: Delivery Article 8.4: Failure of consignee to take delivery Article 8.5: Disposal of perishables
Article 11: Carrier s liability Article 11.1: Liability only if the occurrence which caused the damage took place during the carriage by air or by another means of transport Article 11.3: Inherent vice defence Article 11.6: Conditions of Carriage for Cargo Contributory negligence IATA Recommended Practice 1601
Conditions of Carriage for Cargo IATA Recommended Practice 1601 Article 12: Limitations on claims and actions Article 14: Modification and waiver
Air Waybill Extra-contractual terms No agent, employee, or representative of Carrier has authority to alter, modify or waive any provisions of this contract General Conditions of Carriage No agent, servant or representative of Carrier has authority to alter, modify or waive any provision of the Contract of Carriage or of these provisions Keep cool between 2 c and 6 c Refrigerate during transit Must travel as booked And more... What is the law of contract modification the jurisdiction in which the claim is pending?
Origin Transit Destination Operational Considerations
Operational Considerations Origin: Pre-acceptance??? Acceptance Export Storage Loading In-flight / On-board
Operational Considerations Transit: Aircraft to transit facility including unloading Storage during transit Transit facility to outbound aircraft Loading In-flight / On-board
Operational Considerations Destination: Aircraft to import warehouse including unloading Warehouse storage pending release After release???
Claims handling issues Loss, damage, or delay? (Claimant to prove) Occurrence during carriage by air? (Claimant to prove) Reasonable time for carriage Ordinary incidences of carriage (Claimant to prove) Proper written notice of complaint (Claimant to prove) Sufficiency of packing (Claimant to prove) Shipper-built units (Claimant to prove) Salvage v- destruction, voluntary v- mandated (Claimant to prove) Survey invitations and fees Payment, damage calculations, and principles (Claimant to prove) Investigation: facts, facts, and more facts!!! Documents, documents, documents!!!
Acknowledgement A special THANKS to Alex Losy, paralegal and final year law student at Bournemouth University for his considerable talent and assistance in preparing this presentation! Thanks Alex!
Thank you!