Thinking outside the container: Dominic Hyde

Dominic Hyde is making waves at Peli BioThermal, bringing a fresh approach to pharmaceutical transportation which is increasing revenue and driving down costs

In the year since Dominic Hyde joined Peli BioThermal as vice president of its pharma container rental scheme, Crēdo on Demand, he has overseen significant developments including the company’s expanding programme of network stations and drop points.

Hyde highlights some of the challenges being faced industry-wide in the global transportation of pharmaceutical payloads, including the availability of airfreight and rising rates.

“My first year with Peli BioThermal has been extremely positive with ongoing developments benefiting our global customers, who represent eight of the top 10 pharmaceutical manufacturers worldwide,” he says.

“In 2018, we increased our temperature-controlled container fleet size by 90%, while increasing our revenue by 90%, and we are well positioned to further accelerate our growth in 2019.

“Our growing footprint of network stations and drop points is planned to exceed 100 sites in 2019, representing a significant investment to support continuing worldwide growth within the pharmaceutical and biomedical industry.

“We were busy in 2018 signing multiple freight forwarders and integrators worldwide, increasing our convenience and flexibility for customers by selecting the best locations and organisations to speed the journey of their temperature-controlled shipments around the globe.”

Hyde stresses how the sector is contending with and constantly balancing the availability and increasing cost of airfreight.

In a bid to overcome the imbalance, Peli BioThermal is utilising a greater variety of transportation modes to return containers, including sea and rail.

“One thing we have had to really look at carefully is that all of the container rental companies we compete against, their business models are all dependent on having partnerships with airlines. Initially it was our plan to pursue a similar business model and to have those partnerships with the airlines.

“But if you look at the IATA industry metrics, which they collect constantly and publish monthly, what we have seen is that consistently over the last 24 months the demand for airfreight has outstripped supply by 6%. In 2017 airfreight rates increased by 15% and last year they were on track to increase by 9%.

“So why would we pursue a business model that would be dependent on a diminishing supply and mean we would effectively be joining the queue of container companies vying for this dwindling resource?”

Limited capacity

He adds that there is very little spare capacity out of the Far East into Europe and the US.

“China, Japan, Taiwan and Korea are all producing vast quantities of products that are consumed in European and US markets, so getting units from Shanghai back to Europe is a real challenge,” he explains.

To get around this problem on the European trade, the company has partnered with China Railway and DHL to use their train service from Shanghai to Duisburg in Germany, providing “a reasonably fast service”.

He adds: “There are also fairly fast transpacific [ocean] services to the west coast of the US, where we have demand for containers, so we have solutions going east and west out of the Far East which are set up and are there.”

However, the past year has not been without its challenges.

Hyde says the company has put in a lot of effort to expand its network whilst also trying to bring in ways of working that are more scalable and will have a longer term impact on the business.

“We also had some teething problems with the Crēdo Cargo [its reusable passive product] and had to do some rework, which slowed us down slightly,” he adds.

Hyde highlights how there have also been changes within the marketplace and what it could mean in the sector.

“I think industry-wide, our technology, our advance passive systems, are gaining more traction so that’s encouraging. So many companies are trying to emulate us at bringing systems forward with vacuum panel insulation and phase change materials, however we are at the epicentre of the buzz at the moment, which is great.”

Hyde predicts that the temperature-controlled container sector will see further consolidation. Last year, Novo Holding and private equity firm Cinven purchased Envirotainer.

He says: “I think that is the first phase of some consolidation that is going to continue. I think there will be some changes that we will see over the next 12 months which will also create some opportunities for us – it is an interesting time within the sector.”

Hyde says the business took a new approach to the industry issues they faced, such as user drop-offs, to find a long-term supply chain solution.

“We went back to the drawing board and as a result we have created our virtual drop points system, whereby we set a fixed price for a pharmaceutical shipper to drop a container, wherever that may be in the world

“We set the price for that and then we contract transportation service providers to collect that container and bring it back into our system where it is needed.

“This has been working really well so we have proven that the business model doesn’t need to rely on the airlines for that repositioning capacity, and I think this is going to be a really strong selling proposition going forward.”

For example one leading company, which he declines to name, doesn’t have any return points for containers in South America.

So if you want to ship from Europe you have to rent the container, fly it with product to South America and then fly the empty container back to Europe.

It is only when you finally return the container that the rental ends.

“So you’ve got a lot more airfreight, you’ve got a longer rental period and that all translates as a higher total cost of shipping,” he says.

“Whereas with our virtual drop points the customer knows they can fly containers to São Paulo and as soon as it is unloaded and they tell us that it’s available, we stop the rental.

“We invoice the drop fee for that location but then we spend that drop fee bringing it back in a very efficient way, which is rarely airfreight. We are using a lot more sea alongside other modes of transportation, including rail.”

Hyde says that from the perspective of customers’ and pharma shippers, the whole process is simpler and the total cost should be significantly lower.

“It is an exciting development and we are the only one who seems to be doing this,” he says.

Hyde says that this latest development was not something that could have been anticipated.

“It was a reaction to a key learning on a customer account which meant we had to do a quick rethink and table a solution, which they could buy into. The global drops can be anywhere and we price it out for the customer to accept or reject.”

Since joining Peli BioThermal, Hyde has demonstrated how his knowledge and extensive expertise is helping to rapidly progress the company’s increasing infrastructure, which supports its Crēdo on Demand service.

The cost effective temperature -controlled container rental programme allows organisations to choose the product that best fits their requirements, logistics profile and budget, he says.

Hyde reflects: “I didn’t think we needed to be as heavy on the number of network stations initially planned and using what we know about our pipeline opportunities we are prioritising serving those.

“We are trying to actually do more with less and what that means is that we get a higher concentration of business through those locations. That helps improve quality because the people who are on the ground do more, more frequently.”

Hyde says that the company purchased more than twice the number of Crēdo Cargos than it had initially planned, but by the end of 2019 it hopes the figure will be back in line with its five-year plan.

Evolutionary developments

Hyde hints about new product developments on the horizon.

“Regarding new products we have a particularly exciting development, which looks from our analysis to come with a very strong proposition. I think it could be very disruptive to the market. It’s very exciting but we are trying to keep the details close to our chests right now.

“We will break the back of the development this year so realistically it will be a product launch in 2020. We’ve identified some potential pharmaceutical companies who would, we believe, be ideal candidates to be a sponsor of this project and then the launch customer.”

Currently it is envisaged that the new product will be an evolution of the engineering that was in the Crēdo Cargo container and, as that came out of the UK, it is likely that the new model will also be developed there.

“The new product is not going to bring new levels of performance, it will offer similar or the same performance. However, it will be a different size,” he adds.

“This will bring a new level of operational efficiency on the aircraft, which will then bring the total landed cost for the container down to a new level of economics which nobody can achieve. No one today is delivering that performance at that price point, which is what makes it potentially exciting and disruptive to the market.

“It’s all extremely positive. I think 2019  won’t be without its challenges but I think it will be great, a really good year,” Hyde concludes.

This interview was submitted by Peli BioThermal and subject to editorial revision by Air Cargo News.