Running on Ice: Chinese tariffs’ impact on the pharmaceutical supply chain

All thawed out

The will-they, won’t-they of tariffs has been looming over the pharmaceutical industry. Earlier this week, it looked like 25% tariffs were set to be imposed on top trading partners Canada and Mexico. Then the tariffs were put on hold for a month. For the moment, that leaves only the 10% tariffs on China to contend with.

Impacts of the Chinese tariffs on the pharmaceutical industry stand to be significant. The U.S. is already struggling with medication shortages forcing rationing in some areas of the country – a problem that doesn’t seem to be going away anytime soon, especially if talks on pausing the tariffs on China are delayed.

According to a CNBC article: “China in particular is a large supplier of active pharmaceutical ingredients, or APIs, for both brand-name and generic drugs due to lower manufacturing costs in the country. APIs are the main component of a drug that causes the desired effect of the treatment. Some generic drugs are manufactured overseas entirely.”

The tariffs could increase medication shortages as well as force generic manufacturers out of the market as margins erode. Generic manufacturers operate at low prices, occasionally at a loss, making it difficult for them to absorb significant increases. 

Leaders of various drug advocacy groups have urged the administration to put an exemption in place for generic drugs and drug components in the tariffs, as they could negatively impact U.S. patients.

Temperature checks 

Cutting-edge container monitoring is not a phrase heard very often in the supply chain world, but thanks to Mediterranean Shipping Co., it’s a reality for temperature-controlled shipping containers. MSC has launched iReefer, a monitoring system for reefer containers. It allows customers to track and monitor temperature-controlled containers from anywhere in the world.

It’s not just temperature. The system also allows users to track location, humidity and just about anything someone would want to know about a shipment while it’s in transit. The system will go live March 1. This project connects more than 210,000 reefer containers and more than 500 ships with this technology.

In a news release, Giuseppe Prudente, chief logistics Officer of MSC and president of Medlog, said: “This exciting launch highlights MSC’s unique ability to combine forward-thinking digital solutions with personalized customer care. iReefer is designed with customers in mind: we fully understand their need to closely monitor and control cargo, to facilitate planning and ensure products are delivered in pristine condition. It builds on the already high levels of care we apply to reefer cargo and takes this support to the next level.”

Food and drug

The biggest football game of the year happens this weekend. As U.S. consumers gear up for the big day, so do chicken wing companies. The Washington-based National Chicken Council has released its annual Chicken Wing Report, projecting that “Americans will consume 1.47 billion chicken wings while watching the Kansas City Chiefs and Philadelphia Eagles battle for the Lombardi Trophy on February 8. This figure represents an increase of 1.5 percent from last year’s game, or about 20 million more wings.”

For context, 1.47 billion wings laid end to end would stretch to and from GEHA Field at Arrowhead Stadium in Kansas City, Missouri, to Lincoln Financial Field in Philadelphia – 63 times.

Seeing as how the Buffalo Bills almost made it into the Super Bowl and Buffalo is allegedly home of the buffalo wing, any future championship game with the Bills will undoubtedly see the largest spike in wing consumption. 

With bird flu rising and negatively impacting egg prices, chicken wings aren’t immune. There is a slight uptick in prices to $1.91 a pound, according to the U.S. Department of Agriculture’s weekly chicken report. 

Cold chain lanes

This week’s market under a microscope is Nashville, Tennessee. The home of country music has the fourth-highest reefer tender rejection rate in the country. At 35.71%, shippers are seeing only 63% tender acceptance, compared with the national average of 13.89%. Nashville isn’t a small market, but it is experiencing significant capacity constraints as reefer rates remain significantly elevated.

Compared to previous years, there isn’t a clear trend of reefer outbound tender rejections spiking during the winter and then settling down as spring comes around. 2024 was the only year following the same trends as this year with a spike in rejections for the winter. Historical rates might not be overly helpful for pricing out current Nashville rates. Shippers can expect low contract compliance and might struggle to find coverage even with second- and third-tier coverage from routing guides.

Is SONAR for you? Check it out with a demo!

Shelf life

Häagen-Dazs slows down Fastest Film franchise in 2025 Super Bowl ad 

Trump’s tariffs threaten big pharma with higher costs and slimmer margins 

Pharmaceutical industry responds to proposed Trump Administration tariffs

The trade war is running hot in the Costco frozen food section 

Cold storage company to bring 123 jobs to Robeson County

Wanna chat in the cooler? Shoot me an email with comments, questions or story ideas at moconnell@freightwaves.com.

See you on the internet.

Mary

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