Running on Ice: Tariffs may bode ill for already rising pharmaceutical costs
In this edition: Health care and pharmaceutical supply chains face upheaval with tariffs on Chinese goods, a new rapid thaw unit hits the market, and the frozen french fry section gets tastier. The post Running on Ice: Tariffs may bode ill for already rising pharmaceutical costs appeared first on FreightWaves.
All thawed out
After a week of will-they, won’t-they and days of back and forth, the U.S. imposed tariffs on its top trading partners, Canada and Mexico, for a little over 48 hours. Now, the 25% tariffs have been halted till April 2. So anything that was moving tariff free under the U.S.-Mexico-Canada Agreement is moving freely again for the next few weeks.
The 20% tariff on goods coming from China is still in place as is the 10% duty on imports of Canadian electricity and oil, as none of that falls under the USMCA. The import duties are aimed at forcing more cooperation from Canada, China and Mexico on stopping illegal immigration and drug smuggling into the U.S. As of now, there are still plans for reciprocal tariffs to go into effect with other countries on April 2 as well, meaning any country that has a tariff on importing American goods will have the exact same tariff on imports from that country.
When it comes to the pharmaceutical industry and tariffs, it’s spurring flashbacks to shortages of COVID-era supply.
A Healthcare Financial Management Association article notes, “Scarcity is going to happen,” said Nio Queiro, chief strategy officer at Nashville General Hospital, as well as a leadership consultant and coach, “whether it happens because of long wait times in waiting to get supplies or it happens because there’s a limited number of supplies.”
Wait times on shipments have already increased as confusion about what products were subject to tariffs and which weren’t created a backlog of sorts.
In a letter to President Donald Trump, the American Hospital Association cited China as a source of cancer and cardiovascular medications, immunosuppressives, and antibiotics. Med-surg supply costs were projected to rise by 2.3%, in part due to the September 2024 tariff that affected products such as gloves, needles, syringes and some face masks.
Even without the new tariffs, hospitals would be looking at a moderately inflationary environment for drugs as well. For example, Vizient predicted a 3.84% increase in pharmaceutical spending for the yearlong period starting in July 2025.
Regardless of what happens April 2, it looks as though the health care industry will see aggressive rising costs and possible shortages this year and for the foreseeable future.
Temperature checks
New equipment who dis? Thermodyne Foodservice Products has announced some new equipment for the first time in a hot minute. Last week at the North American Association of Food Equipment Manufacturers (NAFEM) Show in Atlanta, the company introduced its Rapid Thawing Cabinet, which, by use of conduction and convection, produces fast thawing times.
Rapid thawing might be slightly counterintuitive to the cold chain, but it’s an important component of food service as well as vaccines, biopharmaceuticals and cells. Rapid thawing can help reduce the risk of bacterial contamination and poor cell recovery, which can affect cultures produced in other aspects of production.
“The Rapid Thawing Cabinet really is a game changer for kitchens,” says Thermodyne National Sales Representative Aaron Bremer.
Food and drug
Demand for quick-fix items in the freezer aisle has brought in fan favorites. Checkers & Rally’s, long known for iconic black and white buildings, have brought the chain’s biggest assets to the freezer aisle. To be fair, the rest of the company’s food is pretty solid, but the seasoned fries are where it’s at. This collaboration allows the food wholesaler to sell Checkers & Rally’s products in grocery stores and select retail outlets across the United States.
David Dufault, SVP and general manager, retail sales, at Lamb Weston, said: “Providing consumers with a restaurant-quality experience at home is a core strategy for Lamb Weston, and our long-standing relationship with Checkers & Rally’s continues to create new usage occasions while boosting brand awareness.”
“Our partnership with Lamb Weston is among our most successful licensing agreements,” said Kristin Edstrom, director of marketing II global food retail and product licensing for Checkers & Rally’s Restaurants. “This expanded agreement lays the foundation for another decade’s worth of great-tasting products that are truly representative of the unique Checkers & Rally’s Restaurant experience.”
Cold chain lanes
This week’s market under a microscope is Salt Lake City. Capacity is loosening a little in Salt Lake. Rejections are trending down, but reefer outbound tender volumes have returned to the same levels as early February. Reefer outbound tender volumes are up 2.32% week over week. On the other hand, reefer outbound tender rejections have risen 18 basis points w/w, which is some welcome stability to rejections that are regularly at 16.6%.
Reefer spot rates in Salt Lake are going to be inflated as rejection rates haven’t been below 10% since November 2024. Shippers and brokers can expect a reprieve on spot rates but still should expect low contract carrier compliance.
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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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The post Running on Ice: Tariffs may bode ill for already rising pharmaceutical costs appeared first on FreightWaves.
