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UK announces £25m contract for Brexit ‘express freight service’

2019-08-19 Source: Jctrans

Plan to deliver medicines and medical products in the event of a no-deal Brexit is divided into ‘Express Parcel Services’, ‘Pallet Services’, and ‘Specials’, and could last up to two years

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The UK’s Department of Health and Social Care (DHSC) has announced a £25 million (US$30.4 million) contract to set up an “express freight service” to deliver medicines and medical products into the country in the event of a no-deal Brexit, potentially lasting for up to two years.

The department is leading a procurement exercise for the express freight service as part of the UK government’s plans to support continuity of supply if the UK leaves the EU on 31 October after failing to reach a withdrawal agreement with the EU and associated transition period.

It said the service was intended to deliver small parcels of medicines or medical products on a 24-hour basis to the whole of the UK, with additional provision to move larger pallet quantities on a 2- to 4-day basis. While the majority of goods will be standard medicines and medical products, the express freight service can also deliver temperature-controlled products if needed.

The contract will run for 12 months, with a possible further 12-month extension.

After the UK government breached EU competition rules last December when then transport secretary Chris Grayling led a botched freight capacity strategy ahead of the original planned 29 March departure date, DHSC stressed that a contract notice had now been published in the Official Journal of the European Union, and potential bidders have until 21 August to submit proposals. The successful providers are expected to be announced in September.

While some UK media outlets such as the Daily Mail have mistakenly and inexplicably reported that the service will be in the form of an express freight train, DHSC told Lloyd’s Loading List that no specific preferred transport mode had been indicated. Instead, Lloyd’s Loading List understands from previous discussions that the provider is most likely to be an existing express or logistics operator.

The contract for ‘Express Freight Services’ is divided into three lots: ‘Express Parcel Services’; ‘Pallet Services’; and ‘Specials’.

The largest tender for Express Parcel Services, with an estimated value of £16 million, is for “a managed service to provide access to a total daily volumetric capacity of 30 mon request by the Authority. To increase or decrease volume of Assured Capacity by +/- 50 % from the assured capacity, as agreed at the date of request, within 1 working day of receiving written notice from the Authority. The solution may utilise any mode of transport, subject to these being compatible with the transit timescale requirements, conditions of carriage, and the effective mitigation of foreseeable disruption to services.”

The Pallet Services tender is for “a managed service to provide access to a total daily volumetric assured capacity of 50 Euro Pallets on request by the Authority. To increase or decrease volume of volume of Assured Capacity by +/- 50 % (up to a maximum of 200 [Euro Pallets]) from the Assured Capacity as agreed at the date of request, within 24 hrs of receiving written notice from the Authority. The solution may utilise any mode of transport, subject to these being compatible with the transit timescale requirements, conditions of carriage, and the effective mitigation of foreseeable disruption to services.

The nature of the majority of goods for which the Authority wishes to facilitate transport for will be standard, non-temperature controlled, non-hazardous, and require no extra security measures.”

The Specials tender is for “a managed service to provide:

1) Access to a total daily volume of assured capacity of 5 m, subject to the processes and strategies delivered by the service provider in accordance with the tender to mitigate the risk that the capacity is unavailable. The assured capacity will be capable of handing the following goods:

Active temperature-controlled products (e.g. Frozen below -15o C; Chilled or refrigerated 2 to 8o C; Cold/Cool 8-15),

Controlled drugs – which will require compliance with Home Office requirements in relation to their storage and transit, and

Medicines – which will require compliance with Good Distribution Practice (GDP).

2) Bespoke logistics solution – a custom operational arrangement between the service provider and an authorised supplier to meet a specific, complex requirement to deliver a Bespoke Consignment into the UK by an Authorised Supplier.”

It explained that ‘Bespoke Consignment’ meant “anything which is outside of a standard parcel or pallet dimension and/or requiring specialised conditions of carriage including:

Time sensitive shipments (e.g. within 24 hrs),

Substances of human origin (e.g. blood, cell cultures, human tissues and organs),

Hazardous materials – being any item or agent (biological, chemical, radiological and/or physical) which has the potential to cause harm to humans, animals or the environment, either by itself or through interaction with other factors (such as but not limited to: medical gases, radioactive isotopes and flammable liquids);

Oversize products;

Vehicle movements; and

Containerised lift on/lift off (LoLo) services.”

The tender requires that, on request by the Authority, to “increase or decrease volume of assured capacity by +/- 50 % (up to a maximum of 15 m) from the assured capacity as agreed at the date of request, within 24 hrs of receiving written notice from the Authority.”

After the UK taxpayer was hit with a bill for close to £100 for the government’s botched freight capacity strategy ahead of the original planned 29 March departure date, DHSC stressed that “the taxpayer will only be liable for up to around £4 million of the total value of the contract, but it is expected to be much less than this”.

It added: “The service will provide an additional level of contingency as part of necessary preparations to leave the EU on 31 October whatever the circumstances, supported by an additional £2 billion from the Treasury across government. This money includes £434 million to help ensure continuity of vital medicines and medical products through freight capacity, warehousing and stockpiling.”

It said the new service would support existing plans already in place, including:

* building buffer stocks of medicines and medical products

* changing or clarifying regulatory requirements so that companies can continue to sell their products in the UK if we have no deal

* strengthening the process and resources used to deal with shortages

* procuring additional warehouse capacity

* supporting companies to improve the readiness of their logistics and supply chains to meet the new customs and border requirements for both import and export.

Health Minister Chris Skidmore said: “I want to ensure that when we leave the EU at the end of October, all appropriate steps have been taken to ensure frontline services are fully prepared. That’s why we are stepping up preparations and strengthening our already extremely resilient contingency plans.

“This express freight service sends a clear message to the public that our plans should ensure supply of medical goods remains uninterrupted as we leave the EU.”

However, some freight sources have questioned whether the new plan really guarantees capacity to the UK government in the event that capacity is constrained under a disruptive no-deal Brexit.

Torben Carlsen, CEO of ferry and logistics group DFDS – which was one of the ferry companies asked to provide capacity in the UK government’s original tender – was asked recently about further contracts with the UK’s Department for Transport (DfT). He said: “It seems like DfT is taking a slightly different approach this time in how they prepare: they enter into agreements so that if they need capacity, they have already agreed with the terms. But it does not look like that they buy firm space as they did last time.

“We do not question their strategy. But, of course, if stockpiling happens, then there may not be that much capacity to then buy. But we are in discussions and engaging with them to offer the best possible service in that connection; but you should not expect some one-off type income from that, as it looks like right now.”


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