Luxembourg: A Healthcare Logistics Leader

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Sound infrastructure, a prime location in the heart of Europe, government support, and an unwavering focus on quality are all helping make the tiny principality of Luxembourg a serious player in global healthcare logistics.

“Some high ranked senior logistics executives from pharma companies have commented that [the Luxair Cargo Healthcare & Pharmaceuticals Center] is the best pharma logistics hub they have seen in Europe.”

Hendrik Kühne, APL

As a country with a population of less than 600,000 which covers an area smaller than that of both Hong Kong and Samoa, Luxembourg simply cannot compete economically with the majority of countries in the world in terms of volume. However, thanks to its prime location within Europe, a favorable tax and regulatory system, sound economic fundamentals, a highly-skilled multilingual workforce and the forward thinking of leaders in private industry and government alike, the world’s last remaining grand duchy is carving out an imposing reputation as a global leader in the field of logistics, with an increasing specialization in healthcare.

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In terms of infrastructure, Luxembourg’s strengths include airlinks to every continent via CargoLux–Europe’s largest all-cargo airline–, rail connections to all major EU ports, dedicated logistics parks, and a new temperature-controlled pharma and healthcare centre at Findel airport. Additionally, as Laurent Jossart, executive vice president of Luxair Cargo, points out, “being positioned in the center of Europe is very beneficial logistically. Luxembourg can serve as a good entry and exit point for Europe. Secondly, the infrastructure developed here in Luxembourg is of very high-quality with all the facilities in place to run a cargo business.” Hendrik Kühne, secretary general of the Luxembourg Pharmaceutical Association (APL), affirms the point, noting that “Some of our members have started to run significant logistics operations from Luxembourg, covering Europe, Africa, and even Asia from their local distribution center here.”

Luxembourg’s move to prioritize logistics has come about as a result of both private initiative and government policy. Minister of Economy Etienne Schneider initiated a common Good Distribution Practice (GDP) [a quality warrant system for the proper distribution of medical products] in January 2013, which, in the words of Luxair Cargo’s Jossart, “put Luxembourg on the air cargo pharmaceutical map … the initiative certified all the key players within the industry (airlines, freight forwarders, cargo handling and trucking companies). This is a unique selling point for Luxembourg.” As a specific example, Jossart highlights that at Findel airport “the distance between the truck’s docks (that delivers pharmaceutical goods) in the warehouse and the parking of the aircraft is only 108 meters. It is very easy with this short distance to guarantee the maintenance of temperature within a specific threshold.” Whereas there may be weak links in the cargo services chain in other countries, Luxembourg can boast an entirely regulated logistics system at every level from factory to patient.

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Quality is a vital component of Luxembourg’s logistics proposition. Jossart asserts that “In recent years, customers have started to demand a higher quality service. For instance, no-one within the industry thought about using thermal covers before customers began to demand them. Controlling temperature was something rare to encounter among a client’s expectations. However, far from being special requests, they are now common requirements within our cargo services.” Tony Wright, CEO of cold-chain management specialists Exelsius, has noted “a massive shift from traditional warehousing to specialized logistics centers as they add value to the chain.” The 3,000m2 Luxair Cargo Healthcare & Pharmaceuticals Center is unquestionably part of this trend; offering two distinct temperature zones (818m2 for 2°C to 8°C and 1,600m2 for 15°C to 25°C, as well as 70 temperature controlled ULD positions: 2°C to 25°C) with permanent temperature monitoring, fulfilling all requirements of the WHO, IATA and EU GDP guidelines.

One issue that could scare potential investors away from routing their logistics operations through Luxembourg is cost. Exelsius’s Wright does not see the cost of Luxembourgish logistics as prohibitive though, stating that “It is impossible to ensure the best practices if price is the only decision factor when companies choose logistics partners. Fast and cheap may not be effective, cheap and effective may not be fast, and fast and effective may not be cheap.” Due to the sensitive nature of pharmaceutical products, Luxembourg’s decision to base their value proposition on quality rather than inexpensiveness is a sound one. The country’s reputation is burgeoning, as the APL’s Kühne confirms, “Some high ranked senior logistics executives from pharma companies have commented that [the LuxairCargo Healthcare & Pharmaceuticals Center] is the best pharma logistics hub they have seen in Europe.” With this level of infrastructure and expertise already in place, it seems like the sky is the limit for healthcare logistics in Luxembourg.

Writer: Patrick Burton

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