Heightened cold storage demand drives DHL's $400M expansion

Dive Brief:

DHL is investing $400M to expand its pharmaceutical and medical device distribution network footprint by 27% – about 3 million additional square feet – this year, according to a press release. A spokesperson said the move is in response to elevated demand for FDA-regulated and temperature-controlled storage.
The expansion includes six new facilities, which will be fully-licensed and temperature-controlled space that supports pharmaceutical storage requirements, according to the press release.
The investment will expand DHL Supply Chain Life Sciences & Healthcare sites to 34 by the end of 2022. Two of the six new sites will be located in the Atlanta area, with the others in Cincinnati; Memphis, Tenn.; Reno, Nev.; and Lebanon, Penn.

Dive Insight:

Interest in cold storage for pharmaceuticals and medical devices is on the rise and logistics service providers are paying close attention. Global cold chain spending is expected to grow nearly 24% between 2020 and 2024 to reach $21.3 billion, according to Biopharma Cold Chain Sourcebook.

"We recognize that demand will only intensify in the future as the market develops its response to the COVID-19 pandemic and adjusts to new ways of addressing patients' everyday healthcare needs," Jim Saponaro, president of life sciences and healthcare at DHL Supply Chain North America, said in an email to Supply Chain Dive.

DHL Supply Chain's Life Science and Health Care sector has over 150 facilities in over 40 countries and serves 250 life sciences and healthcare customers worldwide. The 3PL did not disclose which companies it's working with but Saponaro said, "our partnerships exist with some of the world's largest pharma/medical device companies."

The $400 million investment focuses on "greater level of near-shoring – through organic manufacturing and CMOs. As opposed to 'Just In Time,' pharmaceutical is building out for 'Just In Case,' due to the nature of lessons learned in the pandemic," said Saponaro.

This isn't the first time DHL has responded to market trends. In response to an increase in B2C demand, its eCommerce Solutions division announced last year an investment of $300 million to expand its U.S. distribution network, adding more automation to its facilities. And in 2019, the company upgraded its 434,000-square-foot cold storage facility at Chicago O'Hare International Airport to deploy new technology to maintain cold temperatures inside the facility.