FedEx to Airlift Emergency Formula Shipment to U.S.
The Department of Defense called on FedEx Express on Sunday to fly the second flight of Operation Fly Formula and deliver another slice of Nestlé baby formula from Ramstein Air Base in Germany to the United States as the Biden administration rushes to stem a shortfall nationwide.
FedEx (NYSE: FDX) will deliver the cargo to Washington Dulles International Airport. The FedEx trucking network will then deliver the urgent shipment to a Nestlé facility in Pennsylvania, says the White House.
The shipment of 114 pallets of Gerber Good Start Extensive HA will take place at the beginning of the week.
The White House also announced President Biden has permissionohized the first two orders of precedence under the Defense Production Actwhich he invoked last week to prioritize sourcing ingredients from formula makers.
FedEx is a long-time freight transportation provider to the Department of Defense, which contracted the integrated logistics provider with the assignment as part of an existing contract vehicle.
The first part of Nestlé’s initial formula order for 1.5 million 8-ounce bottles of infant formula arrived in Indianapolis on Sunday aboard a US Air Force C-17 freighter. The Department of Agriculture worked with Nestlé and the US Transportation Command to arrange transportation of Alfamino Infant, Alfamino Junior and Gerber Good Start products from Zurich. Hypoallergenic brands are designed for infants who cannot tolerate cow’s milk.
Federal officials said using a military cargo plane for the first flight was necessary because the shipment was medically urgent and a business partner could not be lined up quickly enough.
The Biden administration opted for a military airlift to expedite the delivery of certain types of formulas that are in critical shortage after Abbott Nutrition’s largest formula factory in Sturgis, Michigan, went offline in February in due to quality control failures that raised concerns about bacterial contamination. Four infants fell ill and two died in February, but no clear link was found between the formula they drank and the contamination discovered at the Sturgis facility.
Nestlé has used extra air freight to import extra infant formula since the shutdown, which has exacerbated shortages caused by months of supply chain disruptions.
According to industry estimates, the current average out-of-stock rate for infant formula is around 50%.
Defense Production Act
Abbott Laboratories has agreed with regulators to a conditional plan to reopen the plant soon, and the company said it could start operating within a month. Infant formula would take another six to eight weeks to reach store shelves.
Formula manufacturers Abbott Nutrition (NYSE: ABT) and Reckitt will now be able to add legally binding wording to their orders with suppliers that give them priority over other customers. Abbott can now receive priority orders for raw materials such as sugar and corn syrup for infant formula, the White House said. Global supply chain constraints meant that Abbott was only able to source around 75% of its normal allocation. By allowing Abbott to receive its full share of necessary raw materials, the company will be able to rapidly increase production by a third of what it is today at its other factories.
Reckitt, owner of Mead-Johnson, is also allowed for three months to get priority on certain purchase orders for single-use products such as filters used to produce infant formula. It will also allow Reckitt’s facilities to operate at maximum capacity. The clearance requires Reckitt to provide a hardware constraints update in approximately 60 days to reassess the need to continue using the clearance to assist in Abbott’s production.
“We are working around the clock to do what we can to rapidly increase the safe supply of infant formula – from coordinating inbound international flight logistics to strengthening the supply chain of essential ingredients and materials,” said Dawn O’Connell. , Assistant Secretary of Health and Human Services for Preparedness and Response. “We will continue to evaluate additional Defense Production Act opportunities as needed to help get formula to families more quickly and stabilize commercial supply chains.”
The Biden administration has taken a series of steps over the past week to bring more formula to market, including issuing guidelines to provide more flexibility in importing foreign-made formula.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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