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CLIENT MAGAZINE | 2023

PREPARING for the NEXT CHAPTER What’s affecting the 2023 supply chain, and how is Langham looking toward the future of cold chain logistics? 10

INTELLIGENCE WITH

FORCES IMPACTING THE

PHARMACEUTICAL SUPPLY

LEVERAGING BUSINESS LANGHAM EXPERT

COLD CHAIN LOGISTICS: MARKET

4 TRENDS AFFECTING THE CHAIN

CONTENTS

02 04 06 08 10

LANGHAM LOGISTICS OPENS THIRD LIFE SCIENCE WAREHOUSE IN WHITELAND, INDIANA

LANGHAM LOGISTICS RECEIVES BRONZE RATING FROM ECOVADIS FOR SUSTAINABILITY EFFORTS

WAREHOUSE AUTOMATION: LANGHAM INVESTS IN INNOVATION

NEW REFRIGERATED STRAIGHT TRUCKS ADDED TO EXPAND LANGHAM’S FLEET

LEVERAGING BUSINESS INTELLIGENCE

COLD CHAIN LOGISTICS: FORCES IMPACTING THE 2023 MARKET AND BEYOND

4 TRENDS IMPACTING THE PHARMACEUTICAL SUPPLY CHAIN IN 2023

WILL SUPPLY CHAIN STRUGGLES EASE IN 2023?

THE GREAT REBALANCING: REDESIGNING A NEW NORMAL FOR SUPPLY CHAINS

MADE IN AMERICA: RESHORING MANUFACTURING WITH THE HELP OF 3PLS

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20 23

Press Release

LANGHAM LOGISTICS OPENS THIRD LIFE SCIENCES WAREHOUSE Langham Logistics, a leading third-party logistics and freight management company, announced the opening of its third warehouse that will be focused on the life sciences services sector. Located in Whiteland, Indiana, it will serve as a distribution hub dedicated to one pharma client’s US operation. This latest warehouse boasts 500,000 square feet of dedicated space and has been designed to maintain storage environments by temperature zone: controlled room temperature (20-25 degrees Celsius), refrigerated (2-8 degrees Celsius), frozen (-20 degrees Celsius), and an ultra-low temperature freezer farm. The new facility will provide access to ocean, air, freight, truckload, expedited, less than truckload, intermodal and cGDP transport capabilities. And it features an environmentallyfriendly design including solar energy capture,

HVLS fans, LED lights with motion detection and battery-operated fork trucks. “This new venture exemplifies the capabilities of our team to provide great service to our life sciences customers,” said Langham Logistics CEO Cathy Langham. This warehouse is the latest effort in Langham’s growth plan for its life science services logistics operations. Other successes for this vertical include a licensure by the Indiana Board of Pharmacy, the addition of Cathy Langham as a board member for AZBio, as well as Bio Crossroads, a distribution center in Whitestown, Indiana that opened earlier this year in addition to the life sciences distribution center in Phoenix in 2021.

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THE LIFE SCIENCES COMMUNITY H A S B E E N A G R E AT P A R T N E R F O R LANGHAM LOGISTICS, AND WE’RE LOOKING FORWARD TO FINDING N E W S O L U T I O N S T H AT P R O V I D E I N N O V AT I V E A N D R E L I A B L E STORAGE AND DISTRIBUTION TA I L O R E D T O T H E I R U N I Q U E CHALLENGES. -Cathy Langham

Press Release

LANGHAM RECEIVES BRONZE SUSTAINABILITY RATING FROM ECOVADIS EcoVadis is a trusted, international provider of business sustainability ratings, intelligence and collaborative performance improvement tools for global supply chains. Their sustainability scorecards provide detailed insight into environmental, social and ethical risks across 200+ purchasing categories and 160+ countries. We are proud to announce that we have earned a bronze rating on our EcoVadis Sustainability Assessment! Overall, Langham Logistics scored better than the industry average in in environment, labor and human rights. There is a rising need for more sustainable procurement, as 80% of greenhouse gas emissions and 90% of the average consumer company’s impact on air, land, and water resources comes from its supply chain. Langham recognizes the number of opportunities for supply chain green initiatives, and actively works toward more earth-conscious choices in running our business on a daily basis. Delighting our customers begins with making earthconscious choices for running our business. The Langham Logistics family of solution providers is committed to ensuring our decisions today create the absolute best opportunities for all of us tomorrow. We think globally and act locally across our network of services to continually reduce our reliance on non-renewable energy and raw materials while seeking relationships with suppliers who emphasize a reduce/reuse/recycle mentality. We are committed to ensuring our decisions today create the absolute best opportunities for all of us tomorrow, and will continue to be involved with EcoVadis as we work to create a greener business.

Interview

CATHY LANGHAM TALKS INDIANA BUSINESS Cathy Langham joined The Indiana Economic Development Corporation in their video series, “Entrepreneurial All-Stars,” to discuss the success of Langham Logistics and the state’s impact. How has the state of Indiana supported you in your businesses and partnered with you as they have grown? Langham - The state is very interested in seeing companies grow. We’ve got our Fortune 500 companies, but the state is really focused on small businesses too. There are also great universities here that are feeding ground of potential employees. The whole environment—fiscally and professionally—is fantastic. We are a woman-owned business, and the state cares about that. Not just small businesses, but diverse companies too. Even the state’s passion around innovation and technology ensure that companies like mine are able to invest.

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I’M SO PROUD OF WHAT THIS STATE HAS DONE; IT’S BEEN SO ACCRETIVE FOR MY BUSINESSES.

What makes Indiana so special from a business perspective? Langham - Business associates and friends around the country are amazed at the connectivity and networking of people in the state of Indiana. Additionally, there’s an effort to really make a difference in the community and having those resources available. Has there been a noticeable ease doing business in Indiana? Langham - It is very obvious to me, and I have buildings across the country. Indiana wants you to get the business up and running. I’m excited about growing in Indiana; there are a lot of exciting things happening here. The state is ready, companies are ready, and we’re really going to have dramatic growth.

WAREHOUSE AUTOMATION: LANGHAM INVESTS IN INNOVATION Ever notice a major construction site pop up seemingly overnight and ask, “I wonder what that is going to be?” U.S. real estate data indicates the project is likely a warehouse. 2021 ended with 568.2 million square feet of industrial property under construction. Despite more than 270 million square feet of warehouse space added last year, vacancy rates reached an all-time low of 3.4%. Analysts predict more than $53 billion in warehouse construction spending in 2022—a 1400% increase over the last decade. The construction boom is a product of companies building closer to their customers and a need for more space. With demand significantly outweighing supply, rent and construction costs are posting double-digit increases. But warehouse expenses are not the only problem. A labor shortage of almost 500,000 open positions in warehousing and transportation now exists—a number many believe is understated. Not only is hiring new staff difficult, but training and retaining staff is even tougher.

everywhere. A keystone of our corporate philosophy is innovating through technology. We strive to offer the most efficient and effective solutions for the job. As new technologies become available, Langham Logistics investigates, pilots, and implements advancements that stand to benefit clients. Those currently in a pilot project or under evaluation include: •

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So, what is the solution to these warehousing woes? Successful operations must do more with less. The best way to accomplish this is through investments in automation.

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Warehouse Automation in Action

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People walking through Langham Logistics warehouses see the application of automation

Automated Guided Vehicles (AGVs) – a pilot of these automated robots is in development for our Phoenix facility. They transport goods along a pre-designed circuit to speed up the flow of heavy materials. Automated Pallet Shuttle (APS) – this highdensity compact storage system uses powered shuttles to automatically transport and place loads into the rack. Pick/Put-to-Light (PTL) – the paperless order-fulfillment technology uses lights and alphanumeric displays to guide employees on picking, putting, sorting, and assembling for improved productivity and less errors. Vision Picking – also know as pick-by-vision, staff receive guided visual cues projected on their Head-Mounted Displays (HMD) or smart glasses to locate SKUs more quickly for better order processing. Voice Picking – this paperless, hands-free system uses simple voice prompts that direct warehouse workers to picking locations and instructs them on which items to select.

Langham’s innovation investment process has produced significant upgrades to our nationwide operations. The following recent additions enable us to maximize the time and talents of our workforce, improve warehouse safety, and increase throughput for clients. •

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RFID Portals – radio frequency identification systems automate materials control by performing real-time inventory tracking as it moves in and out of the warehouse. Autonomous Mobile Robot (AMR) – operating alongside employees without impeding their work, the AMR continuously scrubs and disinfects floors while self-navigating around obstacles to allow us to reallocate labor toward revenue-generating activities. Co-Bots – short for collaborative robots, these machines interact and work alongside staff to free them from repetitive, complex, and hazardous tasks that cost time and risk safety. The co-bots leverage machine learning to eliminate long walks, reduce in-aisle walking, and accelerate tasks including put-away, picking, sorting, and replenishment.

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Drones – a fleet of drones run overnight conducting inventory counts for up to 1,000 locations per hour inside the warehouse with 99.7% accuracy. Robotic Arm – this robot uses a multijointed limb to maneuver products within the warehouse. The arm moves, turns, and lifts items for picking and packing, receiving and storage, as well as palletizing. The robotic arm works up to three times faster than humans with 99% accuracy.

Look to Langham for Innovation At Langham Logistics, testing and implementing cutting-edge automations is part of our operating culture. We embrace change that is good for our employees and customers. While other companies navigate a slow decision-making process and red tape, we move fast to embrace technologies that drive efficiency and effectiveness. Schedule a visit and experience how technology transforms how we serve customers.

Press Release

LANGHAM EXPANDS FLEET WITH REFRIGERATED STRAIGHT TRUCK SERVICE New therapies. Enhanced technologies. Expanded regulatory initiatives. The pharmaceutical and life science industries are constantly evolving. The changes have Langham Logistics advancing too. The company recently added 26-foot refrigerated straight trucks to its fleet. The service expansion is the latest move in Langham’s growth plan for its life science logistics operation. Refrigerated transportation and warehousing service is not new to Langham. The logistics leader runs a dedicated fleet of 53-foot trailers and strong partners with state-of-the-art equipment. The new straight trucks enhance a niche service previously performed through partners. By managing additional equipment in house, Langham can better help clients navigate the strict demands of life science transportation and warehousing compliance. Benefit #1: Total Control The new straight trucks allow Langham to manage moves directly from raw material manufacturers to final mile and any stop in between. The trucks currently offer tailored transport services for pharmaceutical and life science companies operating within 180 miles of Indianapolis. The strategic radius includes Langham’s four Indianabased warehouses for centralized storage and distribution—complemented by other warehouses in California and Arizona for national and international shipping.

The straight trucks’ smaller size offer price advantages and flexibility compared to larger trailers. Langham’s GMP trained drivers operate the trucks with operational staff monitoring continually. Life science companies get the benefit of Langham Logistics end-to-end management for these critical shipments.

Benefit #2: Constant Monitoring The IQVIA Institute research shows the pharmaceutical industry loses $35 billion annually due to temperature-related issues. Even one degree of fluctuation can destroy an entire load. Langham’s new straight trucks use certified equipment with ranges of 2-8 degrees Celsius and controlled room temperature (CRT) of 15-30 degrees Celsius. Drivers receive special training on maintaining proper temperatures for shipments—including during loading and unloading. Equipment sensors provide 24/7 real-time temperature and location updates. Alerts notify staff of temperature excursions and theft risks for immediate resolution. Langham stores all data for FDA and manufacturer reporting compliance. Benefit #3: Quality Equipment and Cargo Handling Langham’s new straight trucks meet strict pharmaceutical transport regulations: •

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Equipment is cleaned between shipments to prevent cross-contamination. Units do not haul perishables or HAZMAT materials that can leave odors or residue. Units undergo regular testing to ensure all temperature-controlled equipment functions properly. Individuals involved in the transport of pharmaceuticals receive proper training. All transportation movements and trainings are documented and saved.

The trucks hold up to 12 standard skids of cargo. The units come equipped with liftgates and pallet jacks. By offering driver-assist services, Langham promotes quality cargo handling and security. Expedited loading/unloading prevents temperature excursions—and the potentially devasting cold-chain break.

Interview

LEVERAGING BUSINESS INTELLIGENCE When discussing Langham Logistics differentiators, we talk about our nimble experienced team, on-time service, and warehousing capabilities around the country. But one extraordinary thing works behind the scenes helping us advance in these areas and others: the way we leverage our business intelligence (BI) technology. John Huybers, Director of Information Technology at Langham, guides our business intelligence investments. He takes ideas and transforms them into reports, dashboards, and actionable data that improve how we do business and serve customers. John, a master blackbelt, took time out to detail this journey and how the technology informs most of our work today. Why did Langham adopt business intelligence? Huybers: Langham sees technology as a differentiator in logistics. We’ve always heavily relied on data, but it took time to pull the information manually and massage it for the intended use. For example, we had someone dedicated to generating weekly warehouse capacity reports. The project took several hours per week and by the time the reports were ready, they’d already become outdated. We kept our eyes on business intelligence technology. As the price declined and the capabilities expanded significantly, the time was right for us to invest. We partnered with Flexware Innovation to unite our multiple systems within the BI software as a single source of truth for datadriven decision-making. We’ve been enhancing the system ever since. How did you get buy-in and promote adoption?

Huybers: The business wanted it. We lacked the capacity in house and moving forward with the status quo would slow our growth trajectory. Everyone from the CEO to frontline supervisors saw the value in having a business intelligence platform. We began our BI implementation with the finance team. They experienced the ease of use and access across platforms that we didn’t previously have. No more running accounting reports or waiting for data transfers. Our CFO became an advocate and started pushing development in other areas. What systems do you have feeding the BI platform? Huybers: As a global logistics provider with services ranging from transportation to warehousing, we use several systems in our dayto-day work. Our business intelligence architecture works as an enterprise data warehouse. Information comes from on-premise, cloud-based, and third-party systems including:

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Manhattan Associates WMS MercuryGate TMS Great Plains accounting software Pipedrive CRM SqBx package tracking ADP HR management QT9 quality management system Ring Central call center metrics

Using APIs, we bring in the disparate system data and then use the BI to slice and dice it. Rather than collecting data from various places and then manipulating it, the business has a single place to go for data. In one report or dashboard they can have all the information needed in near real time. How is Langham Logistics using business intelligence to improve performance? Huybers: At an enterprise level, we have the Langham daily dashboard which reports on the health of our organization including volumes, ontime service by mode, and operational performance. For example, when we say that our on-time performance exceeds 98%, it’s because the dashboard pulls the data to prove it. Anything lower and people start asking questions because they can see the information. We even have the system tracking quality non-conformances by department down to the category such as training, safety, or temperature fluctuations. The BI platform plays a significant role inside our warehouses. A dashboard shows occupied space down to a fraction of a percent for each location. We then layer in sales data from the CRM to show what’s in the pipeline. Should the projected volumes materialize, we know with near 100% accuracy how that will impact available space and which warehouses are optimal for inventory. When it comes to our long-term growth strategy, we use the data to inform when and where we should build facilities to accommodate new or expanding customers.

John Huybers leads Langham’s Information Technology team and sets the technology strategy of the organization. At Langham, John makes sure Langham provides its customers and employees with the most current technological capabilities to provide maximum visibility and efficiency.

Maybe most unique is how we share business intelligence with our customers. Langham Logistics conducts quarterly client business reviews. We use that time to discuss the customer’s supply chain using the BI. The platform arms the team with service opportunities, network improvements, and ways to help clients manage their budgets and supply chain strategies.

During his 15 years at Langham, John has led development and implementation of a warehouse management system (WMS) at our California Toyota location and webbased customer portal for 8000+ Toyota corporate & dealer users across the United States, Canada, & Mexico. He also led implementation of a new International transportation management system (TMS), the design and installation of a fully-redundant infrastructure for disaster recovery / business continuity purposes, the development of a business intelligence and reporting platform for our customers and employees, and many other initiatives focused on improving operational efficiency for all areas of Langham and better information for our customers. John has spent 2 years in a full-time Six Sigma role leading a team of Black Belts and is a certified Six Sigma Master Black Belt.

We see these quarterly reviews and the depth of information shared as a unique value proposition offered by Langham. Every KPI and data element is unique to the client. The BI helps us stay nimble and ahead of customer needs. Anyone interested in seeing how we use BI to help clients can schedule a demo with our sales team. What’s next for Langham’s use of business intelligence? Huybers: We’re constantly expanding the capabilities of our BI software. Currently we’re involving subject matter experts within the business to design new sections of BI. Next we’d like to bring in external data to measure ourselves against industry KPIs so we can maintain our status as a best-in-class logistics leader. I’d also like to develop a self-service option within our organization so anyone can create their own BI report or dashboard. We value the input of every associate and giving them access will help us capitalize on their firsthand knowledge and feedback. From there the possibilities are endless.

COLD CHAIN LOGISTICS: FORCES IMPACTING THE 2023 MARKET AND BEYOND The pandemic wreaked havoc on the supply chain. Everything became harder— from procuring raw materials to maintaining inventory levels and meeting delivery timelines. However, there were areas that benefitted; one being cold chain distribution and warehousing. Demand for cold chain logistics grew as the pandemic changed how we ate, where we traveled, and the pharmaceuticals we needed. While companies and governments work to get the supply chain “back to normal,” cold chain operations may never be the same.

This evolution and what it means for the future makes cold chain logistics a hot topic for supply chain professionals. How Is the Cold Chain Market Changing? Industry analysts anticipate the North American cold chain market to grow by 61% from 2021 to 2027. The increase creates a market valuation of $99.7 billion.

Cold storage warehouse vacancies consistently hover around 1%. Low-average inventory during the pandemic alleviated some space concerns. However, with shippers ramping up inventory levels, space is tight once again. The strong demand is attracting investor attention with more than 40% surveyed pursuing cold storage assets, up from 7% before the pandemic began. More than 3.3 million square feet of speculative cold storage development is currently under development in the U.S.—a 1,000% increase from 2019. However, that number does little to solve the looming space shortage. Shippers and investors looking to build space face serious headwinds with record-high inflation and rising interest rates. Constructing cold storage facilities generally costs twice that of regular warehouses and takes at least six months longer. With 78% of existing cold storage facilities built before 2000, many lack the qualities of modern cold operations. In fact, the average age of a U.S. cold storage warehouse is 42 years. Retrofitting dry warehouses offers limited cost savings and even those facilities are in short supply. What’s Driving the Demand? Limited cold storage space has done little to curb surging consumer demands. The U.S. now represents the world’s largest market for temperature-sensitive healthcare products like biopharmaceuticals, vaccines, and clinical trial materials. But a booming drug sector represents just a fraction of current cold storage needs. The pandemic accelerated consumer spending in the frozen food sector by $595 per person, while refrigerated food spending also saw increases year over year. The e-commerce trend now represents a serious factor in refrigerated and frozen food storage. Online purchases of edible perishables increased by 58% year over year. These trends have food producers, manufacturers, and grocers pursuing centralized and micro-fulfillment centers to keep products as close to consumers as possible.

A future driver of demand on cold storage capacity is the CHIPS Act, which helps domestic firms develop semiconductor manufacturing capabilities. Many of the raw materials needed for chip production require refrigerated transport and storage compounding an already growing problem. Other government regulations including the FDA rule on Requirements for Additional Traceability Records for Certain Foods and the Drug Supply Chain Security Act are increasing requirements for companies manufacturing, transporting, and storing specific temperature-sensitive materials starting next year. Handling these products now requires additional work, tracking, and documentation. What Will Influence Cold Chain Capacity in 2023? Space constraints aside, expect three major developments to impact cold chain distribution and warehousing in the coming months. Think of them as the “three T’s”: Talent - The current talent shortage will continue plaguing cold chain operations. A record-setting 248,000 U.S. warehouse workers quit their jobs in July 2022. August posted 505,000 job openings in transportation and warehousing. Cold chain positions typically are harder to fill and experience higher turnover due to extreme temperatures and more difficult working conditions. Technology - Labor shortages and facility output demands have cold chain operators investing more in automation technology from RFID to robotics. Currently only 10% of warehouses utilize some form of automation. That is changing with 83% of 3PLs and 70% of shippers indicating they are interested in augmenting their supply chain operations with new technology. As a result, analysts predict the warehouse automation market to grow to $78.82 billion in annual sales by 2026—an 87% increase from today.

Temperatures - Many cold chain warehouses specialize in one type of product or one temperature zone. Freezer storage ranges from -4°F to 14°F. Cold storage requires 30°F to 39°F. Cool conditions mandate 46°F to 59°F. Finding facilities that offer all three zones is rare because they require special construction and equipment. However, with demand far outpacing capacity, warehouses will invest in expending their temperature-controlled capabilities to maximize storage and services. Learn More from Langham Langham Logistics specializes in cold chain distribution and warehousing. We operate three state-ofthe-art temperature-controlled warehouse facilities assessed as top 3% for the country. With 1,300,000 square feet of storage in facilities all less than 3 years old, Langham Logistics is the definition of “modern cold chain.” Walk through our doors to find sophisticated refrigerated and freezer equipment (including ultra-low temperature), highly skilled team members, and automated technology support. Langham Logistics is certified in Good Manufacturing Practices (GMP) for Warehousing, Transportation, and Distribution making us one of the most skilled operators in the country. Learn more about how we stay “cool” under market pressures to deliver for our clients.

4 TRENDS IMPACTING THE PHARMACEUTICAL SUPPLY CHAIN IN 2023 Although there are still too few women-owned supply chain and logistics companies, more women are leading their logistics companies to new heights and improving their communities. DSC Logistics, Kenco, Langham Logistics, and Rush Trucking are part of this new breed. They are all businesses run by women that were established over 25 years ago when women working in supply chain businesses was a true anomaly. Trend #1: Precision medicine’s impact on the distribution model Precision medicine represents one of the most fascinating innovations occurring in healthcare today. By analyzing the genes and proteins present in a patient, doctors can design a personalized drug treatment to cure a particular disease. Analysts project the precision medicine market will reach $175.64 billion by 2030, up from $66.1 billion today. Personalized medicine holds the potential to transform disease treatment, especially for cancer. However, these cell and gene therapies will present major challenges to manufacturers and logistics providers. They are more sensitive to temperature and have greater time constraints than standard pharmaceuticals. Chain of custody controls and long-term storage for individual patients is critical.

Biopharma companies working in this space want logistics companies with needle-to-needle supply chain expertise, sophisticated technology to meet strict storage requirements, and point-to-point tracking systems that monitor each individual drug from production to patient. Precision medicine will force even the most sophisticated pharmaceutical logistics specialists to up their capabilities. Trend #2: Retailers as drug delivery disrupters Local pharmacies and big-box retailers have been expanding into healthcare for years. Now more than 2,000 locations nationwide offer healthcare delivery services from flu vaccines to primary checkups. This trend will continue to grow as consumers increasingly demand care at more convenient, less expensive locations. For pharmaceutical logistics providers, this presents a more decentralized distribution model requiring sophisticated agility to respond appropriately to

local demands nationwide. CVS alone manages 2.5 billion prescriptions.

Trend #4: Cybersecurity across the supply chain

While turning retail locations into healthcare facilities presents unique challenges, opportunities exist as well when it comes to drug development. Decentralized trials using local retail facilities gives biopharma companies access to more diverse patient populations and helps bolster enrollment. This model reduces operational complexities, cycle times, costs, and burdens on the patient. Ultimately, retailers may be the key to helping pharmaceutical developers get drugs tested and to market much faster. A survey by the Washington State Office of Financial Management found that 80% of patients say they would join clinical trials if the site was 30 minutes or less from home. Walmart is doing its part with plans to open 4,000 clinics by 2029.

Supply chain cyber-attacks represent a growing threat against pharmaceutical companies. The issue made headlines worldwide during the race to create COVID-19 vaccines in 2020. Foreign hackers targeted AstraZeneca, Johnson & Johnson, Novavax, Celltrion, and Genexine. The scheme started with typical phishing emails directed toward company employees. The hackers then expanded their efforts to gain access to pharmaceutical providers by targeting their partners throughout the supply chain. Fake emails from the company’s CEOs and even from the World Health Organization tried to mislead suppliers into sharing credentials or altering specifications for the vaccines.

Trend #3: Global animal health demand The global animal health market is expected to nearly double between 2020 and 2026 at an estimated value of $87.07 billion. Several factors influence this rapid growth. First, 70% of U.S. households now own a pet. The American Pet Products Association shows spending on companion animals will increase by 94% over the next eight years. Since 2020, the number of dog owners offering vitamins and supplements increased by 10%. Medication use is up by 7% as well. Also driving growth is government healthcare organizations focused on improving farming techniques and animal health to combat foodborne diseases. While the veterinary pharmaceutical market represents only about 2.5% of that for human pharmaceuticals, it offers the largest and fastest growth opportunity. Expect massive R&D investments in animal drugs and existing human pharmaceutical companies to allocate more spend toward animal health. Distribution and cold chain warehousing providers should be ready for rapid expansion in this market.

While the attempts failed, they showed the vulnerability of pharmaceutical supply chains. A survey conducted by cybersecurity provider CrowdStrike found that 84% of all companies worldwide believe software supply chain attacks represent the biggest cyber threat within the next 24 months. Nearly half of organizations have experienced a supply chain attack in the last 12 months. But despite these numbers, only 36% have vetted new and existing suppliers for security purposes in the last year. Learn More About Langham Logistics Many of these trends already represent business as usual for Langham. We specialize in pharmaceutical and life science logistics. From meeting the strictest governmental regulations to transporting and storing life-saving drugs, Langham knows the nuances and needs of the largest pharmaceutical companies around the world. Leading-edge technology paired with years of industry expertise make us a logistics partner of choice. Discover the Langham Logistics difference for supporting and protecting even the most complex temperature-controlled pharmaceutical supply chain networks.

WILL SUPPLY CHAIN STRUGGLES EASE IN 2023? Managing the supply chain the last two years has been no easy feat. Shortages, delays, and price hikes had even the most seasoned supply chain leaders playing whack-a-mole with evolving challenges. Now with a slowing economy and the pandemic shifting to endemic status, people want an important question answered. “Will the supply chain get better in 2023?” Yes and no. The good news is that several of the problems plaguing the supply chain will improve in the coming year. However, some challenges will stick around. Following are some highlights and lowlights for what 2023 has in store. The Improvements Speed - The pandemic prompted many companies to reshore or nearshore their manufacturing. Many of the early adopters of this tactic will have new facilities coming online in 2023. These efforts will continue to be a big area of investment for manufacturers in the coming year as well. A shortened supply chain will improve transit times. The move also will help companies bypass many of the shortages and backlogs from the past 24 months coming out of Asia. Prices and Capacity - Shippers can expect capacity improvements in 2023—especially among cargo ships. A container shortage at the height of the pandemic now has created the opposite problem. Spot rates are down about 60% in Q4. The order-book-to-fleet

ratio currently sits at 28%, its highest point since 2010. The data strongly indicates container ship capacity will outpace global demand in 2023. The number of passenger flights is also increasing with belly capacity for cargo up 23% since last year. Trucking spot rates currently sit at their lowest point since early 2021. Contract rates are averaging 2-7% less heading into 2023, reflecting an increase in over-the-road capacity. Shippers will have a stronger position when it comes to rate negotiations for cargo movements. Inventory - The pandemic’s impact on demand left some shippers with total inventory stockouts. This prompted companies to saturate their inventory stores, especially over the summer to prepare for Q4. While decreasing consumer demand is never a good thing, the current slowdown will give companies an opportunity to return to normal inventory management practices and the cost benefits that come with lean inventories. Reaction Times - The past 24 months had many shippers scrambling to manage the daily onslaught of supply chain issues. Surviving meant doing whatever it took— and paying whatever was needed—to keep materials and products moving. The new year offers the chance for a reset. Rather than operating reactively, shippers will have the chance to evaluate their supply chain strategies and correct many of the weaknesses. 2023 will be a good time to test new strategies as well.

The Persisting Problems Global Labor - Despite threats of a recession, global labor shortages will remain a major headline in 2023. Expect labor actions, including strikes, in countries across the world as people pressure companies to raise wages and improve working conditions. The Russia-Ukraine war and China’s zeroCOVID policy will further cause labor shortages impacting the international supply chain. More than 500,000 open positions currently exist in transportation and logistics in the United States, a problem that will continue into next year. Diesel Prices - Fuel prices are crushing carriers and 2023 will offer little help. The Department of Energy’s Energy Information Administration projects diesel to average $5.12 per gallon for Q1 of 2023. While prices are anticipated to decrease 13% by Q4, the $4.45 per gallon is still 50% higher than 2020 prices. Expect this to factor into rate negotiations with carriers. Climate Change - The impact of climate change often is undervalued in supply chain discussions. However, this is a growing cause of disruption. Low water levels in Germany are impacting economic activity. The same is true for the Mississippi River which has resulted in a logjam of more than 100 vessels. The number of annual hurricanes is increasing as are draughts, fires, and heatwaves. Expect the volume and intensity of weather events to impact the supply chain in 2023 and beyond. E-commerce Cost Pressures - E-commerce’s growth trajectory will continue with more than $6 trillion in global sales next year. Unfortunately, many of the cost pressures plaguing e-commerce will grow as well. UPS and FedEx both raised rates multiple times in 2022 to account for increased demand. The 2023 General Rate Increase for the carriers sets an all-time high of 6.9%. Shippers will need to experiment with new strategies in 2023 or continue absorbing rate hikes from parcel carriers. One promising and underutilized strategy is zone skipping. The practice bundles small parcel shipments for the longest leg of transit before separating them for the final mile. Langham Logistics transports goods worldwide using a skilled team of experts and business intelligence software that lets us see what others overlook. We know the landscape and how to manage it. Langham Logistics solves even the most complex supply chain challenges making us ready for all that 2023 has planned.

THE GREAT REBALANCING: REDESIGNING A NEW NORMAL FOR SUPPLY CHAINS The last two years of operating in a pandemic offered many lessons. One of the most important was recognizing the vulnerabilities of the global supply chain. A model designed to minimize costs by maximizing efficiencies around lean inventories and international labor gave way to materials delays, total stockouts, and uncontrollable threats.

Life moving past the pandemic has many in the supply chain breathing a sigh of relief as things get “back to normal.” But recent events show us “normal” might not have been working all that well. Plus, the next big challenge is likely right around the corner. McKinsey research indicates companies can expect supply chain disruptions lasting more than a month every 3.7 years. Managing today’s supply chain is a balancing act— or rather a rebalancing act—as companies rethink strategies for mitigating risk as part of a “new normal.” Rebalancing Production A single-source supply approach streamlined materials management, aided price negotiations, and improved quality historically. Now relying on a single source for critical components or raw materials represents one of the biggest supply chain threats. Even companies using multiple suppliers often fall victim to concentrating them within a country. This opens the door to major disruptions like financial crises, geopolitics, natural disasters, and health emergencies. In response, roughly 80% of surveyed shippers report they are rebalancing production locations. For many companies, this includes reshoring to the United States [link to reshoring blog article] with regional and domestic manufacturing networks. Others are better pairing local and global sourcing to gain the advantages of international pricing while improving closeness to the customer. Nearshoring also is becoming increasingly popular as companies maintain a global footprint but bring their supply chain closer to home. Reducing supply chain vulnerabilities also requires increasing redundancies. Having back-up suppliers in diverse locations pre-vetted for production and distribution is critical. Some companies are even working with their suppliers to find them alternative sources of materials. Creating redundancies

throughout the supply chain used to be perceived as “too expensive.” Now the strategy is too costly to operate without. Rebalancing Inventory In Penske’s 2021 25th Annual Third-Party Logistics Study, 42% of shippers agreed that supply chains had become too lean. One year later, the number jumped to 62%. The evidence supports the findings from electronics factory shutdowns, automotive assembly line parts delays, and empty store shelves. The instinctual reaction for solving the problem is increasing inventories, which have been operating at record lows. Restoring stocks to pre-pandemic levels will help. But overcorrecting is a capitalintensive strategy. The move often fails anyway because consumer preferences are changing faster than ever. The key is maintaining leanness without compromising resilience. Companies can rebalance their approach to inventory by better leveraging transportation options—from using alternative ports, to improving pallet and container density, and strategically varying modes based on time-sensitivity. That inventory speed comes in many forms. As with production, companies are rebalancing inventory locations toward a more regional and domestic footprint within the global supply chain. Another approach is focusing on hyper-localization using micro-fulfillment centers to keep stock as close to the customer as possible. Analyzing SKUs to find what is in demand and when also allows companies to proactively position inventory into the right markets at the right time using flexible warehouse capacity. Rebalancing inventory does not necessarily mean more units on hand. The strategy requires using a

multi-faceted approach not judged primarily on how lean it is, but by how effectively it operates given everevolving challenges. Rebalancing Priorities Rebalancing the supply chain also requires reassessing priorities. Solely designing around low cost now comes with higher risk. Yet there are still ways to maximize efficiencies and effectiveness on a budget. Investing in technology enhances visibility into the supply chain. Companies cannot manage what they cannot see. Introducing automation into production and distribution facilities improves productivity and creates better responsiveness when problems occur. The capital investment often reduces costs over time. Allocating time to run scenarios in advance also allows companies to develop alternative plans. Remember, the data shows major disruptions are no longer an if, but rather a when. But companies often find the best investment for managing the rebalancing act is partnering with a 3PL like Langham Logistics. Langham conducts 360-degree assessments of client supply chains looking for risk reductions, cost improvements, and service enhancements. Our proprietary business intelligence technology and transportation management system improves supply chain visibility allowing companies to spot opportunities and make better decisions. Langham’s strategically located warehouses integrate seamlessly with global and domestic distribution networks needing to reoptimize. The last two years have left many companies feeling unsteady. Langham Logistics brings strategy, strength, and stability to even the most complex supply chains. Contact us to experience our work in action.

MADE IN AMERICA: RESHORING MANUFACTURING WITH THE HELP OF 3PLS They say absence makes the heart grow fonder. For U.S. manufacturing that seems to be the case. The industry that once propped up the U.S. economy has fallen by 25% in its number of manufacturing firms and plants since 1997. The production capacity and jobs did not disappear completely. Most relocated overseas as companies jumped on the benefits of inexpensive labor and fewer international regulations. Now fast forward 25 years and the benefits of manufacturing abroad aren’t what they once were. As a result, today’s data paints a much different picture—one that shows a renaissance in American manufacturing thanks to reshoring. Many upsides exist for bringing production back to U.S. soil, but the move is not without challenges. For the more than 75% of companies looking to accelerate their reshoring efforts, they likely cannot go it alone. Third-party logistics providers may be the linchpin for American reshoring success. What Is Reshoring? Reshoring, also known as onshoring, is the process of bringing goods production and manufacturing back to a company’s original country. Reshoring’s economic benefits include helping balance trade and budget deficits, as well as reducing unemployment.

Manufacturing companies win by decreasing costs, improving balance sheets, and accelerating product innovations.

Act now offer major financial incentives to bring production back to the U.S., as well as Mexico and Canada.

Deloitte reports that 62% of surveyed manufacturers have started reshoring or nearshoring production capacities. That includes about 350,000 jobs in 2022, up 25% from 2021. The firm anticipates a 20% reduction in Asiaoriginating shipments to the U.S. by 2025. The number is projected to jump to 40% by 2030.

Proximity to the Customer - Relocating operations closer to home reduces transportation costs, which have been rising over the last decade. Improved proximity also creates shorter lead times and better service delivery. Reshoring paired with localization strategies allow manufacturers to better tailor products to regional preferences. Plus, 65% of customers like to buy within the borders of their own country. The “Made In” label matters.

Colliers International reports that six companies— Walmart, Intel, General Motors, Boeing, MP Material, and Siemens—are responsible for investments of nearly $400 billion in American manufacturing reshoring. They are far from the only ones. What Are the Advantages of Reshoring? The reasons many manufacturers left are now the same reasons they are coming back. Labor - When the offshoring trend took hold, most companies turned to China for its significantly lower labor costs. However, wages paid to China’s laborers have nearly doubled in the last few years making it no longer the “low-cost” country. Balancing decreasing labor savings with increasing supply chain risks makes American labor a more competitive option again. Supply Chain Disruptions - Nothing exposed the challenges of operating a global supply chain like the pandemic. A survey of global analysts found that more than 80% of industries experienced supply chain disruptions in August 2020. Some have not yet fully recovered more than two years later. The crisis highlighted the many weaknesses of an offshored supply chain model favoring lean inventories, low costs, and forecasting that are no match for natural disasters, geopolitical issues, and pandemics. While the United States is not immune to these issues, domestic facilities certainly have better control in managing them. Plus, subsidies from the Inflation Reduction Act and CHIPS

What Are the Challenges of Reshoring? The biggest challenges U.S. firms face with reshoring are time and money. Standing up a new facility can take years. Slowing down the process is a lack of shovel-ready land. Large, contiguous plots with water, gas, and sewers already in place are in high demand and low supply. Plus, five rate hikes in 2022, with more expected in 2023, have interest rates at their highest in years. Construction materials costs were up 12% in 2022 and expected to rise another 7% in 2023. Longer lead times to procure materials also are delaying construction projects. Retrofitting existing buildings does not offer a quick fix because of the time and investment needed to modernize facilities to meet today’s technology and sustainability demands. And while the price of American labor now is more competitive, the quantity remains a challenge. The nation’s unemployment rate sits below 4%, making it a 50-year low. Indeed currently has more than 250,000 manufacturing job openings posted across the country. Despite the challenges, companies are not stuck overseas. Third-party logistics providers with existing warehouses and distribution networks can help expedite manufacturers’ reshoring efforts.

How 3PLs Like Langham Can Help Companies that moved most of their manufacturing overseas cannot reconstruct production, warehouse, and distribution networks inside the U.S. overnight. When it comes to investing capital, these companies must focus on their core business strength: manufacturing. Warehousing and distribution solutions can come through partnerships with a third-party logistics provider like Langham. Langham Logistics offers state-of-the-art warehouses strategically located across the United States. The facilities are within a day’s drive of more than 90% of the U.S. population and within minutes of international airports. Each facility manages a distribution network pairing partner carriers with Langham’s dedicated fleets. Langham’s services include assembly, kitting, quality inspections, and order processing—and the highly skilled labor force already exists. Between location, services, and the distribution network, Langham makes the ideal partner for reshored operations. Companies can produce materials and ship them to Langham for storage with full visibility. Langham then processes orders directly and handles distribution domestically and internationally. The partnership allows manufacturers to expedite and expand their reshoring efforts without incurring unnecessary costs. Companies focus on manufacturing. Langham Logistics manages the rest. The setup makes saying “Welcome Home” that much easier.

Langham getting ready! Langham Logistics has temperature and humiditycontrolled facilities with quarantine cages and a validated warehouse management system. We have ULT freezers, 2-8C, 15-25C, and -20C storage temperatures and tracking capabilities. Please visit us to see our warehouse drones performing cycle counts, our labor-management system (LMS) and bots, and our RFID procurement area.”