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Modal shift in Flower Supply ChainThreat or lessons to be learned for air freight supply chain?

Cool Chain Association, Paris, Christo van der Meer MSc, May 2014

Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Key messages

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1. Modal shift of flowers from air to sea will increase.

2. Flower Supply Chain will always need air freight.

3. Air Freight Flower Supply Chain can learn from Sea Freight.

Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Introduction FloraHolland

• Flower Auction • GROWER owned Cooperative:

4,900 members (inter)nationally• Largest stocked flower

sales center (20,000 diff flowers)

• Distribution to 200,000+ points of sale in Europe

• WALL STREET for world wide flower prices

• Auction CLOCK and DIRECT sales

FloraHolland Facts & Figures

FLOWERS PER DAY

PLANTS PER DAY

TRANSACTIONS PER DAY CLOCK

SUPPLIERS

TRADERS

EMPLOYEES

CLOCKS

ANNUAL TURNOVER

IMPORT COUNTRIES

EXPORT COUNTRIES

Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Global Flower Trade

Consumption of cut flowers per capita (€/year)

50

64

49

44

42

42

40

40

35

33

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Source: PT Online

Seasonality in flowers sales week 1-26 (mio €)

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35.000.000

70.000.000

105.000.000

140.000.000

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2010 2011 2012

Valentine Mothersday-UK

Int. Womansday

Easter

Mothersday NL

Mothersday Fr

Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Sea Freight Supply Chain

HarvestGrading+1 day

ConsolidationTrucking to port +2 days

Antinarcotics/ICAContainer Load + 4 days

Sea freight +13 days

Local transport Delivery +1 day

Int. transport Europe+3 days

Shelf life+2 days

Vase Life+7 days

= 33 DAYS (AIR: 17 days)

WOW! Flowers by sea container???

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Key to success in sea transport of flowers lies in managing the supply chain from farm to shelf.

Basic Elements Flowers@Sea Services:

• Standard Operating Procedures for top 5 flowers

• Post Harvest Advice

• Consolidation

• Palletising, Pre Cooling and Transport

• Cool Chain Monitoring

• Arrival Check

• Vase life tests

Plan-do-check-act: manage the total Supply Chain

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Business Case

Parameters

Costs seafreight 40ft High Cube  Consolidation Nairobi $800

Transport and sea freight $8.950

Logistics NL, loggers, clearing, fee $2.000

Total $11.750

   Equivalent Costs airfreight low Equivalent Costs airfreight high

Price difference low season $5.270 30%Price difference high season $7.018 37%

Logistic costs of flowers out of Kenya are 50% of CIF/costprice.

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Official Carbon Footprint calculations air and sea

International Standard PAS2050:2011

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Transparant Cool Chain

SEA

AIR

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Transparent Cool Chain

• Temperature and duration are key for flower quality in transport.

• The factor of temperature x duration is called degreedays or in short dC (days Celsius).

• A rose can last about 250 dC.

• Consumer vase life take most of the 250 dC: 7 days x 20 degrees = 140 dC

• SEA freight in a container at setpoint 0,5 deg C x 25 days = 12,5 dC.

• AIR freight: 1 day x average 10 degrees is 10 dC.

• Just as important: stability in temperature

Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Current flow of containers (containers per year)

Col-UK: 700Col-Eur:100

Ecu-USA: 50

Ecu-Eur: 100

Ken-Eur:50

Vie-Jap: 400

SA-Eur: 75

Col-Chi: 25

NL-USA: 40

Isr-Eur: 300 Col-Jap

Col-Aus: 25

Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Developments in Kenya

• 120.000 tons all air freighted now

• 75% is roses• Roses are more sensitive

than Carns and Chrysanths• Lots of trial shipments at

the moment

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Agenda

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Introduction FloraHolland

Global Flower Trade

Sea Freight of flowers: wow, why and how

Worldwide Flower Container Flows

Zoom in: Modal Shift Colombia

Coming up: sea freight of roses from Kenya

Recommendations to air freight supply chain

Recommendations Airfreight Flower Supply Chain

• Air freight supply chain needs to improve its cool chain performance: be good and be transparant. Work more closely together. Make it less complex.

• Air freight needs to look at relative costs: 25% price difference is needed to switch.

• Lower middle class will buy flowers: offer routes and infrastructure to those developing cities and consumer concentrations.

Final remarks

We will always keep flying flowers because of seasonality and specific market demands.Q: what will balance be? Educated guess 70%-30%

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35.000.000

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2010 2011 2012

Questions?