Slide 1: The Colombian flower industry and supply-chain practices IX AIR CARGO AMERICAS
November 7-9, 2007
Content : Flower industry
Supply-chain practices: farm to customers
Asocolflores and logistics
Next steps Content
Content : Flower industry
Supply-chain practices: farm to customers
Asocolflores and logistics
Next steps Content
World flower exports 2006 : World flower exports 2006 Ecuador
6%
Per capita consumption : Per capita consumption AIPH, 2007 (Euros)
Country Per cap. Country Per cap.
Switzerland 80 Slovenia 3
Norway 59 Italy 23
Holland 55 Spain 22
Japan 54 USA 21
Austria 45 Portugal 16
Denmark 44 Greece 16
UK 44 Hungary 15
Sweden 38 Chec Republic 10
Germany 36 Poland 8
Ireland 35 Slovaquia 7
Finland 34 Croacia 7
France 31 Russia 3
Belgium 30 China 1
Flower market trends in U.S.A : Flower market trends in U.S.A Size of the floriculture industry: US$19.4 billion (US Department of Commerce U.S.A)
Over the last ten years, the supermarket share has grown from 41% to 52%, while the florist shops have lost market share falling to 32% to 20%.
Specialty-cut flowers increased their share in sales to US homes.
Ten years ago, half the sales of ornamental products in supermarkets were flowers, today they represent two thirds.
Fresh-cut flowers make up 75% of the transactions in florist shops.
Internet sales of flowers held its participation at between 5% and 6% of the number of transactions.
Ipsos/AFE Consumer Tracking Study, 2005
The Colombian flower industry : The Colombian flower industry 182,184 jobs (98,641 direct / 83,533 indirect)
1,000,000 Colombians depend on floriculture
Exports 2007: US$967 million
7,266 hectares
60% of the workforce are women
95% of total production is exported
Colombia is:
the first supplier of flowers to the United States
the first supplier of carnations worldwide
the second largest flower exporter in the world.
Largest non-traditional agricultural export (10%)
75% of air cargo exported from Colombia in the last 10 year were flowers
Colombian flower exports : Colombian flower exports - 50 100 150 200 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Thousand tons - 100 200 300 400 500 600 700 800 900 1.000 Millions dollars Thousand tons Million dollars
Exports by market : Exports by market
Exports by product : Exports by product
Area : Area
Regions : Regions
Share of the U.S. import market : Share of the U.S. import market 77% of flowers imported by the USA are Colombian
98% of Alstroemerias
97% of Carnations
82% of Chrysanthemums and Pompoms
67% of Roses
35% of other types of flowers
Source: USDA, 2006
Bouquet exports to U.S.A. : Bouquet exports to U.S.A. 76.8% comes from Colombia
Comparative advantages : Comparative advantages Supply of labour
Soil quality
Abundance of water
Luminosity
Proximity to main markets
Cluster conditions
Importers of plant material and agro-chemical products located in Bogotá
Closeness to Eldorado and Rionegro airports
Main research centers located near Bogotá
Contents : Flower industry
Supply-chain practices: farm to customers
Asocolflores and logistics
Next steps Contents
Supply-chain Practices : Supply-chain Practices This is not a new issue, but a common factor for anyone in the market
This is used to respond effectively to world competition
Competition is stiffer because of technology, globalization, market saturation, lower productions costs, etc.
The objective is that customers receive the product with the required quality and on time, always adding value
Logistics and competitiveness : Logistics and competitiveness The Netherlands is the European perishables hub and the first flower exporter worldwide; Kenya has been doing sea shipments to The Netherlands, and is their first supplier; Ecuador is reevaluating the process of cargo consolidation; the Mexican flower industry has been stimulated with subsidies and has the opportunity of sending flowers overland by truck
World maritime shipments, including Colombia, have grown significantly in the last years
Supermarkets require more efficiency in shipping and traceability
We still have reports of problems with the cold chain, as it is currently managed in the US
Air tariffs are still 30% of the cost of flowers CIF
Flower Exporting by air : Flower Exporting by air Airport El Dorado: most important airport in Latin America because flowers exports
Flowers: 223,000 tons per year
Bogotá 79% cultivated area
Rionegro 17% cultivated area
Daily: 709 tons on average. During Saint Valentine’s there were close to 1,500,000 boxes, or 111,000 boxes daily, and 816 pallets
El Dorado and Rionegro facilities : El Dorado and Rionegro facilities 30.600 m2 + 11.000 m2 in the international cargo areas
In Bogotá:
37% for flowers flowers
50% are cold rooms
212,000 per year only in 5,660 m2
37 ton/m2 per year
2035 boxes m2/year
2 kgs m2/day
Four years ago, delays were up to 13 hours, today with logistic coordination they have been reduced to 2.5 hours
Slide 21: The industry handles around 60,000 boxes/day, one by one …there is room for improvements
The flower export process : The flower export process The product In the cold room Cargo identification Preparation of the load
Analyses truck-airline Coordination with brokers, airlines, merchandising areas.
Define type of truck
Planning the cargo according to destination
End of the load
Flights
Real Weight / volume Temperature verification Verification of: temperature,
Security
Schedule of load To the
airport Yes No If the truck is going to another farm, procedures for loading the truck must be followed Transport
to other
farms A Posthaverst Planning Planning a load Load a truck Move into the cold room
The flower export process : The flower export process Cargo to the consolidators agencies or airlines Cargo consolidation
Pallets configuration Storage
to weigh pallets Airplane
loading
plan Time and temperature verification Verification of temperatures in cold room. Limits to have this cargo in storage Weight-Balance Verification of the temperature in load conditions Verification of time The product
The flower export process : The flower export process With the cargo agency Inform the farm # of the AWB assigned Farm prepares the
boxes Verification of arriving farm trucks Final AWB. AWB with
# of pieces and weights Gives the AWB and cargo requirements to the airline Pre-alerts destination
and Track & Trace
The flower export process : The flower export process Cargo agency and airline Security warnings Projections for
next week Program itineraries
vs capacity Confirmation
of projections Confirmation of
quota Allocation of flight
and arrival slot
The flower export process : The flower export process At destination Pre-alert Flight Unload AMS documents and
customs manifest CBP
(antiterrorism and
plant health inspections)
(separate sample, prepare
listing, call inspector) Pick up order
The costumers : The costumers They are increasingly more powerful. They reject based on quality and tardiness and demand social and environmental standards. Customers’ requirements:
Colour
Size
Freshness
Sturdiness
Shape
Free of residues
Free of agrochemicals
Free of pests Price
Brand
Destination And they want to be sure of
Sustainability
Environmental standards
Social standards
Slide 28: Quality is a pillar for creating value and customer satisfaction
The exporter or importer usually end up paying for the inefficiency of the chain
Logistic practices : Logistic practices To get quality requires Effective coordination of the chain
Coordinated cargo and document flow
We can improve if: : We can improve if: The chain can respond effectively to
cold chain management...
many box sizes…
coming from many farms...
going to many clients...
asking for special packing, standards and varieties
In a sample of over 200 firms, the critical logistic delays occur mostly during loading and unloading
Contents : Flower industry
Supply-chain practices: farm to customers
Asocolflores and logistics
Next steps Contents
Asocolflores in Logistics : Asocolflores in Logistics The Asocolflores Logistic Committee has worked towards better document and physical cargo procedures in Colombia and foreign markets.
We are part of the WF&FSA´s Logistics Coalition (cold chain, packing, GTIN project)
52 farms have been trained in Logistics Management
Asocolflores actively participated in establishing the procedures for the bids for the airports of Eldorado (Bogotá) and Jose María Cordova (Rionegro)
We provide simulation models to optimize procedures in transportation and management of cargo at the airport
We offer timely information about new legislation, procedures and its implementation to our affiliated companies
Logistics : Logistics During high seasons, we coordinate with cargo agencies, airlines, governments and concessionaries so as to ensure better attention to the supply of flowers
Logistics : Logistics Postharvest Best
Practices Manual
(includes logistics topics
such as traceability)
Asocolflores : Asocolflores Non-intrusive inspections (DIAN)
Protocol for narcotic inspections
BASC - CTPAT
Aeronautic issues (open skies, IATA – CASS)
Colombian custom and exports procedures: MUISCA, Plan Vallejo, VUCE, certificates of origin
International customs and requirements
Contents : Flower industry
Supply-chain practices: farm to customers
Asocolflores and logistics
Next steps: chain Contents
1. Operational improvements : 1. Operational improvements Efficiency between LTO and ATO contact
Consolidation area
Unified security process
2. Protocol for Cold Chain : 2. Protocol for Cold Chain With the national and international LTO and ATO
Verification of temperature at critical points of the chain
Data-bases and feedback Management throughout the chain
3. Packing : 3. Packing On the farm, LTO, ATO
Protocol of consolidation, palletization and deconsolidation processes
Indicators
4. Increase efficiency : 4. Increase efficiency ConsoIidation
Non intrusive inspections
Cargo through-put In recepction of palleted boxes
5. Register indicators : 5. Register indicators Ex. Delays, load time, consolidation time Management and processes
6. Enforce security standards : 6. Enforce security standards Certification of members of the floriculture chain (farm, LTO, ATO, cargo agency, broker)
7. Fullfill international requirements : 7. Fullfill international requirements
Slide 44: Sustainable floriculture with social responsibilityThank you