FROM MAGAZINE - Ensuring a blooming future for Africa’s flower industry

Africa has enjoyed global attention from peers over its blooming flower industry throughout the past decade. However, only volumes won’t ensure a bright future, but an efficient and sufficient supply chain would decide its fate. It is high time for Africa to take some decisive decisions on expanding global footprints, technologies as well as experimenting with newer trade routes to ensure a sustainable business, Shreya Bhattacharya reports.

Florists in Africa are the busiest during the months of February till May, the months leading up to occasions like Valentine’s Day and Mother’s Day. Visibly, cut flowers are the commodity that exchange maximum hands during these occasions, in an expression of love. While they did the same this time, at the backend remains a story untold.

Florists in Kenya were hoping to do brisk business during this Valentine’s Day when they were caught in tangle as a logistics logjam seemed lurking around the corner due to an inbound freight crunch, causing a dearth of outbound cargo flights from Kenya. Amid the accelerating global economic recovery, cargo aircraft had diverted to more-profitable routes in Europe, the US and Asia, and away from less profitable ones in Africa. A Wall Street Journal report says that with air carriers insisting on flexibility and waiting till the last minute to commit to cargo flights, Kenya’s freight crunch around Valentine’s Day was hard to circumvent given the short life of cut flowers.

Confirming the crisis situation, Conrad Archer, country manager, Panalpina Kenya revealed that this has caused increased costs of extra freighters for Valentine’s and International Women’s Day and has indeed affected the flower business in Kenya. “The costs were unprecedented this year. Many of the supply chains are locked and were not prepared for any additional logistics costs, especially at the levels charged. The volumes were still moved, but it was not without difficulties. Since Chinese New Year was on February 16th this year, Kenya was not able to take advantage of the Chinese downturn during that time. Flights operated on days that were not convenient for shippers. On top of that, the problems arising from the local plant health authority system, again affected the documentation process.”

Growing awareness among shippers
It is worth mentioning here that the cut flower industry in Africa, particularly in Kenya and Ethiopia, has flourished rapidly in the past few years, as Netherlands- traditionally the center of production for the European floral market, shifted its attention towards flower trading instead of production. This has brought focus on Africa, the next nearest region to European countries that produces flowers in huge quantity for trade, favored by its climatic conditions. Apart from government initiatives to improve the poor state of infrastructure for a smoother trade route, growers as well as logistic players are also increasingly getting aware about measures that can boost production and bring more returns.

During the recently held second edition of Flower Logistics Africa, organised by Logistics Update Africa, florists as well as the entire cross section of the supply chain unanimously called for standardisation across the value chain to make it lean. In other words, emphasis was laid on a uniform code for all stakeholders including the shippers, supply chain industry, airlines and airports that could be linked to IATA standards.

“Increasingly it is becoming very clear that no one association can cover all the areas of concern. No one association has the competence to deal with all the issues across the value chain. And therefore they need to realise or appreciate the strengths of each association and see how we can tap into that strength and come up with a product that is of value to the common membership we have of the business folk in the industry,” said Jane Ngige, chief executive officer of Kenya Horticulture Council on the sidelines of the event.

Technological upgradation is another important part which is also being taken care of, to facilitate the delicate process. The less often flowers are physically handled during their transportation the longer they are likely to maintain their beauty. The ideal situation is a stable logistics ‘cold chain’ that ensures quick and efficient transportation to keep the flowers as fresh as possible.

“The advent of vacuum cooling has had a major impact on the cold chain management. Panalpina is in the process of fitting its third double-maindeck unit as part of the $3.5 million expansion in Nairobi. We now also deliver our built-up pallets in reefer trucks to the ground-handling agent to ensure the cold chain is maintained. The fact that some producers have changed to a composite box, all pre-skidded prior to delivery, is an improvement. However, it requires us to invest in new facilities designed for unloading and pallet building with forklifts. Our new facility will also have several chambers, allowing us to handle different products with different temperature regimes, such as berries, flowers and plant cuttings,” informs Archer.

Meanwhile, Eline van den Berg, program manager at the Holland Flower Alliance (HFA) shares, “The Holland Flower Alliance was formed in 2016 with the aim to unite the floral logistics supply chain in order to optimise the entire ‘farm to vase’ process. We currently put our focus on the trade lane Nairobi-Amsterdam, where we seek to optimise and increase the speed and efficiency of the supply of freshly cut flowers.”

“The HFA sees great opportunities in the digitisation of the supply chain. Currently, for instance, different systems are used to forward shipment data among different parties and therefore with different parties we work on building an information platform together which can be used for information sharing, but also tracking and tracing of the flower boxes. Another topic is packaging. Currently more than 300 types of boxes are used; there’s a great variety in box sizes and quality, and that brings along a lot of challenges such as building and breaking down of ULD’s. We see a lot of benefits which can be gained from creating more standardised flower boxes. Hence, one of our focuses is related to the standardisation of these boxes,” van den Berg adds further.

She also informs that from the total import supply of roses of The Netherlands, 85 percent is coming from Africa. “Especially the first quarter of each year the volumes received are extremely high because of two important flower holidays i.e. Valentine’s Day (14 February) and International Women’s Day (8 March). For Valentine’s Day this year Air France KLM Martinair Cargo (AFKLMP Cargo) shipped already around 3,000 tonnes of flowers originating from well-known leading production and export countries like Kenya, Ecuador and Colombia to Europe.”

Similarly, Cargolux also informed that in addition to its 20 weekly flights out of Nairobi, Quito and Bogota, the cargo operator has added close to 1,200 tonnes of extra capacity to meet the peak demand ahead of the Valentine’s Day celebration.

There is no denying the fact that the air cargo industry does see a dynamic market in flower transportation and is honing its skill to facilitate an integrated cool supply chain, however, the freighter shortage was a stark reality.

Tapping opportunities from unexplored markets
While European countries have remained the primary markets for flower growers, Africa is gradually looking beyond its traditional consumers to find new markets in China, Australia, Japan and the US.

According to a Rabobank Report, Europe and North America are likely to see a 2 percent growth per year in cut flower and potted plant expenditures, while Asia will see a 6-8 percent growth annually. It is because of such scenarios that Kenya is trying to get the four percent levy that China has imposed on flower exports, scrapped. Kenya Airways Commercial Manager in Charge of Cargo, Peter Musola recently stated that bilateral talks between Kenya and China were at an advanced stage as the latter eyes the hugely untapped market.

Africa’s new ambitions to increase footprint globally were especially highlighted during the recently held second edition of Flower Logistics Africa. “Flowers actually earn us up to Sh70 billion every year, so we do hope the tax imposed in June by China is re-considered,” Musola said during the sidelines of the Flowers and Perishables Logistics Africa Conference.

As Kenya focuses on China, Ethiopia and Tanzania are other East African countries that are fast emerging with significant share in global cut flower export. Africa’s second-biggest producer after Kenya, Ethiopia is looking to expand its footprints to US in a bid to break the dominance of Latin American producers. Speaking about its potential markets for flower logistics, Fitsum Abadi, MD, Ethiopian Cargo & Logistics Services said, “Europe takes the lead in terms of demand growth in flower import from which Liège and Brussels Airports take the lion’s share. From Middle East— Dubai, Jeddah and Kuwait are potential markets. From America it is New York, Los Angeles and Washington while from Far East it is Japan, South Korea and Singapore.”

Abadi further adds, “2017 horticulture product uplift to Liège and Brussels Airport was 49,163 tonnes and we expect increase in this year and per customer forecast it will be 55,000 tonnes in 2018 which will be 10 percent increase.”

Foreign players like Turkish Cargo have also placed their bets on Kenya and Ethiopia and other emerging flower producing African nations. “Considering the appropriate climate and agricultural fields, flowers are being grown in the equatorial African zone. Planting can be done all year around and this enables us to add scheduled freighters. Kenya and Ethiopia are the leading flower exporters in Africa. South Africa, Uganda, Tanzania and Zambia are also major producers, while some other African countries export much smaller volume,” said Muhammad Osman Bayrak, vice president, cargo sales (Africa), Turkish Cargo.

Thus, while on one hand Africa’s floral industry is rapidly growing volumes and is eyeing major markets, a repeat of the freighter shortage could cast a shadow on its growing ambitions. Apart from freighter crunch, many also feel that Kenya could be facing the heat due to Schiphol Airport’s saturation challenges in terms of allotting slots for the airlines. The airport is currently Kenya’s gateway to the world market.

“It is going to affect Kenya as long as we don’t rise to the challenge. A few years back we did not talk about the Liège Airport. Today we are talking about the Liège Airport. I am aware that there are several airports that are lying idle in the market place and this is why I say that if Kenya does not rise up to the challenge it will be a problem. If we do our homework, we will find more Lièges in the market place. Not just in Europe but in emerging markets like the US. We need to find depository for our products. And in China again we need to find our commercial presence as industry and not as business people or business’ providing services to the farmers,” said Ngige.

Going further, Ngige encouraged farmers to take proactive measures. “FloraHolland, for instances, is already setting up business centers. How many more odd centers go up in China? At this point I have no substantial information to answer that. But it is no longer business as usual, they are no longer just farmers. They have grown up into global business people. And they’ve got to face global business challenges. Not just the local challenges, but the global business challenges, which will include logistics, which will include investments etc. They no longer can sit back and grow flowers and deliver them to the airport,” she adds.

Industry experts say that the trend for producers to sell further down the consumer chain has been a major development in this segment. Buyers want to get closer to the source to secure the product, to have it fresher with a more efficient handling and logistics chain. Conversely producers are also increasingly getting conscious and are looking to diversify their customer base and increase their returns by taking all possible measures. Clearly a global demand for flowers exists and so is the availability, but Africa will have to ensure that it takes enough measures to make it reachable to its consumers around the world.