Floribusiness IFF: KLM Cargo investing more in flower transport

IFF: KLM Cargo investing more in flower transport

0

The auditorium of Expo Haarlemmermeer was filled with around 250 decision makers from the international floricultural sector, who had gathered here for the International Floriculture Forum 2018. The Forum, organised by Union Fleurs, IFTF and Floribusiness is an opportunity for experts in the fields of logistics, air freight, trade, marketing, breeding and product innovation to meet. They came from all over the world, from the big floriculture countries such as Kenya, Colombia, Ecuador, Israel and Denmark, to other places like Montenegro, Iran, Sri Lanka, South Korea and anything in between.

The first speaker, CEO Pieter Elbers of KLM, wanted to reassure the audience: after a low period for KLM Cargo, the carrier is now fully committed to cargo again and they’re investing in new aircrafts. The KLM leader explained that the air cargo sector was going through a very bad time a few years ago. “That led to our decision in 2014 to make some radical changes in our air cargo division, resulting in some major restructuring in 2015, 2016 and 2017. We went from eleven to four full freighters for example, and we started to focus on a few specific products, including flowers.”

CEO of KLM Pieter Elbers.

Concerns

Outsiders often found it difficult to see the whole picture though, noticed Elbers in hindsight. “It seemed like we were in decline perhaps, but we weren’t really. The four full freighters we’ve got now have much lower CO2 emissions than the MD-11Fs that were side-lined, so it’s better for the environment.”

The audience in the auditorium didn’t blindly accept Elbers’ message either. Rosalie Zuurbier, a Dutch rose grower in Kenya, expressed her concerns. “The carbon footprint of the roses that we’re growing in Kenya, is four times lower than of those that are grown in the Netherlands, despite the fact that they need to be transported by plane. But we do need modern aircrafts. When I hear that KLM went from eleven to four full freighters, that doesn’t give me an awful lot of confidence.”

Zuurbier is worried about the air freight capacity from Kenya to the Netherlands. “If there’s no improvement, we’ll lose our competitive edge.” The rose grower emphasised that she isn’t the only one in the sector with this concern.

Elbers assured her that KLM will increase their air freight capacity on the Nairobi-Amsterdam route.

Flowers important for KLM

Elbers said that flower transport is important for KLM. “In our air cargo division, we focus on three product segments: online order parcels, pharmaceutical products and fresh produce. The latter category includes vegetables, fish and flowers. Flowers currently account for 30% of this category. Looking at their total air cargo turnover, the share of flowers lies around 10%.” Elbers reported that during the past twelve months, 34% of those flowers came from Ecuador, 24% from Kenya and 19% from Colombia.”

The CEO also announced that KLM Cargo is going to fly to new destinations in the USA and Japan. He feels that there are opportunities there for the flower trade too. CEO Marco van Zijverden of Dutch Flower Group, one of the other keynote speakers at the Forum, politely explained to Elbers that a new market like China is much more interesting for flower exporters. He was wondering whether KLM had any plans to expand their flight capacity to this country.

Elbers responded that KLM is already flying to eight destinations in China and that they’d love to fly a direct Amsterdam-China route with their new Boeing 787s. “At the moment, we’re working together with our partners, Southern and Eastern China Airlines, on that route. The problem is getting enough slots at Schiphol.”

To illustrate this, Elbers said that there are five airplanes from China landing at Schiphol every day, compared to the eighteen Delta Airlines planes arriving at the Amsterdam airport every day. So, there seems to be room for more flights from China.

Van Zijverden added that the Chinese are making more and more use of trains to transport goods for distances up to 500 kilometres and he wondered whether that would also be an option within Europe.

Schiphol capacity

According to Elbers, Schiphol is still the number one flower hub of the world, although that position is under pressure. The capacity of the airport is 500,000 slots, by political decision. “Physically, Schiphol could grow further, but the question is whether the politicians want this. The discussion won’t start again until after 2021. As air cargo sector – including carriers, flower trade and logistics service providers – we should collaborate and clearly communicate our interests to the various political bodies.

Elbers indicated that there are 370,000 people with a job that’s directly or indirectly linked to Schiphol. That’s 3-4% of the working population in the Netherlands.

One of the audience members asked about sustainability. How sustainable is it to fly flowers halfway across the world? How much longer will people accept that? Elbers responded that that was a dangerous question for him. Growers don’t choose a production location based on transport only. They also look at production costs and climate. “It’s all very well to say that growers should produce in Minneapolis, but that’s tricky when there’s 30 cm of snow all winter.”

Freight forwarders

Marco van Zijverden also asked Elbers about the role of freight forwarders, the travel agencies of the air cargo world. “What’s the role of freight forwarders going to be in the future? Will there still be a place for them? In the passenger air transport branch, 95% of the flights are booked online.”

Elbers pointed out that across the globe, only 35 to 40% of the passenger flights are booked online by individuals. The rest of the online bookings are still done by others, including travel agencies. “Freight forwarders will be able to keep their place, as long as they continue to provide added value”, said Elbers.

This led to Van Zijverden’s next question, whether KLM is planning to sell cargo space online. “My initial response is: why not?”, said Elbers. However, he added that KLM believes more in partnerships. Elbers couldn’t say that KLM is currently the leader in the air cargo sector. “We’ve just finished a period of restructuring. Our capacity for flower transports has increased, but we’re more focused on efficient partnerships. The Holland Flower Alliance is a good example. It’s open to everyone.”

More targeted breeding

Ornamental value is still important, but new cultivars will distinguish themselves mostly for other aspects. Think for example of a longer vase life, resistance against pests and diseases, and being able to handle transport conditions better. This is what Hans van den Heuvel, Managing Director R&D of Dümmen Orange, said in Vijfhuizen.

Micha Danziger and Hans van den Heuvel.

“Who wants a new red rose?” was Van den Heuvel’s rhetorical question for the audience. Marco van Zijverden agreed that all too often, he sees mostly lookalikes when new varieties are introduced. He thinks it’s great that breeders are going to focus more on characteristics that add real value to the chain and he’d be able to present the breeders with a wish list straightaway. Van den Heuvel is familiar with these wish lists, just like Micha Danziger, CEO of Danziger, also one of the speakers at the forum.

Shaking up the chain

Van den Heuvel said that five years from now, the introduction of new plants and flowers will be shaking up the floriculture chain. The latest breeding techniques will help produce varieties that meet the demands from the market.

Genetic modification with techniques such as CRISPR-Cas, are prohibited in Europe. Something that’s hard to understand for Micha Danziger, considering the benefits it can bring in a safe way. Van den Heuvel pointed out that there are other options for more targeted breeding in floriculture. He feels that there all still many things in the breeder’s toolbox that he sees being used by vegetable breeders, but not by breeders in the floriculture sector.

Van den Heuvel added that according to him, it’s also time to modernise the Plant Variety Rights. Investing in new techniques is expensive and it’s very difficult to get a return on those investments if you can’t protect your novelties properly.

Vegetable sector ahead

Van den Heuvel explained that the floricultural sector is around 25 years behind in their acceptance of new breeding techniques, compared to for example the vegetable sector. But this gap can still be closed. Techniques have become better and cheaper, and breeding companies are stronger nowadays because they collaborate or because they merge with other companies (consolidation). As we know, Dümmen Orange did the latter. The GenNovation collective is a good example of a collaboration.

“We started about 4 years ago and we’ve already booked a few successes. Both the propagation and breeding processes of tulip for example, were sped up significantly. The traditional process had been in place for centuries. We looked at it with a fresh pair of eyes.” In short, there is a future for plants and flowers, as long as they continue to tempt consumers and meet market demands.

 ‘Blueroots and Floriday hoping to reach an agreement’

“Markets are changing all the time, but at the moment we feel that the speed with which changes come has dramatically increased. These changes, driven by technological, geopolitical and social developments, force every company to reconsider their strategy and sometimes even their own identity. How do we add value to the chain? What do we need to do to remain successful in the future?”. That’s how Marco van Zijverden began his talk at the Forum. Together with Jonathan Ralling of Flamingo Horticulture, they focused on the developments in the international trade and the impact of those developments.

Marco van Zijverden and Jonathan Ralling.

Van Zijverden emphasised how remarkable it is that we’re currently in an economic boom. Business has been very good for DFG the last couple of years. But they see a few challenges: labour and transport costs are rising, and inflation is increasing. “Normally – in a growing market – these challenges wouldn’t cause any real problems, but global consumer spending on plants and flowers is hardly increasing.” He thinks that this is due to the large competition and because it’s so easy to compare prices. According to Van Zijverden, the main challenge is stimulating consumers to buy plants and flowers.

Evaluate your role

Van Zijverden said that DFG is evaluating their role in the chain, looking at how they can add value, so that buyers will stop comparing prices. He also indicated they’re strongly focusing on sustainable production, which they’re trying to do by embracing FSI and investing in sea cargo. The latter could lead to a roughly 85% reduction of CO2 emissions on the routes from Latin America and Africa. For Christmas, for example, fifty containers with flowers will be shipped from Colombia to the United Kingdom”, said Van Zijverden.

He also mentioned another development in the global floricultural sector: the rise of digital platforms. He shared an update with regards to the linking of Blueroots to Royal FloraHolland’s Floriday. “I am very hopefull we’ll reach an agreement before the end of the year. Our dream is to create an ecosystem that enables a close collaboration between the leading parties in the chain. The Netherlands as a country doesn’t just want to keep its leading position in floriculture, we also want to strengthen it.”

No influence

Jonathan Ralling recognised the radical changes in the international flower trade that Van Zijverden touched upon. Brexit is an important topic for both DFG and Flamingo. Ralling feels that change is a constant. And there are changes which a company has no influence on. “That’s why you need vision and the ability to adapt. We can’t influence the oil prices, but we can use our lorries more efficiently”, he said.

In anticipation of Brexit, Flamingo has intensified their search for new markets. Just like DFG, the company has increased their focus on the United States and China.

The International Floriculture Forum is organised by Union Fleurs, the international flower trade association. HPP Exhibitions facilitates and sponsors the Forum and Hortipoint, known for publications such as Vakblad voor de Bloemisterij and Floribusiness, acts as media partner.

Reageer op dit artikel

Laat als eerste een reactie achter.

avatar