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The Colombian flower industry and supply-chain practices IX AIR CARGO AMERICAS November 7-9, 2007.

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Presentation on theme: "The Colombian flower industry and supply-chain practices IX AIR CARGO AMERICAS November 7-9, 2007."— Presentation transcript:

1 The Colombian flower industry and supply-chain practices IX AIR CARGO AMERICAS November 7-9, 2007

2 1.Flower industry 2.Supply-chain practices: farm to customers 3.Asocolflores and logistics 4.Next steps Content

3 1.Flower industry 2.Supply-chain practices: farm to customers 3.Asocolflores and logistics 4.Next steps Content

4 World flower exports 2006 Ecuador 6%

5 Per capita consumption AIPH, 2007 (Euros) Country Per cap.Country Per cap. Switzerland80Slovenia 3 Norway59Italy23 Holland55Spain22 Japan54USA21 Austria45Portugal16 Denmark44Greece16 UK44Hungary15 Sweden38Chec Republic10 Germany36Poland8 Ireland35Slovaquia7 Finland34Croacia7 France31Russia3 Belgium30 China1

6 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

7 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

8 Colombian flower exports - 50 100 150 200 1970197119721973197419751976197719781979198019811982 198319841985198619871988198919901991199219931994199519961997199819992000200120022003 2004 20052006 Thousand tons - 100 200 300 400 500 600 700 800 900 1.000 Millions dollars Thousand tonsMillion dollars

9 Exports by market United States 79% Germany 0,9% Netherlands 1,6% Canada 2,0% Japan 2,2% Spain 2,2% United Kingdom 4,2% Russia 4,4% Others 3,6%

10 Exports by product Other 34% Rose 31% Chrysanthemum and pompon 8% Standard carnation 15% Miniature carnation 7% Alstroemeria 5%

11 Area

12 Regions Regions (Flowers) % of Area Altitude Meters ( Feet) Avg. Temp Centigrade (Fahrenheit) Sabana de Bogotá (Carnations-roses) 79 2600 ( 8000) 13 (55) Rionegro ( Pompons) 17 2000 (6100) 17 (62) Other areas ( Anthurium-Heliconia) 4 1600 (4900) 21 (70)

13 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

14 Bouquet exports to U.S.A. 76.8% comes from Colombia

15 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

16 1.Flower industry 2.Supply-chain practices: farm to customers 3.Asocolflores and logistics 4.Next steps Contents

17 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

18 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

19 Flower Exporting by air Airport El Dorado: most important airport in Latin America because flowers exports Flowers:223,000 tons per year Bogotá79% cultivated area Rionegro17% cultivated area Daily: 709 tons on average. During Saint Valentines there were close to 1,500,000 boxes, or 111,000 boxes daily, and 816 pallets

20 El Dorado and Rionegro facilities 30.600 m 2 + 11.000 m 2 in the international cargo areas In Bogotá: 37% for flowers flowers 50% are cold rooms 212,000 per year only in 5,660 m 2 37 ton/m 2 per year 2035 boxes m 2 /year 2 kgs m 2 /day Four years ago, delays were up to 13 hours, today with logistic coordination they have been reduced to 2.5 hours

21 The industry handles around 60,000 boxes/day, one by one …there is room for improvements

22 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

23 The flower export process At airport Cargo to the consolidators agencies or airlines Security checks Cargo consolidation Pallets configuration Storage to weigh pallets Airplane loading plan Load airplane Take-off 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 Verific ation of time The product

24 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

25 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

26 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

27 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

28 Quality is a pillar for creating value and customer satisfaction The exporter or importerusually end up paying for the inefficiency of the chain The exporter or importer usually end up paying for the inefficiency of the chain

29 Logistic practices To get quality requires Effective coordination of the chain Coordinated cargo and document flow

30 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

31 1.Flower industry 2.Supply-chain practices: farm to customers 3.Asocolflores and logistics 4.Next steps Contents

32 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

33 Logistics During high seasons, we coordinate with cargo agencies, airlines, governments and concessionaries so as to ensure better attention to the supply of flowers

34 Logistics Postharvest Best Practices Manual (includes logistics topics such as traceability)

35 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

36 1.Flower industry 2.Supply-chain practices: farm to customers 3.Asocolflores and logistics 4.Next steps: chain Contents

37 1. Operational improvements Efficiency between LTO and ATO contact Consolidation area Unified security process

38 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

39 3. Packing On the farm, LTO, ATO Protocol of consolidation, palletization and deconsolidation processes Indicators

40 4. Increase efficiency ConsoIidation Non intrusive inspections Cargo through-put In recepction of palleted boxes

41 5. Register indicators Ex. Delays, load time, consolidation time Management and processes

42 6. Enforce security standards Certification of members of the floriculture chain (farm, LTO, ATO, cargo agency, broker)

43 7. Fullfill international requirements

44 Sustainable floriculture with social responsibility Thank you

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