the colombian flower industry and supply-chain practices ix air cargo americas november 7-9, 2007
TRANSCRIPT
The Colombian flower The Colombian flower industry and supply-chain industry and supply-chain practicespractices
IX AIR CARGO AMERICASNovember 7-9, 2007
1. Flower industry2. Supply-chain practices: farm to
customers3. Asocolflores and logistics4. Next steps
ContentContent
1. Flower industry2. Supply-chain practices: farm to
customers3. Asocolflores and logistics4. Next steps
ContentContent
World flower exports 2006World flower exports 2006
Ethiopia2%
Israel2% Kenya
5%
Ecuador6%
Colombia13%
Netherlands42%
China1%
Thailand1%
Others28%
Fuente: AIPH 2007
Ecuador6%
Per capita consumptionPer capita consumptionAIPH, 2007 (Euros)
Country Per cap. Country Per cap.
Switzerland 80 Slovenia 3Norway 59 Italy 23Holland 55 Spain 22Japan 54 USA 21Austria 45 Portugal 16 Denmark 44 Greece 16 UK 44 Hungary
15Sweden 38 Chec Republic 10Germany 36 Poland 8Ireland 35 Slovaquia 7Finland 34 Croacia 7France 31 Russia 3Belgium 30 China 1
Flower market trends in Flower market trends in U.S.AU.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 The Colombian flower industryindustry 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 exportsColombian flower exports
-
50
100
150
200
19
701
971
19
721
973
19
741
975
19
761
977
19
781
979
19
801
981
19
821
983
19
841
985
19
861
987
19
881
989
19
901
991
19
921
993
19
941
995
19
961
997
19
981
999
20
002
001
20
022
003
20
042
005
20
06
Th
ou
sa
nd
to
ns
-
100
200
300
400
500
600
700
800
900
1.000
Millio
ns
do
llars
Thousand tons Million dollars
Exports by marketExports by market
United States79%
Germany0,9%
Netherlands1,6%Canada
2,0%Japan2,2%
Spain2,2%
United Kingdom4,2%
Russia4,4%
Others3,6%
Exports by productExports by product
Other34%
Rose31%
Chrysanthemum and pompon
8%
Standardcarnation
15%
Miniature carnation
7%
Alstroemeria5%
AreaArea
5.906
6.201
6.544
6.953 6.974
7.266
5.000
6.000
7.000
8.000
Has
2002 2003 2004 2005 2006 2007
RegionsRegions
Regions(Flowers)
% of Area
AltitudeMeters( Feet)
Avg. TempCentigrade
(Fahrenheit)
Sabana de Bogotá(Carnations-roses)
792600
( 8000)13
(55)
Rionegro ( Pompons)
172000
(6100)17
(62)
Other areas( Anthurium-
Heliconia)4
1600(4900)
21(70)
Share of the U.S. import Share of the U.S. import marketmarket
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.
703.9
25
1.0
66.1
77
1.2
33.5
02
1.4
45.8
61
2.0
21.0
56
2.0
27.3
81
2.9
53.6
06
3.1
14.6
37
3.3
66.6
07
3.5
79.3
76
0
500.000
1.000.000
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
4.500.000
Fu
ll e
qu
ivale
nt
bo
xes
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
76.8% comes from Colombia
Comparative advantagesComparative 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
1. Flower industry2. Supply-chain practices: farm to
customers3. Asocolflores and logistics4. Next steps
ContentsContents
Supply-chain PracticesSupply-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 Logistics and competitivenesscompetitiveness 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 airFlower 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 El Dorado and Rionegro facilitiesfacilities 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
The industry handles The industry handles around 60,000 boxes/day, around 60,000 boxes/day,
one by one …there is one by one …there is room for improvementsroom for improvements
The flower export processThe flower export processThe 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,
SecuritySchedule 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 processThe flower export process
At airport
Cargo to the consolidators agencies or
airlines
Security checks
Cargo consolidation
Pallets configuration
Storageto weigh pallets
Airplane loading
planLoad
airplaneTake-off
Time and temperature verification
Verification of temperatures in cold room. Limits to have
this cargo in storageWeight-Balance
Verification of the
temperature in load
conditions
Verification
of time
The product
The flower export processThe flower export processWith 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 processThe flower export processCargo agency and airline
Security warnings
Projections for next week
Program itinerariesvs capacity
Confirmation of projections
Confirmation of quota
Allocation of flightand arrival slot
The flower export processThe flower export processAt 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 costumersThe costumersThey 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
Quality is a pillar for Quality is a pillar for creating value and creating value and
customer satisfactioncustomer satisfaction
The exporter or importerThe exporter or importer usually end usually end up paying for the inefficiency of the up paying for the inefficiency of the
chainchain
Logistic practicesLogistic practicesTo get quality requires
Effective coordination of the chain Coordinated cargo and document flow
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
1. Flower industry2. Supply-chain practices: farm to
customers3. Asocolflores and logistics4. Next steps
ContentsContents
Asocolflores in LogisticsAsocolflores in LogisticsThe 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
LogisticsLogisticsDuring high seasons, we coordinate with cargo agencies, airlines, governments and concessionaries so as to ensure better attention to the supply of flowers
LogisticsLogistics
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
1. Flower industry2. Supply-chain practices: farm to
customers3. Asocolflores and logistics4. Next steps: chain
ContentsContents
1. Operational improvements1. Operational improvementsEfficiency between LTO and ATO contact
Consolidation areaUnified security process
2. Protocol for Cold Chain2. 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. Packing3. Packing
On the farm, LTO, ATO
Protocol of consolidation, palletization and deconsolidation processes
Indicators
4. Increase efficiency4. Increase efficiency
ConsoIidation Non intrusive inspections Cargo through-put
In recepction of palleted boxes
5. Register indicators5. Register indicators
Ex. Delays, load time, consolidation time
Management and processes
6. Enforce security standards6. Enforce security standards
Certification of members of the floriculture chain (farm, LTO, ATO, cargo agency, broker)
7. Fullfill international 7. Fullfill international requirementsrequirements
Sustainable floriculture with social responsibility
Thank you