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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 Flower industry Supply-chain practices: farm to customers

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slide1

The Colombian flower industry and supply-chain practices

IX AIR CARGO AMERICAS

November 7-9, 2007

content
Content
  • Flower industry
  • Supply-chain practices: farm to customers
  • Asocolflores and logistics
  • Next steps
content3
Content
  • Flower industry
  • Supply-chain practices: farm to customers
  • Asocolflores and logistics
  • Next steps
per capita consumption
Per capita consumption

AIPH, 2007 (Euros)

CountryPer cap. CountryPer cap.

Switzerland 80Slovenia 3

Norway 59 Italy 23

Holland 55Spain 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 China1

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

1.000

900

200

800

700

150

600

Thousand tons

500

Millions dollars

100

400

300

50

200

100

-

-

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

2005

2006

Thousand tons

Million dollars

exports by market

Netherlands

Germany

1,6%

Canada

0,9%

2,0%

Japan

2,2%

Spain

2,2%

Others

3,6%

United Kingdom

4,2%

Russia

4,4%

United States

79%

Exports by market
exports by product

Miniature

Alstroemeria

carnation

5%

7%

Other

34%

Standard

carnation

15%

Chrysanthemum

and pompon

8%

Rose

31%

Exports by product
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
Contents
  • Flower industry
  • Supply-chain practices: farm to customers
  • Asocolflores and logistics
  • Next steps
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
the flower export process
The flower export process

Yes

The product

To the

airport

Planning a load

Move into the cold room

Posthaverst Planning

In the cold room

Load a truck

No

  • Coordination with brokers, airlines, merchandising areas.
  • Define type of truck
  • Planning the cargo according to destination
  • End of the load
  • Flights
  • Real Weight / volume

Verification of: temperature,

Security

Schedule of load

Temperature verification

Cargo identification Preparation of the load

Analyses truck-airline

Transport

to other

farms

If the truck is going to another farm, procedures for loading the truck must be followed

A

the flower export process23

Security

checks

At

airport

Take-off

Load

airplane

The flower export process

The product

Cargo to the consolidators agencies or airlines

Cargo consolidation

Pallets configuration

Time and temperature verification

Airplane

loading

plan

Storage

to weigh pallets

Verification of temperatures in cold room. Limits to have this cargo in storage

Verification of the temperature in load conditions

Verification of time

Weight-Balance

the flower export process24
Theflowerexportprocess

With the cargo agency

Final AWB. AWB with

# of pieces and weights

Inform the farm # of the AWB assigned

Gives the AWB and cargo requirements to the airline

Farm prepares the

boxes

Verification of arriving farm trucks

Pre-alerts destination

and Track & Trace

the flower export process25
The flower export process

Cargo agency and airline

Security warnings

Confirmation

of projections

Projections for

next week

Confirmation of

quota

Program itineraries

vs capacity

Allocation of flight

and arrival slot

the flower export process26
The flower export process

At destination

CBP

(antiterrorism and

plant health inspections)

(separate sample, prepare

listing, call inspector)

Pre-alert Flight

Unload

Pick up order

AMS documents and

customs manifest

the costumers
Customers’ requirements:

Colour

Size

Freshness

Sturdiness

Shape

Free of residues

Free of agrochemicals

Free of pests

The costumers

They are increasingly more powerful.

They reject based on quality and tardiness and demand social and environmental standards.

  • Price
  • Brand
  • Destination
  • And they want to be sure of
    • Sustainability
    • Environmental standards
    • Social standards
slide28

Quality is a pillar for creating value and customer satisfaction

The exporter or importerusually 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

contents31
Contents
  • Flower industry
  • Supply-chain practices: farm to customers
  • Asocolflores and logistics
  • Next steps
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

logistics34
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
contents36
Contents
  • Flower industry
  • Supply-chain practices: farm to customers
  • Asocolflores and logistics
  • Next steps: chain
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

Management throughout the chain

  • With the national and international LTO and ATO
  • Verification of temperature at critical points of the chain
  • Data-bases and feedback
3 packing
3. Packing
  • On the farm, LTO, ATO
  • Protocol of consolidation, palletization and deconsolidation processes
  • Indicators
4 increase efficiency
4. Increase efficiency

In recepction of palleted boxes

  • ConsoIidation
  • Non intrusive inspections
  • Cargo through-put
5 register indicators
5. Register indicators

Management and processes

  • Ex. Delays, load time, consolidation time
6 enforce security standards
6. Enforce security standards
  • Certification of members of the floriculture chain (farm, LTO, ATO, cargo agency, broker)