The ocean versus the sky: which is logistically attractive to operators?

Skyrocketing air freight prices are driving significant momentum for sea transportation in East Africa.

For over a decade, cut flower transportation has revolved around sea freight and whether it will replace air freight. Lower costs, lower carbon footprint and less cumbersome access to distant markets were essential factors in favour of sea freight. By 2019, everything seemed to indicate the flower industry would adopt this mode of transportation except for last-minute or unforeseen orders, which only airfreight could do.

The Covid-19 pandemic changed everything, with closed borders, container scarcity, congested ports, and other logistic difficulties. Contrary to the initial expectation, demand for flowers surged, and exporters had to ship flowers by any means available. Everyone recalls how flower boxes were even strapped onto passenger seats.

Sea transport nevertheless continued to be an option – even with increased prices – especially for sales scheduled in advance, such as supermarket bouquets. Sea transport is cost-effective and reliable; initial drawbacks for companies that could not fill up a container have been solved with cargo agents capable of consolidating consignments efficiently, and the carbon footprint is much reduced concerning air freight. We conducted a series of interviews to get an update on the current outlook for sea transportation of cut flowers.

Kenya – growing fast

Maersk has acquired great experience with maritime transport of perishables over the years – especially with avocados – which has provided a robust platform to handle flower cargo efficiently.

After listening to interventions from key players in Kenya during the IFTEX show, held in Nairobi this past June, we reached out to Carl Lorenz, managing director for Maersk in Eastern Africa. “If we were to calculate the number of containers needed to load a year’s worth of flowers from Kenya, we would be looking at about 90 million stems or 325 containers per week,” he said, adding that the main ports in Europe, where flowers are shipped to, are Rotterdam and London Gateway.

However, there are hurdles to overcome, such as vessel berthing congestion and delays in EU and UK ports, often associated with weather, labour challenges, or other reasons exacerbated by the Covid-19 pandemic. Yet, they have dedicated staff to follow up on and correct these problems, as Maersk is aware of the clear need for a sustainable transportation option for cut flowers. Lorenz said, “The question is no longer whether the ocean will be a mode of transport, but how the industry can embrace the benefits of sea transport to ensure long-term market access.”

More emotion than facts

In the case of Kenya, key stakeholders from all fronts need to be involved to guarantee smooth operation. This includes government authorities in Kenya, the UK and the EU, retail traders in the EU, Dutch flower auctions, flower producers and logistics service providers.

Furthermore, Lorenz noted, “Overall industry alignment is essential, and this requires a change in mindset on the part of growers and buyers. Breeders should develop more resilient flower varieties, while exporters must identify the varieties that best handle the ocean voyage. In turn, growers need to find the right formula for preparing the flower during pre- and post-harvest for long-term storage on the ocean.”

Lorenz summarised, “It is essential to share information openly and freely across the industry about how long different varieties can last because, at the moment, perception of ocean freight as a viable means of transportation for flowers is founded more on emotion than facts.”

Sea transport labels at the clock front: yes, or no?

Maersk has acquired significant experience with maritime transport of perishables over the years – especially with avocados – which has provided a robust platform to handle flower cargo efficiently. Flowers are relatively new in the shipping industry. Still, the predicted growth in export volumes of perishable agriproducts out of East Africa is very high over the next five years. They are gearing up to provide the best logistics possible. Because a large portion of Kenyan flowers is traded via Dutch auctions, an important question is whether there should be a mention at the clock front that some flowers have been transported by sea.

Lorenz thinks yes. However, he is worried that the perception around the quality of the product shipped is sometimes negative and needs to change. For example, sea freight is at least 90 per cent more environmentally friendly than airfreight, and costs are around 50 per cent less.

Losses are very low. This year, Maersk experienced less than a three per cent loss in flowers shipped from Kenya, which easily rivals airfreight, even before the financial and environmental upsides. In Lorenz’s view, “marking flowers as ‘transported by sea’ should attract a premium price because it has a massive, reduced impact on the environment during transportation.”

Improving schedule reliability

Christo van der Meer, sea freight perishables manager for Kuehne+Nagel in East Africa, said, “Skyrocketing air freight prices are driving significant momentum for sea transportation in East Africa. Air rates could soon touch 3 USD per kilo. This is primarily due to Africa’s limited airfreight capacity, and this situation is unsustainable mainly.”

More recently, Van der Meer sees former sea freight customers returning. Kuehne+Nagel caters to n European ports; Rotterdam has been the traditional touchdown spot, but the UK is growing in importance for flowers from Africa and South America. The company is also serving more distant markets like Australia and Japan.

Van der Meer commented, “At least for Kenya, sea transport will be a way forward. In the long run, shipping lines, containers, and logistics will be optimised, and freight costs will go down, making the difference with airfreight even larger.”

However, there are issues to be addressed before this can happen. The sea freight supply chain needs to get back to normal. Schedule reliability is currently low – about 40 per cent; it needs to go up to at least 80 per cent, like pre-Covid times. The cold chain needs to be improved; it should cover the full cycle efficiently and without glitches. Van der Meer acknowledged, “From farm to consolidation centre, containers should be cooled down before loading and, very important, effectively using the right boxes to remove heat once they are in the container. This last issue creates a bit of a headache in Kenya.”

A decidedly lower carbon footprint

Techniques such as vacuum cooling, controlled atmospheres, GPS monitoring systems and real-time temperature devices are beneficial and, fortunately, increasingly in use. “Much work and education are needed along the entire supply chain,” noted Christo, stressing that full integration amongst key stakeholders is essential.

Kuehne+Nagel has plans to set up a consolidation centre in Kenya, near production areas, allowing for better control of packing and shipping conditions. Further, harvest and postharvest management, flower treatments, packing, and pre-cooling are critical elements of the product cycle. And to top this, flower quality is simply essential. All these together will ensure losses are kept to a bare minimum.

What about sustainability? “The carbon footprint is decidedly lower,” stated Christo. He added, “However, there is still a perception that flowers shipped by sea are not fresh because the voyage takes a long time; this is not fair when the product clearly meets the required standards.”
He thus prefers that the shipping mode is not mentioned at the auction, stressing that flowers shipped by air are often stored for weeks before they are sold, which is also not mentioned.

Colombia – short update

Flower exporters have been exploring sea freight since the early 2000s. Still, the option gathered steam in 2012. It offered a great opportunity for flower exports to Europe and Asia – distant markets that are expensive and even cumbersome to reach by air (Asia in particular).

Then suddenly, in 2017, sea transportation to the USA surged in response to successive hurricane seasons and snowstorms that disrupted flights, constrained space on planes, raised freight costs and, in general, made it very challenging for flower exporters to reach consumers in time.

By 2019, sea freight from Colombia to the USA had doubled, and it seemed that maritime transportation would steadily increase. Costs were reportedly 15-20 per cent lower than airfreight and 40 per cent lower when shipping to Europe or Asia. In 2018-2019, about 30 per cent of flower cargo from Colombia left the country by sea.

However, in 2020 this number dropped to five per cent and in 2021 to eight per cent. Currently, it stands at about nine to ten per cent, according to the Colombia Association of Flower Exporters (ASOCOLFLORES). The following challenges cited by Colombian exporters include establishing pre-loading inspection (phytosanitary ad otherwise) to avoid opening containers at the port. This would disrupt the cold (and modified atmosphere) chain. Another challenge is ensuring smooth logistics when consolidating consignments, as only a few companies can fill up a container (about 800 flower boxes). Ideally, flowers are all of the same kind (i.e. only roses, only carnations) as that facilitates handling immensely. Then there are ground transportation issues in Colombia. The mountainous terrain and often secondary roads can be a hurdle from production areas to the ports. Ports still need to improve efficiency, at both ends, particularly with logistics.

Sea freight is clearly an option for transporting flowers, which will undoubtedly increase soon but cannot entirely replace airfreight. With sea transport, times are given in weeks (to delivery), with airfreight, in days.

A view from Morocco

Mr Ali Bennani-Smires is the general manager of SCA Clementine, which is the flowers and avocado division at the Delassus group in Morocco. SCA Clementine currently grows 48ha of spray carnations, which they mainly sell in the UK.
Responding about transportation options for his carnations, he explained that they are now back to exporting 90 per cent of their product in refrigerated trucks, which takes from four to five days door to door. Trucks are maintained at 4°C and arrive in excellent condition. During the Covid-19 crisis, however, when ground transportation prices doubled, they had no option but to send sea containers to the UK. Containers were held at 0.5°C and took up to ten days to reach the destination. It was a good solution, but now that trucks are back in operation at reasonable prices, the company prefers to go that way, mainly because there is less uncertainty with arrival dates.

Bennani-Smires commented, “We do see sea freight as a good alternative, as sometimes the market is not really in big demand, and instead of storing flowers in our farm, we prefer to send them by sea; we gamble a bit that by the time the sea containers arrive the market has recovered, and very often we are right.

“Controlled atmospheres are not used, just regular refrigerated containers; spray carnations withstand the ten-day journey very well, especially with good postharvest management.”

SCA Clementine has also run a trial with sea transportation to the USA. The process took a month door-to-door, and there was some loss of product, but not significant. If the company were to expand their sales to the USA, sea transportation would probably be a good option.

As for the carbon footprint, they believe that by truck is the best option, better than sea transportation and much better than air freight. Bennani-Smires does not think it’s necessary to identify the means of transport used to get the flowers to market. This could give the buyer the impression that sea-freighted flowers have been harvested much before those coming by air, which is entirely misleading since, all over the world, growers and marketers store flowers for weeks before they go on sale.

Flowerwatch

Jeroen van der Hulst from Flowerwatch has more than 25 years of overall experience in postharvest management of cut flowers, including solid expertise in sea transport. When the flower industry took off in Kenya, air freight capacity was adequate and well-priced; this is mostly still the situation in Ethiopia. However, return cargo is virtually absent as imports into Africa are not large, and planes return empty to fetch the flowers. This is in high contrast with South American countries where active cargo exchange occurs with the USA and Europe.

Sea transport emerged as a promising transport option for Kenyan flowers more than 15 years ago, but problems like the 2008 energy crisis slowed progress.
With the Covid-19 pandemic, air freight rates skyrocketed as capacity diminished. This has turned eyes again towards sea transport. Nairobi is the most prominent maritime cargo hub in Africa, with five to seven freighters leaving each day, but even so, the sea freight market is not mature.

Van der Hulst said, “Ecuador or Colombia have been shipping fresh produce for years, for example, bananas, blueberries, and avocados. In East Africa, there are no other active ports that could help move business. Even so, sea transport will become the biggest development in 35 years. But it will never completely replace air freight. It is all about finding a healthy mix, and that varies within the markets.”
Sea freight is growing fast. In the first six months of this year, more than 300 flower containers were shipped (approximately 300 full freighter aircraft), which is three to four times more than the same period in 2021. The potential outlook is to have a 50/50 share of air/sea by 2030, but there are challenges.

Van der Hulst said about the USA market, “The USA is difficult to access from Kenya, and air freight is prohibitive at $5-10/kg. However, there are special holidays when flower demand is so high in the USA that it still is an attractive option; perhaps a combination of sea/air could offer a solution.”

Flowerwatch offers comprehensive assistance to ensure quality flowers arrive at the destination in the best possible shape and with minimal losses. This requires considering every step of the value chain with the utmost detail, from assigned responsibilities among staff for every aspect of postharvest handling to considering various characteristics. Moreover, staff must use clean water and buckets, treating flowers with the correct food according to flower species and cultivar. When flowers are transferred to the port, an eagle eye must also be kept at grading, storage and processing, packing, and even trucking. “We have developed specific standards and offer training and oversight at every step of the way,” Van der Hulst concluded.