Volume revives despite capacity worries

Flying by plane begins again for business travel, but air freight capacity is still a worry

Fred van Tol Manager of International Development at Royal FloraHolland[/caption]

For more than 18 months, we have not travelled due to Covid safety regulations. So, I was delighted to visit our Kenyan office recently thanks to the global vaccine roll-outs and loosening of travel restrictions. Nevertheless, after testing and the necessary paperwork, I took extra precautions to get on the plane.
Last year, Royal FloraHolland’s Kenyan branch moved from Nairobi’s city centre to a site near the international airport.
After many months of absence, my trip allowed me to see the office space and catch up with my colleagues — Royal FloraHolland’s Kenyan headquarters neighbours, the leading freight forwarding companies at the airport. We support our growers with services like post-harvest advice, consolidation, and palletising boxes.
Catching up was not the only purpose of this trip. I also wanted to sample current sentiments in the Kenya flower industry and seek updates about the country’s economic situation.
My colleagues and I embarked on a farm tour to meet our members in person, and the growers appreciated this renewed face to face contact with their marketing organisation.
The average results this year on the auction are chiefly positive. Growth in supply volumes and higher prices led to a plus in turnover. Everybody was pleased by these results.
But growers in Kenya also worry about the logistical situation within the air cargo market, including the substantial shortage in freight capacity due to airliners pulling out passenger flights, in spite of the increasing global demand for cargo flights.
Also, the prices per kilogram have increased due to the developments in fuel price markets. There is currently compensation because of the higher turnover, but it is a big concern for the long term.
It will take some time before the freight situation becomes stable again in Kenya and Latin America. This position is also affected by the unstable situation within the sea freight industry. Here there is a big demand for containers from Asia towards Europe and the USA. The lack of availability is also increasing the demand for air freight.
In Europe, we are also seeing an increase in costs. Especially the price of fuel has gone up immensely. However, the effect differs between growers with long term contracts and growers who usually work on the spot market overall. In the long run, these cost implications will affect supply.
How this logistical nightmare will end depends very much on demand. So far, we see that global demand stays at a high level, as consumers continue to appreciate flowers and plants to cheer up their lives. And, for the coming months, there are no reasons to see this position change.

Fred van Tol
Manager of International Development
Royal FloraHolland