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The Weakest link

The Weakest link

The Weakest Link

A troubling trend is starting to emerge that will challenge the Import floral business in the months and years to come. I refer here to the lack of schedules flights out of Colombia and Ecuador.

When the import business began in the early 80’s the volume of flowers coming out of Colombia was a bonus for airlines as they needed cargo out of South America to help balance out the good paying cargo they had going to South America. This was a perfect match and the flower importers enjoyed very favorable rates for many years combined lots of cargo space, and lot of aircraft availability.

Back in those days the freight rates were in the .60 per kilo range. This equated to approximately $10. per full box. At those rates the industry grew into the huge industry it is today.

However, over the many years things have changed and not all for the better.

Basically there are 5 airlines in the daily floral market. Tampa, Centurion, Atlas, LAN and UPS.  As we know planes and trucks need to have good paying cargo in both directions to remain profitable. When one of those legs in the trip changes the whole process might need to be changed.

Flowers are not the optimum cargo since they are bulky yet not heavy. Basically airlines are forced to seek out the best cargo they can find and that often means not focusing on flowers and sending the planes to other destinations to find better revenue

This happens seasonally each year to some extent as certain cargo events push the airlines in many directions. One example is the stone fruit (peaches, plums) coming from Chile. These have a limited window to be transported and since they pay well the airlines will divert plane to take advantage of this cargo.

The airlines traditionally add extra flights to cover the Valentine’s and Mothers Day Holidays. These flights all carry an additional surcharge to cover the extra cost of diverting the empty aircraft to transport the waiting flower load.

Crude Oil plays a role here as a main south bound cargo of many South American based airlines are oil production products. With the sustained low oil prices the demand for these products has stalled forcing the airlines to find routes that will afford them better revenue, often taking them out of the North South lanes.

A few significant events have taken place that has made this news worthy.

Two of the major cargo carriers have been purchased by passenger airlines. Tampa Air was bought by Avianca and Lan Cargo merged with TAM airlines.

This brings me back to the title of this article. The weakest link in the Floral importing business is the transport from South America to North America.

If you can’t fly the flowers in then you can’t sell them.

There has been a lot of work done with shipping flowers via containers on ships. This appears to work well for certain products like carnations and chrysanthemums but the extra 10 days in transit plus an additional $3-4 per box make this only viable for companies able to fill a container and able to plan that far in advance.

For the other products and the general importing public it is too expensive and not practical at this time. (Maybe never).

Currently the rates are nearly $1.00 per kilo or 22.00 per full box. (average rate Quito, Bogota, and Medellin) But when holidays rush begin the rate to land a box (all import cost included) from Quito will be more in the $36.00+ range for a full box.

So what does this mean for wholesalers and retailers? This is not a floral holiday problem because there are enough surcharges and volume to attract the carriers. I suggest that many have already felt the effects of these changes over the last 6 month. Missed connections and late deliveries.

For sure there are some importing companies that have this figured out either by chartering their own flights or they have a very close relationship forwarder/Airline that will guarantee them space.

This is a good time to ask your supplier about holiday plans since the holidays are near.

My intention here is just to inform my readers that things have changed in this link of the chain of floral life. This is not a dire warning about a pending flower shortage but a heads up that you might have to wait a little longer to get your orders filled at certain times.

In the end this is still a supply and demand industry so if fewer flowers are available on the market and the demand is high then prices will reflect this reality.

A Tuesday Valentines this year should make it a good one.

 

Thanks for reading

Williee Armellini”
Editor: Flowersandcents.com
williee@flowersandcents.com

 

3 Comments

  • What do you see with the new administration’s vow to repeal or change existing trade policies? And what are the key products thatare export to fill the return flights to South American cities? This was a great article well thought out and cogent.

  • Thanks and since Herbert does not like publicity I only referred to his organization.

  • Well written Willie and very much to the point.That is why Herbert Jordan is always in the best position over anyone and most likely, always will be.

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