What new trade routes are established in the new world order that is emerging?

Author: Spence Gunn

It would have been hard to imagine at the start of the year a time when more than 15,000 planes in the world’s fleet of commercial aircraft were ordered to stay put. That was before the Covid-19 pandemic unfolded.

Dennis Verkooy has been part of the international flowers and fresh produce business since his first job working for a handling agent at Schiphol.

Dennis Verkooy, global head of perishables for Kuehne+Nagel, the world’s largest freight handler for cut flowers, says the Swiss company did have an inkling of what was coming. “We have a lot of business in China so could see the situation looming,” he says. “But it was not something anyone could plan for or put a contingency strategy in place.”

The effect was to throw international supply chains – not least that for cut flowers – into chaos, although some passenger planes, which are the main way that flowers are carried around the world, continued to fly. “Our global carrier partnership meant we could get flowers onto them,” Verkooy says. He adds, “We also chartered a lot of planes and were able to combine fresh produce with some of our other high-value lines such as pharmaceuticals.”

It all came at a cost, though. “We were faced with the global demand for charters to move PPE from Asia, which increased prices, so it was a challenge.”

 

How well will business recover?

The situation is gradually righting itself with capacity increasing on a monthly basis. “Other commodities will take longer to get back to normal because of the time producers need to restart supply,” he says. “If there is a plane tomorrow, a flower grower can harvest and get a shipment out.”

How well business will recover if the global economy moves into the predicted post-Covid recession Verkooy believes will be hard to predict. “I think some of our customers will have a challenging journey ahead of them,” he says. “If one throws in the new world order that is emerging, it will be interesting to see what new trade routes are established. This I see as a great opportunity for Kuehne+Nagel as it will offer us growth.”

Avoidance of waste

Kuehne+Nagel chartered a lot of planes and were able to combine fresh produce with some of our other high-value lines such as pharmaceuticals.

However, he thinks the avoidance of waste through incorrect handling is a more pressing issue to address. “The essence of the business is to ensure the consumer gets a product that is fresh and has the maximum shelf-life,” he points out.

“We deliver an end-to end service for many of our customers. With the effort, investment and time, which can range between 90 days to eight months for flowers, our customers put into their crops, we see it as our duty to ensure we take care of their products up to the point of delivery.”

The best thing a grower can do to ensure their flower consignments keep their quality during transit is to get them cooled as fast as possible after harvest, says Verkooy. “If that’s not possible on the farm, then we can do it at our facility, as they all have their own coolers. We try to make sure flowers are moving out at 2-3°C.

“Then on arrival at the destination we aim to transfer the flowers as quickly as possible from the aircraft into our warehouse. At Schiphol in Amsterdam, for instance, we have airside warehousing so freighters can pull up by the door and the first pallets are inside within 15 minutes of arrival.”

‘Once you’re a player in ‘perishables’, you can’t ignore flowers’

A careful eye is kept on the flowers throughout their journey. Consignments are followed with active data trackers, including GPS. Transport conditions can be monitored as an extra service. “Our service centres also keep watch and, for example, if the temperature is rising where a shipment is standing at an airport, they can alert the local team. Major retailers are particularly interested in tracking this way.”

Strategic acquisitions

Verkooy has been part of the international flowers and fresh produce business since his first job working for a handling agent at Schiphol. By 2006 he was managing director, with a small share, in Nether Cargo when that company was acquired by Kuehne+Nagel. Since then he has played a pivotal role in bringing the company to its dominant position as an international freight handler of fresh produce.

“Until then, ‘perishables’ had been a small part of Kuehne+Nagel’s business,” he recalls. “We started looking seriously at the sector, looking at where we already had business and where we wanted to be. In some cases we were able to do it by growing organically but in many places that was too difficult and would take too long. Strategic acquisitions of the market leaders, such as Van der Put in 2011, have been key to the strategy.” He adds, “And once you’re a player in ‘perishables’, you can’t ignore flowers.”

Double digit percentages

Freight in flowers has been growing twice as fast as any other air freight – up to 2020 it has grown in double digit percentages most years for Kuehne+Nagel. Verkooy notes, “But it only makes sense financially if you can be involved on a big scale and are committed to providing round-the-clock support to customers.”

Colombia, for example, was one market crucial to the flower business that Kuehne+Nagel identified, acquiring Trans Lago nine years ago. “To start from scratch in a very competitive market with complex existing relationships and rules, it would have been almost impossible to get a foot in the door,” he says.

For Verkooy, the pandemic-imposed lockdown hasn’t been all bad. For someone who travels for 200 days most years, he says spending the last four months at home without a trace of jet lag is a new experience he has quite enjoyed. But it has also brought home to him the value of partnerships. “Much of the business travel may not come back,” he says, “but it will still be important to keep our relationships with existing customers and to meet new ones. Personal relationships can’t be conducted online.”

K+N: the statistics

100: countries in which the company has a presence

1400: offices around the world

209,000: tonnes of cut flowers moved a year

27: percentage total world air movements in flowers handled annually  

It’s not all about air

Interest in using sea freight for flowers has been increasing from some quarters. “The volume of flowers shipped by sea has increased in the last number of years on certain routes in particular,” says Verkooy. “It’s not suited to all types of flower, however.”

Even if it works from a technical point of view, a container-full is a large amount for any one client to market at one time. “But as a full-service forwarder, Kuehne+Nagel is able to offer our clients transportation by both modes,” he says.