Every day at 6:00 am, Bloemenveiling Aalsmeer comes alive, as flowers and plants from all over the globe flow in and out of this 430,400 square foot auction hall, the largest trading building in the world. By 10:00 am, most are on their way to be packed and shipped to destinations worldwide.
A trading business that started in a cafe in the town of Aalsmeer, outside of Amsterdam, almost 100 years ago, Bloemenveiling Aalsmeer is now hailed as the “Wall Street” of the floral marketplace. It’s big business. Turnover for 2005 totaled some $2.2 billion, with 5,400 national and international growers, 3,000 of which are Bloemenveiling Aalsmeer member growers.
Each day, over 1,000 exporters and wholesalers meet in one of five auction halls to place bids on the 13 Aalsmeer auction clocks for 19 million flowers and two million plants from around the world. Based on information on the clocks, buyers make quick decisions on how much they want to purchase and at what price.
“Last year, approximately 24,000 transactions were made per day, for 20 million flower stems and 2 million units of plants,” says Timo Huges, CEO of Bloemenveiling Aalsmeer.
Most of the plants and flowers are for consumption in Europe. The Netherlands, as a whole, sells approximately $6.37 billion annually to European markets. By comparison, the Dutch export approximately $130 million of this commodity to North America and $45.5 million to Asia.
Over 30% of the flowers traded in Aalsmeer are produced abroad, in part by Dutch growers who have settled in East Africa, for example. The highest percentage of flowers come from Africa, Israel and Central and South America. In 2005, flowers from Kenya accounted for approximately $147 million of the trade; Israel, $49 million; Zimbabwe, $19 million; Uganda, $18 million; Ecuador, $9 million; Ethiopia, $6 million, and Zambia, $6 million. In fact, cut flowers, plants and bulbs represent 21% of Holland’s total foreign trade, a figure higher than its natural gas imports and exports.
While in 1995 around 50% of sales went to Germany, the trend today shows exports to increasing numbers of different countries. Today, 31% are sold to Germany, with countries such as the United Kingdom and those in Eastern and Southern Europe increasing in importance. Bloemenveiling Aalsmeer is very much a part of that trade. “Thirty-five percent of the flowers in the world are sold from Bloemenveiling Aalsmeer,” Huges says.
The business has enormous growth potential. Estimates by the Floral Marketing Association project that by 2025 the market for exports will total nearly $12 billion, up from about $6.6 billion today. In fact, the executive board and management of Bloemenveiling Aalsmeer see a trend toward fewer, but bigger orders. This is in part due to ongoing mergers and acquisitions within the industry – the result of difficult market conditions and the emergence of new sales channels such as supermarkets, gas stations, and do-it-yourself stores in additional to traditional vendors such as florists and garden centers.
With growers experiencing significant increases in their own costs over the past years, many are taking a closer look at the entire distribution chain. High fuel costs, in particular, are putting margins under heavy pressure.
“We realize there will be more direct trade,” Huges adds. “In fact, we are seeing more growers looking to sell more flowers direct from Kenya to Japan.” But Huges stresses that this is only possible if transportation providers in that market maintain product integrity throughout the entire supply chain. Next year, Bloemenveiling Aalsmeer will also operate as a logistics provider, taking on a 4PL role.
Fast to market
Currently, 90-95% of the product is shipped by air. “This is especially important when you look at value,” says Huges. “Fresh produce drops in value around 15% per day while in transit, compared with personal computers that drop one percent in value per week.”
In order to save costs, some products are increasingly being shipped by ocean, such as decoration greens or baby’s breath that are imported from Israel via containerized freight to Athens, and then trucked to the Netherlands. Technology is also increasingly being improved that can put flowers in a “coma” while they are being shipped, thereby preventing wilting or spoilage.
Immediately following the auction, or after arrival at Marketing & Verfoop Aalsmeer (MVA) -- a sales channel where growers, exporters and wholesalers can also make agreements in advance regarding price, quantities and the type of packaging for their floral purchases, the flowers and plants are prepared for shipment. Various batches are split up, re-combined, or even repacked or fashioned into bouquets, depending upon where and to whom they are going.
“Eighty-five percent are exported the same day,” says Huges.
Companies such as Holex Flower BV, located minutes from the Bloemenveiling Aalsmeer trading hall, provides freight forwarding services.
“We export flowers to the United States and are the market leader there,” says Paul Hoogenboom, Holex managing director. “One-third of the flowers that are exported from the Netherlands to the United States come from Holex.”
Ninety-eight percent of all shipments are transported via air and maintained at a cool temperature that does not vary within one-half degree Celsius. The company ships approximately 7,000 Dutch boxes per week, with the average size of box at nine volumetric kilos.
Most shipments are flown by American Airlines (AA) through London. “From London they are shipped to New York, Miami, Chicago and Boston,” Hoogenboom says. Hoogenboom finds New York’s JFK is the easiest airport through which to ship. “We experience the fewest holds,” he says.
Hoogenboom remarks that Holex uses KLM on only a limited basis since their network is limited in the United States.
“We prefer to ship out of Amsterdam Schiphol Airport , but it is cheaper to fly via Heathrow,” he says. “We utilize AA trucking from here to London, with shipments leaving here at 3:00 pm and arriving Heathrow by midnight.”
The shipments are placed on skids at Holex’s facility in Aalsmeer, and palletizing or containerized in London by American Airlines. Expeditors handles the shipments on the receiving end in the United States. No shipments are insured. “We replace shipments if the sales have already been made,” he states.
The two percent of product that Holex ships by ocean consists of approximate 2,100 stems of tulips, or five million tulips per container.
“We use approximately 22 reefer containers per year,” Hoogenboom reports. He reveals, however, that US Homeland Security rules have resulted in ocean shipments taking on average three days to inspect, thereby compromising the quality of his shipments.
“The Japanese inspect product here, so the risk is smaller,” he says. “Canada is also easy. We can pick up our sea containers the next day.”
Consequently, Holex is considering sea freight to Canada, then trucking shipments into the United States. “If we can truck our shipments to the United States in one day, we will be able to save two days in transit time,” he says.
Without a doubt, speed to market is imperative in this highly perishable trade. And with Bloemenveiling Aalsmeer behind many of the shipments, the Dutch reputation for quality is a top priority.