Kenya flower industry bets on sea transport to remain competitive

As flower exporters struggle to get their produce to international markets in what is attributed to exorbitant freight charges and lack of capacity to accommodate the cargo, exporters are looking for other cost-effective alternatives with sea freight becoming a preferred choice.
While flower demand continues to grow, the incessant hike in freight charges, having increased by an estimated 20 per cent at the moment, has put the brakes on the country’s ability to capture more markets and on growers’ potential to scale production. It has also heavily affected exporters’ bottom line. Transportation costs are now estimated to take 50 per cent of the production cost.

Air freight constraints

For example, a kilo of flowers is currently being charged an estimated Ksh600 across the board which majority of growers and flower farms says is untenable and unsustainable. On the capacity side, while there are on average about 5,000 tonnes of weekly flowers ready to be transported to various international destinations, only 70 tonnes weekly cargo capacity is available which has added to the misery of the exporters.

“The air freight industry is well-developed in Kenya and highly flexible to meet demands. It is however clear that air freight capacity will not increase in the short term and that prices will only rise. The capacity and environmental pressures to be carbon neutral (communicated via retailers) is resulting in production moving away from Kenya (to countries which do not require air freight) for supply into Europe,” read a section of a report dubbed ‘A study on sea freight for Kenya’s agricultural exports’ that was commissioned by the Embassy of the Kingdom of the Netherlands.

And while the main transport method for global trade is maritime shipping which accounts for 90 per cent of all shipments, Kenya still lags behind in this space, with only a fraction of produce including avocados and pineapples being transported by sea, until now. The country is now training its eyes on maritime shipping of flowers joining its competitors like Columbia that exports over 70 per cent of its horticultural produce by sea.

Enter maritime shipping

The arguments advanced in favour of ocean shipping is that it is cost efficient, reducing transportation cost by up to 50 per cent, cutting carbon emissions and providing more flexibility compared to airfreight.

Buyers are also becoming increasingly critical of where the flowers are grown and how they get from the farm to the market, creating a need for sustainable means.

“The Kenyan flower industry is predominantly market-driven and responds to the dynamics and needs of the markets. The increase in freight charges and lack of capacity to transport flowers despite the rise in demand has inspired the industry to look to favourable alternatives. Shipping flowers by sea is going to be a game changer in years to come and will redefine Kenya’s place in the international flower market,” said Victor Juma, Business Manager for East Africa at Syngenta.

To demonstrate the potential of shipping flowers through sea, the United Kingdom’s Foreign, Commonwealth and Development Office (FCDO) set up the Vulnerable Supply Chains Facility (VSCF) in partnership with Flamingo Horticulture. Through Flamingo farm Ibis workers were trained on sea freight export. Seven months after the introduction of the project, the firm had shipped five containers of produce from Kenya to UK by sea protecting an estimated 18,000 workers from loss of jobs.

Equator Flowers, an offshoot of Sian Roses, is exploring shipping its flowers by sea arguing that the cost is between 40 and 50 per cent cheaper than airfreight and helps the farm reduce its carbon footprint.

“The world flower industry is a highly dynamic industry. Product varieties, production techniques and retailing arrangements are all undergoing continuous change. A number of trends are having a significant influence on the flower industry for example the increasing importance of quality products and the need to invest more capital to achieve this,” said Nehemiah Kangogo the General Manager at Equator Flowers.

Kenya has now inked a deal with Netherlands to set to strengthen the efforts in adoption of sea freight for perishables in Kenya.

That Framework of Cooperation was signed by The Ambassador of the Embassy of the Kingdom of the Netherlands, Mr. Maarten Brouwer and the Chairman of the Kenya Flower Council board Mr. Richard Fernandes during the opening of the International Floriculture Trade Exhibition (IFTEX) at Oshwal Center in Nairobi, Kenya.

“Every cloud has a silver lining and with the massive hike in cost of air freight we have seen more focus shifting to the development of finding sea freight solutions. The success and resulting uptake of shifting flowers by sea has been quite remarkable. Kenya is not just the home of the world best flower growers but also home to incredible ingenuity. The development of sea freight is a positive step forwards from a more sustainable and carbon reduction way for our sector,” said Mr. Fernandes.

To realize this, a fulltime position of an agro-logistics coordinator has been developed to coordinate the initiative. The incumbent will be based at Kenya Flower Council for two years.
By combining both air and sea transport, Kenya would be well-positioned to become the East-African perishable hub and ready for the future. It is however important to incorporate the supply chain requirements of perishable goods in new infrastructures. For instance, Standard Gauge Railway (SGR), ports, container depots as well as realizing efficient customs clearance procedures of perishable goods leaving Kenya for example. There is know-how and expertise in the Netherlands geared towards achieving this. Within the Framework of Cooperation, the Kenya Flower Council and the Netherlands commit to work on the adoption of sea freight for perishables in Kenya, which will lead to clear benefits for the Kenyan public and private sector. The transition for Kenya to become the East-African perishable hub will not only lead to more jobs (SDG 8), but also to a significant reduction in the carbon footprint (SDG 13).

“By combining both transport systems namely air and sea, Kenya would be well-positioned to become the East-African perishable hub and ready for the future. Sea freight also opens new markets for Kenya including to the Middle East and Far East,” said Ambassador Brouwer.

Industry players have also welcomed the move, terming it timely and sustainable but calling on laid down of the requisite logistical measures to ensure the country reaps from this move.

“It is inevitable that Kenya had to move to sea freight. Its greatest competitors like Columbia and some countries in Europe are already doing it. Pricewise it is more competitive and it has proven itself as a more sustainable solution. However, for certain crops there is no recipe for keeping them fresh in the container which poses a challenge with sea transport. Again, there are no direct routes from Kenya to Europe so the industry must move with the big container companies to make this happen,” noted Leon de Mooij, the Area Export Manager at Royal Van Zanten, a Holland breeder.

Welsey Tonui the Sales Manager Kenya at Selecta Cut Flowers agrees: “With the high cost of air freight and capacity issues, sea freight is offering a cheaper and sustainable alternative. There are still trials with sea freights to see which flowers would work well with sea transport. Carnations work well. Other products like gypsophila are also being tested. There are however challenges with this mode of transportation. If sea freight takes 30-40 days then it affects quality at the end of the day. Sea containers get lost which is something that must be addressed.”
As emerging shocks like climate change and COVID-19 disrupt supply chains, businesses are looking at innovative ways to stay afloat and remain competitive while producing sustainable flowers. Kenya’s focus on sea freight is promising to be its silver bullet.