Freight movement is the art of moving cargo from one-point to another, without damage or corruption, during a specific time window. A properly running commodity market requires a transparent marketplace with a method for establishing price transparency, uniformity, and a method for trading.
One location has perfected the art of both. FloraHolland, just outside of Amsterdam is the largest flower exchange and marketplace in the world. The exchange handles over 12 billion flowers a year, generating a notional trading value of 4.7B euros. The exchange is a combination of a very impressive logistics facility with a financial trading floor.
Each morning, staring at 4AM locally, flowers are brought in from around the world to the 1.4M square meter facility, where over 4000 buyers will bid on the daily catch. Most of the buyers are actually remote, bidding from a secured internet location. For the 70 or so buyers in the building, they are given an in person view of flowers that will be bid on that particular morning. The remote folks will bid on the flowers by looking at notes on the grower, flower type, and origin location.
Trading for a particular flower starts at a price in a reverse auction format, dropping until a buyer commits to the order. This goes on all morning, until the entire lot of flowers for that day have been purchased. Trading closes down at 1PM.
Flowers that are not sold on a given day will be destroyed. On a typical day over 30 million flowers will exchange hands.
As buyers acquire product, the flowers are loaded on an intricate system of automated trolleys. There are 250,000 trolleys in total. These trolleys will enable the logistics professionals and handlers to route the flowers through the warehouse and onto whatever mode of transport is required to get them to wherever the buyer requests.
From there, the flowers begin their journey onto their final destination. Most of the flowers are sent out by truck, with Germany being the largest destination. Germans bought over 1.4B euros of flowers from the exchange last year. Other countries that receive trucked flowers are France, Belgium, and the UK.
Brexit has complicated things. Because of the delays at the ports around the UK, it has been riskier for British buyers to purchase flowers from the exchange than before. Also, with the value of the sterling dropping against the euro, the flowers out of Amsterdam are far more expensive.
Because of the sensitivity of the flowers, they must be kept at 0 degree centigrade for most of their journey. On trucks, this includes putting the flowers in the back of a reefer trailer. For flowers that will be put on planes, they are loaded onto special flight containers that maintain environment conditions for the delicate cargo.
The total life of a flower is measured in weeks, with an expected life of just three. Ethiopia is FloraHolland largest supplier. The African country produces flowers from fields that are the size of 1400 soccer fields. Kenya is the largest producer of roses in the world and also has an enormous presence at the exchange. Roses remain the most popular flowers exchanged.
FloraHolland considers themselves a logistics company first and derives most of its money from logistics services. Flower growers rent trolleys for 10 euros a day. The exchange also rents out space to growers and buyers and coordinates with freight forwarders.
The real growth for FloraHolland is beyond the massive facility’s walls. They are investing heavily in an online platform that will help growers manage supply and logistics. At the end of the day, if there is anything that the Netherlands has figured out throughout history, the money is in flowers and freight.
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