Simple steps to upgrade the FOB Direct Market from Kenya to European retailers

Around 50% of the flowers shipped to Europe from Nairobi, Kenya – Africa’s biggest air hub – are sold ‘Free on Board’ (FOB). This means the buyer pays for forwarding and is responsible for the flowers. In this article, we explore pain points and offer practical solutions, highlighting how relatively simple efficiency and quality measures can hugely improve the condition in which flowers reach Europe, saving costs and generating more money for buyers and growers alike in the FOB direct market from Kenya to European retail.

Challenges for buyers using the FOB model

Against the backdrop of global growth, today’s flower supply chains face pressures from many sides. These include sustainability and carbon footprint demands, rising quality expectations from consumers, labour shortages in countries like the Netherlands and the United Kingdom, reduced air freight capacity with rising freight prices due to the COVID-19 pandemic – and, more recently, a dip in demand and prices due to the war in Ukraine.

Added to these pressures, players using the FOB forwarding model face challenges of their own. While the FOB model has advantages, it also has drawbacks, . particularly, if you purchase flower volumes from a large number of different growers, with all of these growers delivering their diverse products in their own ways to Nairobi - or to any other forwarding port you choose anywhere in the world.

Typical FOB inefficiencies and losses for buyers

  • Cost and quality inefficiencies in packaging and consolidation at the forwarding port, as shipments from a variety of farms have to be brought together
  • Supply chain optimization is difficult for buyers dealing with a variety of suppliers, as they need to upgrade each link in the chain for every farm, while carrying the cost of forwarding themselves
  • Hard-to-manage quality losses along the way, due to a diversity of supply chain issues that have to be traced back to different origins
  • Multiple grower contact points, with inefficiencies and delays in negotiations
  • Quality differences in the end product
  • The additional costs you will incur – packaging, paper, plastics, fertilizer, and chemicals – are high

Challenges for growers using the FOB model

As a grower, you may think using the FOB model relieves you of the pains listed above. However, as farmers are not in the driving seat, many of these issues come right back to you, in the shorter or longer run.

How FOB challenges can hinder growers

  • You need to account for sourcing costs for input like cardboard and fertilizer, as the costs faced by the buyer may be passed on to you, increasing pressure on your margins
  • While not directly responsible, you need to work with your buyer to overcome any concerns 
  • A buyer can place claims with you for logistical and quality problems occurring during forwarding
  • Lack of influence on how your flowers reach their final destination makes supply chain optimization inaccessible to you, and can damage your reputation and margins
  • Without vertically integrated supply chains, inefficiencies cost you money which would be saved with streamlined logistics 

The underlying challenge: fragmentation

The central problem underlying these various challenges posed by the FOB model is that the supply chain, at least at the front end, is fragmented. Unlike Cost, Insurance, and Freight (CIF) exports, in which a player has a simple chain with one farm, one shipment, and one destination, and is in control of every link in the chain, the FOB buyer has to work with dozens of points of contact. This makes it difficult to control and optimize for buyers and growers alike. And that, in turn, opens the door to leaks and losses that can severely damage everyone’s margins. The model needs to change. 

The solution: integrated optimization based on standardization

FlowerWatch has already helped many players and supply chains to overcome this problem for good. This is because our approach to quality is based on the FlowerWatch Standards we have developed for every link in the chain. Using science-based Key Performance Indicators (KPIs), we enable our clients to confidently manage everything from growing and postharvest practices to packaging, cold chain management, and both air and sea freight. With experts both on the ground in Kenya and across Europe, we can assist you in optimizing your logistical operations at every step of your supply chain, checking everything from farming standards to packaging.

By integrating our smart solutions, we can help you reduce costs by increasing your pack rates, letting you ship more flowers without spending more on air freight, as well as speeding up the transition to sea freight and storage solutions without the risk. In the FOB direct market, getting FlowerWatch Approved Certification for all those individual suppliers delivering flowers to Nairobi – as well as for the freight forwarder who then takes over - will improve logistical efficiency and product quality, while reducing cost and losses. And often the gains are yours through relatively simple measures, such as better packaging practices and pack rates, or a more tightly monitored cold chain. With FlowerWatch, we can offer savings quickly, without added risk. 

These gains are yours with FlowerWatch 

  • Improved logistics and post-harvest practice based on worthwhile, achievable, and measurable KPIs
  • A more efficient and competitive supply chain 
  • Improved sustainability 
  • Improved packaging quality to reduce damage
  • Improved packaging efficiency to raise pack rates and cut freight costs
  • Meticulous cold chain management to ensure perfect conditions from farm-to-florist
  • Real-time data monitoring with data loggers to find and fix – with a standardized solution to prevent recurrence – any issue occurring on the way
  • Access to the latest flower science for solving cultivar or other challenges
  • Training, tools, and support for every player in the chain
  • A quick and risk-free transition to sea freight 

With international crises pushing the floriculture industry’s need to adapt even further, FOB buyers and growers face a challenge. By working with a partner like FlowerWatch, you can overhaul your logistical operations to help you overcome these issues. As a subscriber, you have access to FlowerWatch Standards tailored to your role and supply chain, on-site training, performance monitoring, and continuous optimization. Our teams in the Netherlands and Kenya are equipped and ready to help you benefit fully from the FOB model and navigate the wider challenges of today’s flower industry confidently and sustainably.