Wednesday, Oct 19, 2005
A new logistics hub poses a threat to Amsterdam's pre-eminence in the Dollars 4.7bn global industry, reports William McSheehy
The desert sands of Dubai might not be an obvious place to trade fresh cut flowers. But if the government has its way, the Gulf emirate will soon become a global floriculture logistics hub - potentially threatening Dutch pre-eminence.
At the end of this month the Dubai Flower Centre (DFC) opens its doors and by early next year hopes to be attracting international shippers and wholesalers.
By routing their goods through tax-free Dubai - whether South African proteas, Kenyan green beans, Malaysian bouquet foliage or Sri Lankan orchids - shippers would be able to cut time and money off the chain linking 15 producing nations to Asian and Middle Eastern consumers.
Japan, Hong Kong, Singapore and the United Arab Emirates were among the top 30 cut flower importers in 2003, according to the latest International Trade Centre statistics. They also showed the global flower import trade to be worth Dollars 4.7bn (Euros 4bn, Pounds 2.7bn).
Where once an east African rose would have travelled north to Amsterdam to be auctioned, packaged and flown on to a Tokyo florist, in theory it will soon be able to arrive faster and fresher by heading directly eastwards. Until operational, however, DFC officials are refusing to estimate potential cost or time savings.
The centre comes under the wing of Sheikh Ahmed bin Saeed Al Maktoum, head of Dubai's airports and civil aviation authority and chairman of flag-carrier Emirates airline. As part of a strategy to increase cargo flows through Dubai, preferably using his aircraft, the government has invested about Dollars 70m in the DFC facility at Dubai International Airport capable of handling 180,000 tonnes of perishable goods annually. As construction of a new six-runway airport to the south of the city gets under way, two more phases of the centre are envisaged.
Ian Strachan of Zurich-based ADI Consulting, the company contracted to manage the DFC, says east Asian flower shippers "want to shorten delivery times from African producers, but can't do that without the ability to sustain the cool chain".
Inside the largely automated refrigerated centre he runs, which looks like Sydney Opera House fused with a Wal-Mart, a sustained cool chain is the top priority. Mr Strachan claims to have received 300 applicants for his 20 warehouse chambers, and says that 12 have already been offered to tenants from the Netherlands, Sri Lanka, Kenya, Jordan, Ecuador and Japan.
The centre insists it is not seeking to take business from the Netherlands but that it will open new trade routes for perishable goods between Africa and Asia, just as Miami did between Latin America and the US a decade ago. Nevertheless, some Dutch shippers are concerned. Quint Wilken, managing director in the Netherlands for the Cool Chain Group, says Dutch brokers are already investing in overseas facilities to protect their market share.
"I think if the Dubai centre is successful as a handling depot, then it will be a big blow to the Netherlands," Mr Wilken said. "If it also becomes an auction house, then that will be a disaster for people here."
The DFC has shelved plans for an auction house in the first phase, but has not ruled it out at a later stage. About 60 per cent of the global flower trade passes through Dutch auction houses.
Felix Schrandt, chief executive of the Flower Council of Holland, is taking a more phlegmatic view of Dubai's ability to disrupt the business of the Dutch flower wholesalers he represents.
"I expect some exporters will be interested, once they see how Dubai develops as a hub," he said. "It took the Netherlands half a century to build its horticulture export industry though, so I don't believe that can be copied overnight."
By WILLIAM MCSHEEHY
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