Cut flower outlook dims on 127pc freight cost rise

Freight charges on cut flower have shot up by 127 percent after a majority of cargo flights grounded operations on fears of Covid-19 spread.

Kenya Flower Council (KFC) chief executive Clement Tulezi said the cost of hauling a kilogramme of cut flower has risen from Sh138.45 to Sh314.18.

“Pre-pandemic, freight forwarding companies used to charge between Sh127.80 to Sh159.75 on a kilogramme of cut flower, but now it costs between Sh298.20 to Sh617.70,” said Mr Tulezi.

He said the disruptions imply that exports can only supply 2,000 tonnes of cut flowers per week against 3, 800 tonnes demand.

“We are now relying on South-bound freight airlines that transport medical supplies and other equipment to Nigeria and South Africa to ship flowers to major markets,” said Mr Tulezi.

Kenya exports the bulk of its cut flowers to the European Union countries. Last year, exporters earned Sh120 billion from flower exports.

Mr Tulezi said the European market was now 100 percent open as countries ease lockdown measures.

He added that the local industry expected flower production to hit 80 percent by the end of the year.

On the challenge of freight consolidation, Mr Tulezi said it was the forwarding companies that had failed to reach an agreement, citing the “fear of losing business to rivals”.

“The consolidation hit a snag after companies said international rules govern them, thus they could not make individual agreements on freight consolidation,” he said.

In March, the KFC announced that it was engaging with freight companies on freight consolidation as demand dropped due to restrictions in the wake of the Covid-19.

“If we can consolidate the small exports that we currently make then it makes it viable for freighters to pick flowers even as they look at the northward bound flights,” said Mr Tulezi earlier.

This comes after the lobby group last month announced that the government was yet to release Sh4.2 billion in tax refunds it had promised flower farmers.