Management column: Peak 2023: better and predictable end times

January 26, 2023
Logistics & transport
A much discussed topic among growers and buyers in 2022 was the end times of our logistics process. Despite numerous additional measures, we did not manage to get those end times right for a long time. Despite all our efforts, they proved unable to cope with the combination of labour shortages and extra supply on the clocks. That was frustrating. First of all for our customers, but certainly also for our logistics staff and for us as management. Even then, we said internally to each other, we have to find a solution for the peak in spring 2023.

Highly fluctuating energy prices and unpredictable weather create great uncertainty. It causes lagging volumes in the supply of flowers and plants in the first quarter. But it is all impossible to quantify exactly. Whether, like last year, products that cannot be sold in the direct channel will come in front of the clock, cannot be predicted. Nor when supplies will increase due to sunshine and temperature. That makes the challenge even greater. After all, it will be difficult to strongly scale up our manpower. The labour market is still very tight. That is why we started thinking about Peak 2023 very early on. This is a challenge for the entire sector and for us in particular because logistics services are a priority for us.

In consultation with growers and buyers

In consultation with us, growers and buyers have asked us to choose early and make clear choices. That is why we have already tied the knot. The outcome is that two important measures will take effect from 3 April. The most far-reaching is that in Naaldwijk and Aalsmeer we will opt for an accelerated start for flowers and an end sprint for plants. This will lead to better and predictable logistics results. The second measure concerns limited auctioning of higher volumes per transaction to contain the number of transactions. For the benefit of small buyers and for the sake of pricing, we will start small, but auctioneers will decide how quickly they can responsibly scale up to larger auction sizes.

This choice was arrived at after consulting growers and buyers. We also discussed with them the scenario of not taking any additional measures or regulating the supply and, thirdly, using employees of chain partners in our processes. The sessions showed that doing nothing is not an option. We agree. Hardly anyone was keen on supply regulation either. It is also an exceptional measure that you deploy when the urgency is high, like at the beginning of the corona crisis. The third option, that of using external staff, was ruled out beforehand, because research among growers showed that it would not yield results. If volumes pick up, every link in the chain will be busy and no one will have employees to spare.

Staff shortage

Of course, we also discussed the elephant in the room. Because how big is this staff shortage, really? We have about 350 permanent vacancies for logistics staff. Some of them we fill with temporary workers. It is expected that on the busy days during peak and summer, we are short about 200-250 men across all export locations. These are a lot of vacancies that you can't just fill in the tight market. Especially not if you are not the most attractive employer because we can 'only' offer 20-hour contracts. It is an important reason why the sector rhythm of starting auctioning at 6 am and delivering within three hours is no longer tenable. We want more spread out so we can offer longer labour contracts.

We are taking a first step in that direction with the measure accelerated start flowers. That is why it will remain in place even after the peak. Are we doing everything we can to recruit enough staff? We can answer a resounding yes to that. Besides a large targeted recruitment campaign that yielded more than 500 new colleagues last year, numerous initiatives are ongoing. Such as collaborations with employment agencies, student associations and deploying non-native speakers such as Ukrainians. Here, we always have to weigh up whether the efforts outweigh what it yields. If five people are busy bringing in one logistics employee, we are not doing the right things. Everyone at Royal FloraHolland realises how serious the challenge we face is. The fact that office staff are working plenty of peak shifts says it all. That is not a structural solution, but it is a welcome reinforcement until it is.

Flexible deployment

Unsurprisingly, nobody wants a repeat of last year. Hence, we are taking the two chosen measures. This is a necessary addition to regular measures such as early auction days, additional logistics means and intensive recruitment of logistics staff. The appeal of the two measures is that we can use them flexibly, according to the situation. In case there is less supply on certain days of the week or enough staff, an accelerated start of flowers is not needed or only briefly and our people can start distributing plants faster or even immediately. In that case, there is also less reason to auction higher volumes per tranaction. We do what is necessary to deliver flowers to the norm, but we don't auction unnecessarily higher volumes if we expect to meet end times. Plants we deliver later when it is busy, but regularly also according to the norm and only on the busiest days late in the afternoon. Perhaps most importantly for everyone: you know what to expect. As you would expect from us, we share the forecast end times via our website.

Flower buyers enthusiastic

We know from meetings with buyers that flower buyers are enthusiastic. For them, getting the flowers on time is very important. For plant buyers and transporters, it requires the most adjustment. We mainly get questions from growers about auctioning higher volumes per transaction, for instance about pricing. We can answer that auctioneers keep a close eye on this. We are still working out how to limit Clock Pre-Sales (KVV). This was a learning point from previous tests with auctioning higher volumes per transaction.

The measures require adaptation from all of us. With these two additional measures, we will succeed in achieving predictable end times. Using data, we can predict the size and timing of supply volumes. The same goes for logistics end times, based on expected available staff and number of transactions, among others. We know that with these measures, we end up with the most predictable logistics. It is the best response to the challenge that the peak poses to the industry. By announcing early, we are particularly enabling buyers to prepare for the peak. If we can help with this, please let us know. After all: peaking is something we do together.

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