Miami, Still the Cupid of Airports
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Feb 10, 2015

Miami, Still the Cupid of Airports

By Kellogg Insight | Based on the insights of Marty Lariviere

This Valentine’s Day, if you buy a rose—or any other flower, for that matter—chances are good that it will have passed through Miami International Airport. Last year, the airport accounted for 85% of flower imports, with the majority of those coming from South America.

Getting roses from farm to shop is a delicate operation, especially when global demand surges in early to mid-February. More than two hundred million roses are sold for Valentine’s Day alone, accounting for over 30% of florists’ annual revenue.

Flowers are fragile, highly perishable products. Most will last for about ten days, assuming they have been packaged and cooled according to industry standards—for roses, the suggested temperature is typically 33–35 degrees Fahrenheit. On Valentine’s Day in particular, they need to be shipped and processed quickly.

That means most flowers end up flying into the United States. After harvests in large flower-exporting countries like Ecuador and Columbia, getting the flowers to market requires advanced cooling centers, refrigerated trucks, and a team of U.S. Customs inspectors who sort through stems around the clock. Miami is one of the few airports that offer all of these services.

The story of Miami’s floral dominance dates back to the 1970s, when the airport became a gateway between the U.S. and Latin America—just in time to capitalize on the growing demand for fresh-cut flowers. Its peers around the world include Amsterdam, a traditional flower hub; Nairobi, which mainly supplies Europe; and Dubai, home of the Flower Centre, a state-of-the-art $300 million facility. Domestically, only Los Angeles and Dallas have sought to capture more of the market.

Chicago officials once had dreams of making O’Hare International Airport a flower hub. With its central location, expansive airfield, and hundreds of connecting flights, Chicago seems like a good candidate for collection and distribution. In 2012, Mayor Rahm Emanuel even discussed the idea with Netherlands Prime Minister Mark Rutte.

Making this dream happen is a complicated prospect. Marty Lariviere, a professor of managerial economics and decision sciences at Kellogg and author of The Operations Room blog, explains why the rose supply chain is a difficult one to manage. “For one thing, unlike auto parts, it’s not just a matter of clearing customs,” he says. “There are additional regulations for agricultural products—there’s the fumigation process, for example.”

The Miami airport is equipped not only to accommodate millions of roses, but also to keep them at optimum temperature, as well as to satisfy the authorities over at Plant Protection and Quarantine. To compete, Chicago would have to build an even bigger handling facility.

There is also the challenge of adding more cargo flights. “International travel has always been more regulated than domestic travel,” Lariviere says. “It’s easier to add a flight to Kansas City, but the flight between O’Hare and Bogota will be more regulated.” And while there is usually cargo space reserved on every passenger flight, those are subject to consumer demand. “Airlines always want to have a side business for freight,” he says, “but it can’t be developed overnight.”

Theoretically, one of the advantages of having a cold chain is the ability to transport not just flowers, but other perishable products, ranging from produce to seafood to pharmaceuticals. “The problem,” Lariviere says, “is that you have different distribution channels—the distribution channel for produce may not be the one for flowers.” That means airports are forced to commit to handling some products rather than others, and therefore invest in facilities that are more specialized than they might wish.

Airports face a trade-off when it comes to transporting cargo. Some, like Memphis and Louisville (home, respectively, of the FedEx “SuperHub” and UPS “Worldport”) earn most of their revenue transporting cargo for one delivery service; both are among the world’s busiest. In part, their success is due to the fact that neither is located close to a major metropolitan area, where passenger flights and road traffic would slow their shipping business down. Larger airports must constantly balance addressing global travel patterns and capitalizing on cargo.

As the port of entry for flights coming in from Latin America, Miami is still an ideal hub, and it has all the facilities needed to process those Ecuadorian roses. Lariviere doesn’t expect to see this change anytime soon. “If Miami has 85% of the market, that gives them economies of scale, so it’s going to be hard to take that business away.”

Photo credit belongs to Junior Henry. Published under a Creative Commons license.

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