It's the largest trading floor in the world - a conjoined complex of cavernous warehouses as large as 200 football fields, or the size of Monaco. Inside, 22 million separate items are auctioned off every weekday and distributed to buyers, mostly in Europe and North America. The volume is expected to double in the next 20 years, so the trading floor is constantly expanding.
The items being auctioned are flowers and plants of some 13,500 varieties. Most are grown in the Netherlands, but there are more being sourced in warm-weather countries. The bewildering array of flowers and plants are sold early each morning at the Aalsmeer Flower Auction, which sets the world price for each variety. Bloemenveiling Aalsmeer, the Dutch grower cooperative that runs the auction, is located near Amsterdam's Schiphol Airport, from where most of the flowers are airfreighted to wholesalers in 134 countries. The logistics are enough to give even the most seasoned freight forwarder an Excedrin headache.
Enter the cavernous hall that constitutes the trading floor and you'll think you have walked into an ant colony. Aalsmeer's 1,800 employees work under one roof, one so large that many of them use bicycles to get around. Hundreds of electric-cart drivers scuttle around the hall, pulling trains of as many as 15 flower trolleys from auction rooms to the storage rooms that serve as holding tanks where the plants and flowers are sorted by buyer and put back onto trolleys.
Then the flowers are conveyed on the Aalsmeer Shuttle, a computer-controlled system that carries the trolleys by suspended rail through the air and over the road in a covered, air-conditioned fly-over eight miles to VBA South. There, the wholesalers and exporters who have purchased the flowers package them for shipment. At peak times, the shuttle can convey 1,300 trolleys with 2,600 carts every hour, the equivalent of 120 truckloads.
Of the total auctioned off every day, 85 percent is exported to other countries, mostly in Europe. The rest are sold to Dutch buyers. The largest export market is Germany, followed by the U.K., France, Italy and Belgium. The fastest-growing markets are Russia and eastern Europe. The U.S. ranks far down the list - Americans buy fewer flowers per capita than Europe - and is dropping with the decline in the dollar's value against the euro.
At the heart of this complex system are the dozens of rooms where the auctioneers conduct Dutch auctions - meaning they set the starting price high and lower it until one of the many bidders in the room or at a remote location anywhere in the world hits a button on their computer screen to indicate that they will accept the price. A Dutch auction permits the rapid sequence of bids, because a sale never requires more than one bid. The buyer pays the last announced price.
The Aalsmeer flower auction is so successful that it has made Bloemen-veiling Aalsmeer the largest world's flower auction, with 1.7 billion euros ($2.2 billion) in sales in 2005; sales are expected to grow 3.5 percent this year. "They call us the Wall Street of roses," said Timo Hughes, the company's chief executive since May. But the global system of flower cultivation and distribution is changing quickly, and Hughes is quick to recognize this.
"High energy costs are forcing the movement of growers overseas," he said. "We realize that in future there will be direct shipments of flowers from Kenya to the U.S. or Japan, without their coming through here."
Seventy percent of the flowers and plants auctioned at Aalsmeer are produced in the Netherlands in the open during warm-weather months, and in heated greenhouses the rest of the year. Thirty percent are cultivated in warm-weather countries, especially Israel, Kenya and Ethiopia. Already, 25 percent of the growers in Ethiopia are Dutch.
"The biggest threat to Aalsmeer will come if our buyers start buying direct from growers in Kenya or Ethiopia," Hughes said. "Already we are seeing more direct sales bypassing Aalsmeer."
That's why logistics plays such a large role in Hughes' vision for the future. "We will try to compete with direct sales by becoming more of a logistics provider, with a specialty in providing logistics for flower shipments," he said. "We will expand overseas to provide logistics services to growers and sellers."
Hughes is taking another giant step toward protecting Aalsmeer's pre-eminent position in the changing global flower market. He is merging it with FloraHolland, the second-largest flower auction cooperative in the Netherlands. The two cooperatives announced their decision to merge in October under the name FloraHol-land, which is combined with the recognizable logo of Bloemenveiling Aalsmeer, the red tulip. The head offices of the merged cooperatives are in Aalsmeer.
Together, the organization will control 60 percent of all Dutch flower exports. Aalsmeer has controlled 33 percent, and FloraHolland, 27 percent. "The main aims of the merger are to strengthen the market position for suppliers and clients, and (supply-chain) cost savings through increased efficiency," said Hughes, who is chairman of the combined cooperatives. "We want to generate transactions on the side of both suppliers and buyers at the lowest possible costs. For this, a further increase in scale is essential."
Another change in the offing is the way cut flowers are shipped. Currently, 95 percent of Aalsmeer's flower exports are shipped by airfreight, and only 2 percent are shipped by ocean transport. The rest are trucked over the Netherlands' jam-packed highways.
Amsterdam's Schiphol Airport "is of huge importance to us," Hughes said. He said the co-ops are considering building an underground pipeline for flowers to and from Schiphol, about eight miles away.
But even as he considers this project, Hughes predicts that a growing volume of flowers will be shipped in refrigerated containers by sea in the next five to 10 years. He said Aalsmeer is experimenting with the possibility of packing roses in gel and "putting them to sleep" so that they can stay fresh for four to six weeks.
Holex Flowers, a wholesaler-exporter that controls 30 percent of Dutch flower sales to the U.S., expects to increase its shipments of flowers by sea. Holex already is moving in that direction, largely because of the rapid rise in airfreight costs. Last year, Holex tested ocean shipments with tulips in 23 refrigerated 40-foot containers, each of which carried 210,000 stems.
The tulips were delivered to the U.S. market in reefer containers cooled to 32.9 degrees Fahrenheit. Paul Heegenboom, Holex's managing director, said the shipment went well. He said the flowers don't grow during shipment "and they arrive in better shape than airfreighted flowers."