Bulk coffee shipment in vogue

Container shortage leads to bulk coffee shipment experience


In the world of the coffee trade, one ship crossing the Atlantic Ocean is garnering a lot of attention.

A bulk cargo ship, named Eagle, has left Lampung (Sumatra), crossed the Mediterranean and is now headed for New Orleans. One of the first such cargoes in more than 20 years, it is carrying sacks of robusta coffee stacked in its hold to the United States, where roasters are hungry for supplies.

The ship is part of a burgeoning experiment in the industry, with producers, roasters and traders trying to get around a global container shortage that is causing an unprecedented backlog of shipments.

“The moment we saw that shipments were getting delayed, that customers were having difficulty sourcing on time and accessing coffee, that’s when we started looking at the possibility,” Manish Dhawan, senior vice president of coffee at trading company Olam Food Ingredients, which chartered the Eagle, said in an interview. “If you talk to some of the older traders, the last time they did it was in the late 1980s, or maybe the early 1990s, so this is really kind of a new frontier for us as well.”

The staggered economic revival during the pandemic and the acceleration of online shopping have created an all-out fight for freight. This has made shipping containers at best expensive to move coffee and at worst impossible to get, driving up prices, which have reached decade highs due to shortages in Brazil this year.

Olam expects roasters to start using more old-school non-containerized shipping in the future. On another Eagle cargo, Arabica coffee from Brazil was recently discharged in Bremen.

Other breakbulk vessels also depart from the Brazilian port of Santos, where the world’s leading arabica cooperative, Cooxupe, shipped 108,000 bags of coffee to Europe on a vessel chartered by a customer in early December, according to commercial director Lucio Dias. The cooperative will handle two more shipments of non-containerized coffee bags in January.

“We did an experiment, as some customers have adapted to this new shipping modality to solve shipping bottlenecks,” Dias said in a telephone interview. “But it’s a complex operation.

Everything is more difficult in bag handling compared to containers, from inland transport at origin to receiving at destination, as only some ports have adequate equipment to lift bags from a ship’s hold, he said. Normally, coffee is dumped in bulk into special containers, or the bags are stacked inside containers to facilitate sea and rail transport.

Cooxupe expected to load its first ship with sacks in two days, but it took more than five because the operation was interrupted by rain, Dias said. Costs were also higher than initially estimated, prompting the cooperative to renegotiate the values of the new shipments with its customer.

Dias expects logistical bottlenecks to continue into the first half of 2022, as different nations adopt new isolation measures to combat the spread of the omicronic variant of Covid.

“Logistics are clogged around the world, and it will take a long time to unravel this knot,” Dias said.

Not everyone will be able to do such operations, which are coffee-intensive and capital-intensive. But market players are already talking about bulk sales as a way to ease the bottleneck that has caused coffee to pile up in Vietnam, the world’s largest producer of robusta coffee.

“I’m sure people will look into it, we’ve heard that a couple of ships are being planned and we’re evaluating our options,” said Olam’s Dhawan.

This could have an impact on prices, said Carlos Mera, head of agricultural commodity research at Rabobank.

“The robusta crops from Vietnam and Brazil are potentially record, so if shipments move a little more normally, that could drive prices down,” he said.

Source Bloomberg

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