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Coffee shipments are delayed from Brazil to Southeast Asia because of soaring freight prices stemming from Covid complications which have caused a shortage of containers. Photo by Maja Wallengren
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Global robusta exports for Oct-Jun fell 4.8 percent mostly because of the container shortage, according to the latest ICO report released in August. Photo by Maja Wallengren
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Delays to robusta exports from Vietnam, the world's second largest coffee grower after Brazil, are expected to continue due to a shortage of containers. Photo by Maja Wallengren
Vietnam and Indonesia, the world’s 2nd and 4th largest coffee exporters respectively report difficulties with the lack of containers and soaring pricing.
Coffee shipments from Southeast Asia’s top growers Vietnam and Indonesia face new delays stemming from the soaring freight prices and a shortage of containers, a situation which hampers efforts to get the export-import flow back on track from backlogs that started with the arrival of Covid-19, cargo operators and exporters said this week.
This latest news of further delays to coffee imports from Vietnam and Indonesia dampen hope for coffee roasters that the world’s 2nd and 4th largest producing countries, respectively, will be able to fill in for some of the delays and crop losses currently unfolding in Brazil, the world’s largest growers and exporter, where drought and frost cut supply short on top of ongoing backlogs from dealing with freight prices and shipping complications.
“The prolonged shortage of empty containers has caused a sharp increase in the cost of coffee exports, reducing the competitiveness of Vietnamese coffee in the world market," said Simexco Daklak Ltd, one of Vietnam's leading exporters, in its latest market report, a copy of which is reviewed by STiR coffee and tea. "The average sea freight to US$ is around 6,500 US$/container and it’s very hard to get the booking due to low space of vessel.”
The global coffee trade already faces growing challenges with shipping delays on multiple fronts, first from continuing complications from soaring freight prices which first broke out in early 2021 causing disruptions to the supply chain and which worsened with a one-week-long blockage of the Suez Canal last March when the container ship Ever Given got stock.
“According to the import and export department under the Ministry of Industry and Trade, Vietnam's coffee exports will face many difficulties,” said Simexco, a state-owned company which first started operating back in 1993 in Vietnam’s southern coffee capital Buon Ma Thuot in the Central Highlands region where over 70% of Vietnam’s coffee is grown. “In addition to the complicated situation of the Covid-19 pandemic, such difficulties are also caused by large-scale social distancing measures that have been negatively affecting the production and transportation of goods,”
Adding to an already long list of growing trouble to importers and roasters, the US coffee port of New Orleans was shut down in the wake of Hurricane Ida making landfall as a furious Category 4 hurricane on Aug. 29 along the coast of Louisiana. This is further aggravating the shipping delays which may slow down shipping activity in New Orleans for weeks, Nick Gentile, managing partner for NickJen Capital Management, told Bloomberg News in an Aug. 30 report.
"Due to the impact of Hurricane Ida in the region, [ICE] is prohibiting the certification of coffee in all New Orleans exchange licensed coffee warehouses,” said the ICE futures exchange in a Aug 30 statement concerning the two certified warehouses under ICE administration used exclusively for certified stocks. “The prohibition, which is effective immediately, will remain in place on each licensed warehouse until [ICE] is able to inspect each store and confirm that it meets all requirements.”
Robusta coffee exports out of Indonesia’s Lampung region on the island of Sumatra in July, meanwhile, were down 66% to 6,689 metric tons, or 111,489 bags, Reuters News reported in a report released on Aug, 2, citing lower offshore demand because of Covid-19 complications.
Industry concerns are now growing that what is already reported to be delays in imports of up to two months from Brazil alone now are being pushed further back, both because of damage from drought and frost to the current 2021 harvest and flowering for the 2022 crop in Brazil cutting supply short. But any hope of filling the gap with crop from other origins were leaning heavily on Vietnam and Indonesia and this now seems unlikely to happen.
The shipping delays caused by container shortage caused robusta exports from Vietnam and Indonesia to go down and world robusta exports dropped 4.8% to 35.234 million bags in the period from Oct. 1, 2020 to June 30, 2021, compared to the October-June period the year before, ICO said its latest market report released in mid-August.
“With the lack of empty containers and many difficulties in exporting coffee . . .the upcountry inventory in July is 139,200 mt, 16% lower than last month,” said Simexco in its report. The main roaster season in the US and Europe take place between October and November in preparation for the holiday and winter season but roasters typically need to ensure getting all supply cleared through ports during August and September in order to stay on schedule. Simexco said local authorities in Vietnam are working to find solutions to the shipping delays by easing some of the pandemic restrictions on movement.