Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

Toronto’s Pilot Coffee Roasters Acquiring Bridgehead Coffee for $3.6 Million

Toronto, Ontario-based specialty coffee roaster and retailer Pilot Coffee Roasters is acquiring Ottawa-based Bridgehead Coffee in a deal worth approximately US$3.6 million.  Bridgehead, which has 21 coffee shop locations throughout…

Bypass coffee brewing: How can it improve extraction?

There is a lot of science to brewing coffee. Whether knowingly or unknowingly, we trigger – and try to control – an almost endless number of chemical reactions to achieve the perfect extraction. To do so, we have to tweak different variables – such as grind size, temperature, and coffee-to-water ratio – to get the […]

Coffee News Recap, 26 Jan: Researchers create new genetic map to “future proof” arabica production, UAE & Italian Coffee Champions crowned at WoC Dubai and SIGEP & other stories

Every Friday, Perfect Daily Grind rounds up the top coffee industry news from the previous week. Here are this week’s coffee news stories. The word of the week is: competitions. Mon, 22 Jan Timemore launches crowdfunding campaign for upcoming Millab E01 portable electric coffee grinder. The wireless electric coffee grinder features a 5,000 mAh lithium battery […]

Ethos Agriculture’s Journey from Vision to Impact in Coffee Sustainability: Part Two

In the second half of this article, we discover how the Coffee Barometer attempts to bridge the gap between discourse and action, envisioning a sustainable future for the coffee sector. BY VASILEIA FANARIOTISENIOR ONLINE CORRESPONDENT Featured photo courtesy of Rodrigo Flores via Unsplash As we embark on the second part of our conversation with Ethos […]

Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

Understanding the Process: Carbonic Maceration

Continuing our series on coffee processing, we learn about carbonic maceration—a unique, newer processing method. BY TANYA NANETTISENIOR ONLINE CORRESPONDENT Photos courtesy of Cafe Imports Editor’s note: Check out more entries in our “Understanding the Process“ series here. The rise of the specialty-coffee scene has helped many people understand that talking about coffee as something […]

A Look at Digital Coffee Future’s Digital Origin Education Program

The new program connects coffee producers to one another, provides them with educational resources, and more. BY VASILEIA FANARIOTISENIOR ONLINE CORRESPONDENT Photos courtesy of the Cocaerol, Comal & Amprocal cooperatives in Honduras Since 2021, Digital Coffee Future (DCF) has been working on a digital training program to address the needs of coffee producers. In September […]

Philadelphia’s Café Don Pedro Seeks to Build Up Small Businesses

A Dominican-owned coffee roasting company called Café Don Pedro recently launched in Philadelphia with ambitions for direct trading and boosting more Latino-owned small businesses throughout its supply and distribution networks….

Brewing at Home and on the Road With Diego Campos

We talk to the first Colombian World Barista Champion and Diamante Coffee Farm founder Diego Campos about his brewing habits. BY TANYA NANETTISENIOR ONLINE CORRESPONDENT Photos courtesy of Diego Campos The focal point of a coffee worker’s professional life is, obviously, coffee. Whether for a customer, to check a specific production batch, or to verify the […]

Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

minimum dose size?

I use the Hario switch to brew my coffee and am trying to reduce my caffeine consumption. Hence I would like to brew smaller cups of coffee. I am currently using 10g of coffee with 160g of water. (1:16 Ratio) I am wondering if there is a minimum amount of coffee...

Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays

Like many other industries, conditions in the coffee supply chain can change quickly, and in turn, have a huge impact on all actors and stakeholders. Price volatility is one of the more pertinent – which is influenced by many factors. These include fluctuations in supply and demand, extreme or unexpected weather events, global economic downturn, and social or political unrest.

Additionally, these factors can also affect shipping coffee from producing countries to export markets. We saw this with Covid-19, which caused the freight industry to collapse and shipping companies to massively reduce their capacities. But with demand for coffee only growing during the pandemic, coffee stockpiles soon started to reach record lows.

Most recently, however, conflict in the Red Sea (a narrow inlet of the Indian Ocean in between Africa and Asia) and escalating political tension in the Middle East could have a huge impact on global trade. 

“Recent attacks on commercial vessels transiting the Red Sea have already started to disrupt key shipping routes, eroding slack in supply networks, and increasing the likelihood of inflationary bottlenecks,” the World Bank stated in its latest report.

Ultimately, this means the coffee supply chain is highly likely to be affected – so roasters need to best prepare.

I spoke to Betiel Medhanie, East Africa Logistics Manager at Sucafina, to find out how.

You may also like our article on why it becomes more expensive to ship coffee.

A large cargo ship on the Red Sea.

What’s happening in the Red Sea?

The current conflict in the Red Sea – which separates the coasts of Egypt, Sudan, and Eritrea from those of Saudi Arabia and Yemen – is incredibly complex and hard to unpack. 

In a more immediate sense, it largely stems from Israel’s ongoing war in Gaza, which first started in early October 2023. Since then, over 25,000 Palestinian civilians have tragically been killed. This conflict also has its own long and complicated history dating back to World War One.

In response to Israeli attacks in Gaza, the Houthis – a political and military organisation in Yemen – have started to attack commercial shipping vessels travelling through the Red Sea. Members of the group have also boarded or hijacked cargo ships, although no serious injuries or deaths have been announced so far.

To avoid the conflict as much as possible, shipping companies like Maersk, Hapag-Lloyd, and MSC have halted or rerouted their vessels. According to the Atlantic Council, seven of the ten largest shipping companies have now suspended operations in the Red Sea.

How will the conflict affect global trade?

Simply put, the Red Sea is one the most important trade routes in the world. In a recent article, the Guardian stated about 12% of global trade passes through the Red Sea, including 30% of global container traffic. This equates to billions of dollars of goods passing through this route every year.

So with many freight companies avoiding the Red Sea and rerouting around the Cape of Good Hope (on the southern tip of Africa), total shipping times will increase by a few weeks. Moreover, shipping companies who choose to travel through the conflict zone are also facing higher insurance risk premiums. Either option comes with its own unique challenges and uncertainties.

There have been efforts to stop the attacks on and hijacking of cargo ships, including the formation of the Operation Prosperity Guardian coalition. But as of now, the conflict is still ongoing.

Workers in a green coffee warehouse in Aquires, Costa Rica.

Impact on the coffee supply chain

The vast majority of the world’s coffee supply is transported from producing countries to export markets by cargo ships. This means many green coffee buyers and roasters are sure to be affected by the conflict in the Red Sea – mainly as a result of ensuing delays and higher shipping prices.

“Most carriers have paused service or rerouted vessels from the Bab-el-Mandeb Strait because of the continuing attacks on vessels there,” Betiel says. “Those who have continued service have introduced a war risk surcharge and declared force majeure.”

This is a common clause in contracts which essentially ensures both parties are not liable to fulfil their obligations when an extraordinary event or circumstance occurs beyond their control, including conflict.

“The diversion is causing more traffic in the Suez Canal and in general, we’re seeing transit delays of two to three weeks and slow container turnover,” Betiel explains. “If this continues, we anticipate that reduced capacity could trigger increased rates on top of the already implemented surcharges.”

Drawing comparisons with the pandemic

Shipping delays aren’t an uncommon occurrence in any industry. The last time we saw disruptions this significant, however, was during Covid-19.

With so many businesses forced to close, out-of-home coffee consumption took a huge hit. But this was offset with a simultaneous rise in at-home consumption. In the months following the pandemic as the global economy bounced back, demand for coffee and other consumer goods skyrocketed.

Resultantly, so that businesses could replenish their stocks to normal levels, there was a historic increase in the number of cargo ships coming into ports. What’s more, with social distancing measures in place at the time, port staff had to unload freight at a much slower rate – delaying shipments by weeks.

This led to unprecedented bottlenecks and disruptions across many supply chains, including in the coffee sector.

The problem was exacerbated even further in late March 2021 when the 400 metre-long Ever Given cargo ship blocked the Suez Canal for almost a week. At the time, it was carrying some 18,300 containers. The unintentional blockade also delayed the movement of 369 other ships which were unable to pass through the canal – resulting in an estimated loss of US $15 million per day for affected businesses.

Effectively, container space then became more competitive, which caused shipping prices to rise dramatically. In July 2021, a Bloomberg article stated the price of a single shipping container travelling from Brazil to the US had reached around US $4,000 – double the normal rate. Other reports at the time suggested containers travelling from Shanghai to the Netherlands sold for US $10,000, which is more than a 540% increase.

Roasters (especially smaller ones with less inventory on hand) then had to absorb the costs themselves, or raise their prices and pass them onto the end consumer.

Roasters inspect roasted coffee beans.

How can coffee roasters best prepare for shipping delays?

In the years since the pandemic, we have seen how the coffee industry has remained resilient and managed to adapt to the ensuing challenges. So given that the scale of the conflict in the Red Sea isn’t as comparable to that of a global pandemic, there’s hope that recent disruptions will be more manageable for roasters and green buyers.

That doesn’t mean, however, that roasters shouldn’t prepare for shipping delays and increased costs as much as they can.

“We suggest that roasters contact their suppliers to review new arrival dates,” Betiel says. “Roasters should expect at least an additional two to three weeks for most shipments to arrive. It’s helpful to subscribe to weekly arrival updates on your importer’s website or with your trader.”

Maintaining green coffee quality will be one of the biggest priorities. The longer it takes coffee to reach its import destination, the more likely it is that quality will drop. Green coffee, however, technically stays fresh for up to a year – so delays of two to three weeks shouldn’t cause too many serious issues.

“Check your inventory levels regularly and estimate your consumption far in advance to account for slower arrival times,” Betiel tells me. “Additionally, check out spot offerings if you need last minute coffee and subscribe to newsletters to receive important information, such as monthly logistics reports.”

Dealing with increased costs

Undoubtedly, there will be financial repercussions of the conflict in the Red Sea and its impact on global trade. And with many coffee businesses still facing higher energy and food costs – tightening already slim profit margins – it’s likely that end consumers will also have to pay more.

It’s a difficult balancing act for roasters. They need to make sure they pay producers fairly for their coffee, while also not passing down too many extra costs to consumers. 

Ultimately, communication and transparency are key. Although it’s more difficult than ever to provide customers with accurate timescales and updates, they will only help to strengthen partnerships and relationships.

Workers in Addis Ababa, Ethiopia stack bags of coffee in a warehouse.

Logistical issues are certainly a concern, but industry can still be manage them effectively with plenty of preparation.

While it seems that shipping delays will be persistent for another few months at least, roasters and green buyers should strive to remain resilient and adaptable.

Enjoyed this? Then read our article on logistical challenges in the coffee sector.

Perfect Daily Grind

Want to read more articles like this? Sign up for our newsletter!

The post Conflict in the Red Sea: Why coffee roasters need to prepare for shipping delays appeared first on Perfect Daily Grind.

Shopping cart0
There are no products in the cart!
Continue shopping