Coffee Supply Chain Mired in Global Shipping Delays

Shipping delays in the Port of Oakland.

Global shipping delays continue to affect the movement of coffee, and logistics experts are warning that shippers should prepare for 2021 to be a "perpetual peak season across all transport modes," American Shipper reported. The same article describes global supply chains as "buckling under huge order volumes and a confluence of disruptive forces."

Those forces are, in short, a combination of COVID-19 related labor shortages, the too-slow reversals of COVID-19–related carrier decisions last year, and an exploding consumer demand for Chinese exports that is straining and reshaping the global shipping industry.

Each of the first six months of 2021 are expected to set new records for import volumes, according to JOC. This unprecedented demand is being further complicated by a lack of shipping containers and a limited numbers of workers.

Rolf Habben Jansen, CEO of shipper Hapag-Lloyd, told customers on a February call that he doesn't expect the situation to "get back to normal" until well into the second quarter of 2021, according to Lloyd's List. "Terminals are facing phenomenally higher volumes," he added.

While Jansen expected the Lunar New Year to "help a bit," with hopes that fewer containers would be loaded in Asia in February, others were skeptical, saying that to meet demand, many factories that would normally close for the holiday month had remained open.

Ships Can't Unload, Containers Are Unavailable

The ships in the photo above are lined up at the port of Oakland. The Ports of Los Angeles and those in New York/New Jersey are also being hard hit, and the congestion is sometimes leaving ships waiting on the water for seven days. Even once it's their turn to unload, there aren't enough warehouses to take in the volume, and in some cases it's taking two weeks or longer for warehouses and trucking companies to turn around a container — which is further exacerbating the container shortage.

Similarly, in Toronto, the CN rail container yard depot is running at capacity, and empty containers are being returned to the truckers' yard because CN doesn't have capacity for them and has no alternative. Truckers are not allowed to return an empty container without taking an import container for pick up. All of this is causing extra stop charges and potential yard storage fees per container.

Far from a coffee industry problem, this a global shipping problem with a startlingly expansive reach. The European Shippers Counsel is petitioning the European Commission to address "outrageous price hikes" by cargo carriers, Bloomberg reported Feb. 4, and the biggest retailer lobbying group is looking to Washington to regulate the situation.

Every day, we are absolutely doing all we can, and we ask you for your patience and understanding — and most of all, we ask you to please prepare your orders and deliveries as far in advance as possible, with the expectation that these delays may continue well into mid year and rises in fees are very likely.

Questions? As always, please don't hesitate to get in touch: traders.iacus@nkg.coffee.

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