You know you’ve made it to the big time when your profession makes it onto the SNL Weekend Update. We’re talking supply chain woes and, in this case, making it to the “big time” is not a good thing.
Over the past few months, supply chain issues have been all over the news. For a reasonably concise summary of what’s happening in the container shipping world, this Slate article does a pretty good job of breaking it down.
For the TL;DR version: currently, there is unprecedented demand for shipping goods from Asia to the US in containers. This demand is quite a bit greater than what the supply chain can efficiently handle and it is causing a lot of problems.
Given that Brazil is nowhere near Asia, you’d think that the coffee supply chain wouldn’t be impacted by the Asia-US shipping snarl. However, because there is so much money to be made moving containers from Asia to the US, shipping lines are rerouting resources to the most profitable lanes (Asia to US), which is causing problems in other parts of the world.
Brazil to the East Coast of the US has historically been a relatively inexpensive and reliable shipping corridor. However, starting in July and August of 2021 rates skyrocketed up to 10x their historic levels. Bookings and containers became extremely difficult to obtain. One of our counterparties shared their take on the situation:
“I have been working with Foreign Trade for over 10 years and I have never experienced a situation as complicated as the one we’ve been dealing with since mid-April.
You leave on Friday with a schedule, and on Monday it’s changed, bookings have been moved or canceled altogether. We’ve already had incidents when shipping times have been changed and postponed last minute even as we were loading units in the warehouse for departure”
We have been working very hard with our partners to get coffee into containers to move it to our warehouses. We continue to collaborate with our partners to get creative with our shipping strategies, as we try over and over (and over) to obtain bookings. It used to be sufficient for us to work with one or two shipping lines, we are now working with more than five. Generally, we do not expect coffee shelves (across the industry) to be full of fresh crop spot Brazils until the end of the year.
It’s not all doom and gloom though. The good news is we have some fresh crop Brazils here in our US warehouse, including coffees from a new-to-us exciting Organic project from Espirito Santo, and many more in containers on the way with mostly mid-late December ETAs. We’ve also seen shipping rates begin to stabilize from Brazil to the US, though we expect them to remain at historically high levels for the remainder of this harvest year.
If you have not already been in communication with your salesperson about your Brazil needs for this season, it would be a good idea to check in to gameplan usage for this fall and beyond. We can help walk you through coffee options based on ETAs and your individual needs.