How Logistics Slowdowns are Affecting Roasters, in their Own Words

We’ve talked a lot about how the now-notorious global logistics slowdowns and cost increases are affecting us and our partners throughout producing countries and the green coffee supply side, but we wanted to find out the impacts of these delays and cost increases in roasteries and cafes. To find out, we checked in with a varied slate of roaster partners in different regions and of different sizes to see how the global logistics situation is affecting their business, operations, and costs. 

Flexibility

One impact that’s been felt broadly is the increased need for flexibility, a lack of a “new normal” and more of a sense that agility will continue to be a priority for successful roasters—in other words, plan ahead but expect the plans to shift continuously as needed. 

“It’s been chaotic for absolutely everyone,” says Laura Perry of Canada-based subscription coffee company Luna Coffee. “No matter how small or large of a roaster, importer, exporter or producer you are, this year has shown us how delicate of a dance global shipping really is.”  

As Max Gonzalez, owner of Amaya Coffee in Houston, TX, puts it “operating through the pandemic has been like yoga—it requires flexibility and a lot of deep breaths.” 

“Our operations and plans have had to evolve continually due to the last year of logistics backups,” says Thomas Warmath of Utah-based La Barba Coffee. “We aim to offer coffees seasonally and have had to shift those seasons back a couple months as containers have all been delayed and then further delayed. I worried that receiving our Central American, Ethiopian, and Kenyan arrivals so late would interfere with booking the coffees we typically expect to be roasting during the winter from places like South America and Rwanda, but we’ve been able to move through our position quickly enough to feel confident about these next bookings.” The key is staying flexible while staying prepared. 

Increased Costs

Almost universally, costs are up. The United States Consumer Price Index rose 6.2 percent over the last year, with .9 percent of those increases in the month of October alone with the largest increase being in energy costs—a cost that affects everyone, but decisively affects the transport of coffee. While it might seem straightforward, the increases in costs hit differently on different roaster needs—while everyone is feeling them, the ways they’re affecting different roasters are complex. 

For Gonzalez of Amaya, this has been the single biggest challenge presented by the global logistics crisis, in addition to delays. “The biggest issues we’ve had with the supply chain have been with increased lead times and increased pricing across all costs of goods sold. Our geographic location near Port of Houston has helped, but we still have to adapt and plan accordingly to future delays, minimized access to volumes, and increased pricing (the current Colombian coffee situation comes to mind).” 

Jose Lepe, Director of Sourcing and Quality Control at Sightglass in San Francisco, CA, brought up the point that as port slowdowns are hitting West Coast ports hardest, “the increase in the cost of transit also makes it cost-prohibitive to move coffees from the East Coast when we do find something that fits our needs.” So to get fresh coffee from less backed-up East Coast ports to SF, they have to spend much more money. 

“We’ve seen significant rises in freight costs paired with major delays at terminals,” says Warmath of La Barba. While these impacts hit cash flow harder than they’d prefer, “it seems to be the world we live in now, and we’re trying to start perceiving those as normal costs rather than short term or temporary interruptions. We’ll definitely be thrilled if or when the logistics strains level out or even settle back down to what they once were.” 

Delays & Unpredictable Supply

For Charlie Gundlach of Color Coffee in Colorado, freight delays have caused them to increase their in-house green inventory, something we’ve heard echoed by a lot of folks we talked to. “Overall, we’ve avoided anything major and crushing—we’ve planned well and with the help and hard work of the Red Fox team, we’ve been spared major obstacles” he told us. “That being said, we learned the hard way this summer when we had to drive out to the freight terminal two hours away in Grand Junction, Colorado.” One of those times, Glenwood Canyon was closed due to mudslides and the team had to take an extra hour managing a dirt road with no guard rails. “It’s kind of like a scaled down version of driving from Calca to the Yanatile Valley in Cusco,” he said. They’re now picking up orders when feasible and otherwise avoiding freight in-state to avoid extra fees and delay risk.  

In Oakland, CA, Timeless Coffee Operations Manager Sam Fugate has seen some unpredictability on the supply side, which he told me about using the example of decaf. “It wasn’t until about six months ago that I started to feel the logistics and supply difficulties at our level, but it ramped up really fast after that. For example, finding decaf has been oddly difficult—once businesses were in survival mode they weren’t spending the money to decaffeinate coffee. We had a decent backstock, but once we ran through that we were pinballing from one decaf to the other, getting whatever was available.” Fugate says supply became so unpredictable he started planning a longer decaf position. “I didn’t get to choose which one I was excited about, it was more like, you have some in stock, cool, how many bags, I’ll take it.” 

Justin Dedini of Roseline Coffee in Portland told us that while long-term flexible planning and great communication from supply partners have taken the worst of the sting out of the situation thus far, the most frustrating delays have been at port. “The lack of transparency around how long it’s going to take to unload and strip in a container has been maddening. I understand these things are taking a long time, but the lack of communication is really challenging.” 

Despite great planning and organization, Lepe of Sightglass called this the year of unreliable ETAs. “Based on how our release schedule works, several coffees have had to be delayed at least eight weeks due to issues along the supply chain. When we’re in a pinch, it’s also been challenging for us to find spot lots that are usually quite abundant.” 

Larger companies who handle a wide segment of the coffee supply chain are no exception, as Coffee Sourcing and Relationship Manager of Blue Bottle Coffee Shaun Puklavetz tells us. “We’ve been impacted pretty significantly by delays. We’ve seen really critical deliveries arrive up to three months after we’d expected. Delays seem to run the length of the entire supply chain. Coffees have struggled to find a shipping container at origin, sat on a boat for weeks upon arrival, struggled to get picked up from the shipyard, and sat in our third-party logistics partners’ spaces for weeks waiting to be stripped and logged into their system.” Like all the companies we spoke with, they’ve adapted and remained agile, rescheduling releases where needed and covering gaps with spot purchases. 

Smaller Selections & Shortages

On top of the decaf example, Fugate of Timeless pointed to the Red Fox offer sheet as a great indicator of the leaner, more curated spot selections green coffee suppliers are favoring—a factor that’s definitely changed the way he thinks of supplying his menu. “I was showing our head roaster Josef what the Red Fox offer sheets look like now compared to a year ago, and that was the most startling moment for me, where I was used to scrolling through pages and pages of offerings and now seeing ten coffees.” He contrasted to 2017 where he would come into the Red Fox office and cup a table full of options, choosing his favorite. “There’s been moments when I reached out and said ‘hey I need something in this range’, my rep suggested something, and I said ‘great, I’ll take it’. No samples, no tasting, just committed to it.” For Fugate, trust is key to this arrangement. 

While Lepe of Sightglass noted the same spot coffee supply limitations, he sees them as a positive sign overall, even though they’re hard to navigate. “It seems that many other roasters and importers brought in less coffee this past year and demand has outpaced projections. I’ve never seen spot positions so depleted across the board,” says Lepe. “Overall, I think this is a positive sign of the specialty industry weathering the challenges of the past year and folks returning to some of the routines that we put on hold.”

Operations Adjustments

I asked each roaster partner what adjustments they’d had to make to their operations to accommodate the changes in the outside world, and a lot of answers involved carrying longer positions, making faster commitments on offerings, and pulling from different warehouses. And, of course, the aforementioned flexibility. 

As Dr Lee Knuttila of Ontario-based Quietly Coffee told us, “the timetable and cost of things has certainly changed over the last year. I like to partner with the same coffee producers year-to-year and harvest-to-harvest but due to labor shortages, port delays, shipping interruptions and numerous other logistical disruptions, my calendar has certainly shifted.” To stay ahead, he’s casting a wide net and bringing in coffees early from multiple regions. “It means sitting on my stock at headquarters but I don’t want to try to add additional levels of stress and strain all my already tense producer network.”

Gundlach of Color highlighted forward booking, warehouse flexibility, and a host of other operational adaptations. They usually pull from West Coast warehouses whose partner ports are now notoriously backlogged, so “as a precautionary move, this fall we’re bringing in more coffee from the early Peruvian arrivals from Continental on the East Coast.” He also contracted more Mexico bulk lots than usual to help tide them over to the end of the year when Peru makes it to Colorado and stocked up on Ethiopia to make sure they have enough to get through to when we land the fresh crop in the spring. Generally, they’re stocking as much green on hand as their space allows, which has forced them to get creative with how they use their space, and production-wise, they’ve added more Sunday roast days to compensate for the slower UPS/Fedex shipping times. “If we can’t get our coffee to the rest of our state (due to Fedex/UPS slowdows) in one business day, then we’ve got to bump the ship day up to compensate for it.” 

Roseline’s Dedini has adjusted by increasing forward booked volume and focusing on communication. “We currently forward book about 90% of our green coffee needs for the year. Under normal circumstances I would try to book enough to have one to two months worth of green coffee on hand by the time my forward contract is set to arrive.” Given the current climate, he’s adjusted projections to have four to six months in the green room by the time contracts are due to arrive. To do this right, he says utilizing reporting in Cropster and Quickbooks has been crucial to making accurate projections. “We’ve also been initiating more communication with our importing and shipping partners to receive the most up to date timelines. Communication is key.” 

For Warmath and La Barba, the main operational change aside from holding a longer inventory in their warehouse is “to pay for time-critical freight in order to give our pallets the best chance at making it from the consolidation warehouses to us in a reasonable amount of time,” he told us. “Where we used to aim for a one month inventory turn over, we’re now keeping two to three months of green coffee on hand in order to be able to cope with freight delays, particularly with the holidays coming up.” They’re also thinking further ahead since they don’t know what container delays will look like into 2022. 

On the other side of the spectrum, some customers have had to move away from forward booking due to unpredictability, even though forward booking is more in line with their values and generally more cost effective. “We leaned a little heavier into landed spots than in years past,” says Perry of Luna. “I’m not used to doing this, but it was important to stay honest with the realities of logistics this year and not have too long of a position for forwards, while balancing the reality that we still want folks we buy from annually to know they can count on us despite all the volatility.”

Silver Linings & Takeaways

One thing roasters listed as a silver lining was quality, both of coffee and of relationships. 

“From a quality standpoint, we’ve had a lot to celebrate this year,” Puklavetz told us. “Coffees are often hitting our menu almost immediately upon arrival.” He added that “while it’s never fun chasing down coffees to fill gaps, we’ve had the opportunity to bring in coffees from producers we really admire and hope to continue working with. Having trusted import partners like Red Fox has really allowed us not to compromise, even when we’re in a pinch.”

Gundlach was also bullish on quality. “Other than the logistical headaches, I’m proud to say the coffee is tasting better than ever on the whole. So stoked on our green coffee quality and our roasting. There’s a lot of great coffee to share with our customers and I’m proud of it.”

Another silver lining was the lessons learned. Lots of roasters we talked to shared takeaways that have helped them keep planning and maximizing flexibility. 

“We’ve learned a lot about managing risk over the last two years,” says Puklavetz. “We experienced huge shifts in demand in 2020 due to cafe closures and spiking online sales. This year we’re dealing with major slowdowns on the supply side. There’s no new golden rule in terms of how we’re looking at our sourcing strategy, but it’s brought a lot of little things to the surface. We’ve learned a lot about how we schedule our logistics, where we can use coffees interchangeably, and when it’s important to take a ‘just in case’ vs. a ‘just in time’ strategy.”

“Green coffee is your most important asset as a roaster,” Dedini advises. “New buildouts, machines and packaging are cool, but having coffee to sell is even cooler.” He added that forward booking is a roaster’s best friend. “Get in tune with your harvest calendars. Take a look at your consumption rates for the past two weeks and three months to determine how much coffee to book forward. If you can, book enough to cover a four to six month delay, at least until these logistical challenges simmer down. Forward booking also gives you the first pick of the best quality lots.” Lastly, he says, roasters are all facing the same challenges and can learn a lot with open lines of communication. “We’ve had a great time the past year swapping coffees, sharing information, selling green to others roasters when they are in a pinch and buying green from other roasters when we are in a pinch. Most people love to help out if you just ask!”

The Main Takeaway: Roasters are Amazing

What we’re sure of is this: roasters are doing a fantastic job handling a truly unprecedented collection of challenges. Their coffees are tasting better than ever, and they’re agile, adapting to the changing conditions and creating positive communal experiences for their customers no matter how complex it gets to do so. Within the delicate balance of planning and flexibility, there are a lot of lessons we’re learning as an industry and a community that will continue to make us all stronger no matter how things change.

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Colombia & Peru Update, August 2021

As promised, we’re coming to you today with another origin and shipment update with specific focus on the current and anticipated situation in Colombia and Peru, typically our two largest and most critical sources from the Southern Hemisphere. The C Market has been a rollercoaster ride for the past 60 days, the South American harvest is as volatile as we’ve seen it with the Brazilian frosts and competition for parchment in both Colombia and Peru, and the global shipping situation showing no signs of improvement as the 2021 finish line appears on the horizon.  

Fret not. We will be flush with Peruvian coffee on all three coasts come fall as well as preparing shipments for Korea, Japan, Australia, and Europe. Colombia, Ecuador, and Rwanda will follow suit from the Southern Hemisphere harvests. Our primary objective is to get fresh coffee into your roasteries as quickly as ever.

With that said, you may have noticed that the time we would usually have opened forward booking for Colombia has passed. As we’ll delve into below, the current harvest and shipment situation in Colombia will leave all green coffee sources competing at higher prices for much smaller volumes of quality Colombia coffee. Because of that, we strongly recommend forward booking the majority of your South America volume in Peru, rather than Colombia. We will not be able to offer a substantial amount of Colombia coffee to forward book this year and the quality we’re seeing out of Peru will absolutely meet the full scope of your menu needs. In order to give you the time to outfit your single origin and blend menu accordingly, we’re extending forward book pricing through September 15. To talk through your menu with us or make a commitment, get in touch. 

Supply, Demand & the C Market

The C Market price surged 30+% in July before backing off to the $1.80/lb zone. Three frosts in Brazil have been the driving force in conjunction with dwindling green coffee stocks across both the global north and the Brazilian reserves themselves. The current Brazil crop could be down as much as 10% (roughly four million bags). Long term damage assessment is still in process, though experts forecast even heavier losses in the 2022/23 season due to these three frosts and the horrible drought situation in 2020. The extent of the damage won’t be fully known until after the first rains trigger flowering in the months ahead. It is highly likely that another market spike is tethered to those fall reports.  

Colombia 

Along with a C Market in flux, the Colombia harvest outlook also appears bleak for the upper end specialty segment. Due to an overly wet harvest season and aggressive internal competition for parchment, clean, sweet, complex 85+ coffee is incredibly difficult to come by. We expect our own purchases to be down somewhere in the neighborhood of 50% from this first semester’s harvest versus 2020. Fabian is currently vetting weekly deliveries to the Asorcafe warehouse in Inzá, Cauca and will soon move on to cup through Nariño warehouse deliveries. Our supply will be extremely limited through year-end 2021. Expect pricing in excess of $4.50/lb ex-warehouse on all of our offerings this season.  

Peru 

We are knee deep in the Peru buying season with our first eight containers headed to dry mills in Piura and Lima. Coffees from across the north—Amazonas and Cajamarca—were first-in first-out of our Lima lab this year and will therefore hit the water first, along with Cusco coffees from our primary partners at Valle Inca. With vessels scheduled for September departure, we expect our first arrivals to land in October in both New Jersey and Houston, TX. Our first Incahuasi containers hit the water in September as well.

Our strongest cooperative partners remain competitive in their respective regions, both in quality and quantity. Due to Valle Inca’s location in Yanatile and Lares, they’ve faced the most competition for parchment, but Prudencio’s history with his producer members has proven stalwart. 

Shipping & Logistics

Transporting coffee remains the specialty segment’s most critical 2021 impasse. Container availability is bleak. Vessel availability is a crap shoot and tremendously expensive. Routes have been cut down, equating to longer transship times. Covid-related port restrictions have led to container ships sitting off the coasts of their destinations for potentially multiple months.  

We elected to address the worst situation, Port of Oakland, by landing a healthy dose of our South American offerings in Houston. We will store more coffee at Dupuy Houston than prior years and will also move coffee from Port of Houston directly into The Annex. All East African offerings will land in Port of New Jersey and be railed across the country. Ensuring fresh delivery is critical to us and we’re constantly evaluating and adjusting plans to get coffees to their destination as quickly as possible.

As always, as in all things, we’re here for you—so get in touch to ask us questions, talk, or anything else you need. 

Red Fox Coffee Merchants Origin & Shipment Update: Q3 2021

Hello friends, coming to you as we enter the third quarter of 2021. We’ve put together a report on the current state of coffee affairs in the areas of the world in which we work. With the supply and shipping disruptions we’ve seen over the last year and which we know will echo into the future, we want to help keep your finger on the pulse of global coffee traffic and hopefully make your job a little easier. This report contains some details as well as some broad strokes—if anything here piques your interest or leads to more questions, we’re always here to talk, so get in touch

This quarter, we’re seeing many disruptions and complexities borne out of civil unrest, with the two most notable for our upcoming harvest and shipping season being Peru and Colombia. The other component that’s affecting global shipping operations on an extremely broad scale is the confluence of the global container shortage and widespread port and trucking slowdowns due to Covid-19. Much more on all of that below. 

Logistics, Port, & Warehouse Updates

We continue to see widespread disruptions in our supply chains as we enter the second half of 2021. Globally, ocean freight rates have skyrocketed. Routes between East Asia and the US West Coast have been the most impacted. Efforts to combat a Covid outbreak in Shenzhen, China in June caused the port of Yantian to vastly reduce its operating capacity for nearly a month, resulting in a huge backlog of shipments waiting to berth, soaring freight rates, and a further reduction in the supply of available containers for all shipping routes. There is ongoing uncertainty in bookings and volatility in transit times across the industry, and little indication that this will ease before 2022.

 Congestion at US ports has seen some mixed improvement, mostly on the East Coast where cargo is moving a little more fluidly through the NY/NJ ports. West Coast ports, which have seen a huge surge in imports this year, are still over capacity, with ongoing labor and equipment shortages contributing to congestion. The port of Oakland continues to see major delays, with boats sitting on the water waiting for a berth for up to 2-3 weeks after arrival. 

There is also a general state of congestion across the domestic trucking industry. LTL freight carriers (shipping services for relatively small loads) are dealing with massive shipping volumes alongside continuing shortages of drivers and equipment, and their networks are strained. Transit times and costs are increasing across the board. Carriers are capping the number of warehouse pickups and cutting locations out of their service maps to cope. Warehouses are struggling with inconsistent pickups, last minute cancellations, and a general backlog of shipments. We recommend that roasters plan ahead for longer transit times and higher freight costs, and encourage everyone to get their orders in the pipeline with time to spare.

On the warehouse front, we do have some positive news to share: Continental Terminals, Annex (formerly The Annex) has completed their move to a new facility in Alameda, CA. With the move complete, they are now returning to their 24 hour notice to process and ship orders, meaning pickups from the warehouse can happen a full day earlier than under their previous 48-hour turnaround. 

Supply, Demand, & The C Market 

Supply and demand have hit their most volatile moment in close to a decade, with dwindling stocks in the Global North, container shortages, reduced route availability by container carriers themselves, and a 2+ month long trade disruption in Colombia at the core of the issue.  The C market has risen sharply in the past 60 days, coming in just above $1.50/lb for the past couple weeks. While we don’t expect another rise in the immediate future, many in the trade suspect another spike later in the year around Q4. The situation is developing and no one here has a crystal ball, so we will take this as it comes (or doesn’t) down the line.

The immediate impact of the four aforementioned market dynamics has significantly affected parchment buying across South America, Colombia & Peru most acutely. The FNC, Nespresso, and other large buyers have entered producing regions with extremely high prices for ‘clean’ (sound, nondescript) coffee leading to the most competitive buying market we’ve entered ourselves in our 7+ years in business.  As the first semester harvest now enters its peak season we expect to be paying upwards of 50c/lb FOB for our offerings from Inzá & Nariño. Port closures in Buenaventura/Cartagena have trickled down to Peru in that the Colombian supply shortage has created chaotic buying across the country with prices for ‘rubbish’ (wet, unselected) parchment almost doubling from last year. At least one of the major Peruvian exporters has received US $2.6M in loans from the government helping them to incapacitate competition in certain areas of Cajamarca, San Martin, Cusco, and select other departments.  Red Fox expects to pay 20-30c/lb FOB more for certain relationships and maintain a level of price stability with others. More to come on the Peruvian state of the trade below as well as in our early August supplement.  

Peru 

On the political front, the country had a disputed presidential election, where two candidates with very different political positions clashed in June. Socialist candidate Pedro Castillo won the presidential election after clinging on to a narrow lead. On the other side, his rival Keiko Fujimori, who refused to concede, has challenged the results, claiming electoral fraud. The political situation has revealed deep gaps between voters, along economic and racial lines, as well as ideological ones. Because of the political instability and speculation regarding the new leftist government, the price of the dollar rose against the national currency during June. This only aggravated extant concerns about the country’s financial stability.

On the coffee front, harvest has already started. The price of coffee is up an estimated 85% over last year, regardless of quality and physical standards. According to comments from cooperative managers we work with, there’s an overall concern regarding what this means for coffee quality this year. The price rise stems from a combination of factors including the increase of the dollar against the national currency, the uncertainty generated by the lack of mobility of Colombian exports, the increase of the commodity price, and the instability of the political future of the country. 

Hugo Cahuapaza of Coopbam in Amazonas, Northern Peru, reports that the harvest in the lowest altitudes is already at 100%, while the middle sector has reached almost 80% and the highest zones are just getting started. The rainy season has been unusually prolonged, but producers are taking steps to achieve preset standards in coffee drying. Hugo also told us that the political and financial instability aren’t currently affecting the producers, who continue to carry out their daily activities, since they’re not used to depending on state support anyway.

Cajamarca-based Santuario manager Ismael Alarcon expects a higher production volume this season, approximately a 20% increase over last year. As in all of Peru, Cajamarca has also seen coffee prices rise, which, combined with the greater competition in the market, has led to an increase in labor costs. 

Albino Nuñez of Pangoa in Selva Central reports that business continues as usual and that harvest is at its peak right now. He and other members view the season with optimism since they’ve noticed an improvement in quality and expect an increase in the volume produced this year.  

Stay tuned for a Peru supplement in the coming months going into more detail as we get into the field and start the actual purchasing process—the situation here is developing and we’ll keep you on top of it. 

Available Lots: 

While Peru spot coffee continues to make its way into roasters and mugs, we do still have a number of solid lots from community to producer ID available on both coasts and in DuPuy Houston. We’re cupping all lots regularly and they’re still at the top of their game.

Colombia 

The political chaos surrounding tax reform that has mired the country for the past two months appears to be nearing its end, at least for the moment. Ports have reopened as of late June, though diminished availability/routes with container carriers and the ensuing backlog of coffee in dry mills across Colombia creates an outlook of slow shipments and deliveries into fall.  

COVID-19 appears to be hitting it’s peak in Colombia at the moment recently passing 100,000 deaths due to the virus.  A dearth of vaccine availability keeps the outlook bleak for the immediate future.  

From our dry mill/export partners in Popayan: 

“Things are getting back to a certain normality and coffee flow/purchases are decent. There is congestion at the ports which will take weeks to sort and freight rates are increasing. May shipments were 0.5m bags and June has shipped 0.2million bags so far (June 14th). Differentials [countries’ standard differentiated price for clean coffee in relation to the C market] are continuing to increase due to rains having an impact on the next mid crop. We might need to reduce our production expectations to around 12m bags.

Despite the strikes having ended and the road corridors to ports being reactivated, the situation has not improved much. Ports are facing high congestion due to the increased volume now coming through from different areas. 

  • Buenaventura has been operating since mid-June, but the main problem is low availability of vessels. During May, only two vessels were available in Buenaventura and as the operation just started to normalize, the combination of limited vessels, limited trucking routes, and the backlog of coffee in the dry mills means continued delays. 
  • Cartagena’s been highly congested since the end of May because of space limitations, low storage capacity, and lack of containers. Until mid-June, the trucks were taking eight days to enter port (literally waiting in a nearby parking slot, waiting to enter the port’s installation), which caused the loss of the vessels. It also led to carriers refusing to travel to this port unless a daily stand-by rate is set to include waiting times.
  • Santa Marta is facing the same situation as Cartagena with the difference that until this week (June 21st), entry to the port is taking 12 days.
  • For all ports, the main concern now is truck availability due to the increase of inland freights and because the preference goes to transportation of imported goods (often paying four times more than usual freight), followed by lack of space in the vessels.
  • As a final comment for the logistic side, we are 85% confident that the situation will smooth out for August.”

As far as the first semester harvest itself is concerned we are hearing consistent reports of heavy competition for parchment across the country. Whereas Red Fox leveled up farmgate pricing to producers from $1.35mill pesos/carga in 2020, the FNC (National Federation of Coffee Growers of Colombia) is opening at $1.6mill pesos/carga for clean coffee now. Expect a significant increase in your Colombian coffee costs this year regardless of your source.  

Inzá, Cauca has been pummeled by late season rains as peak harvest begins at altitude. Volume expectations for the fly crop are plummeting on a weekly basis. 

From Geovanny Liscano, Producer and Asorcafe President: 

“I can tell you that internal prices are very high at the moment. Nespresso is at 1.6mill pesos per carga.”

From Danilson Oidor, Producer and Asorcafe Member: 

“It’s a strange year, we’re harvesting very little. There are a lot of rains which has led to a lack of cherry maturation.”

From Raquel Lasso, Producer and President FUDAM

“Narino is now approaching its peak season harvest at altitude. The parchment market across the department is also at a competitive high. Climate change seems to be rearing its head in ways that are clear to anyone looking. While the flowering was solid, heavy rains during the fruits’ maturation cycle caused a lot of fruit to drop from the trees prematurely. There will be immediate repercussions in the season’s yield due to this.”  

From Gildardo Chincunque, Producer and Parchment Collector, Tablon de Gomez:

“The harvest has begun but the baseline price in the region is 13,000/kilo or 1.650.000 pesos/carga [for clean coffee*].” 

*This is compared to the 1.3mill pesos/carga we opened at last year for 85+ scoring coffee.  

Rwanda 

Harvest in Rwanda is coming to an end, with high-elevation Kanzu wrapping up about a month later than washing stations at lower elevations. Rainfall and conditions were favorable for quality and volume this year, with total production in the coffee sector expected to be up 10-15% over the prior season. Competition for coffee cherry was intense, and internal prices paid to farmers increased to almost double what they were last year. 

Logistics are expected to be challenging this season. Empty containers for export are scarce and difficult to secure. Landlocked Rwanda moves all cargo by truck to the ports in Mombasa, Kenya or Dar Es Salaam, Tanzania. Travel restrictions and Covid testing requirements for truck drivers crossing the borders are slowing down the movement of coffee to port, such that what might be a five day drive under normal circumstances can now take up to three weeks.

With outbreaks surging in neighboring Uganda and DR Congo, new cases of Covid-19 in Rwanda have risen exponentially in the past weeks. The country is now recording its highest number of daily cases since the beginning of the pandemic. Access to vaccines remains low, with just under 2% of the population fully vaccinated, and there are concerns that the highly contagious delta variant will soon be widespread in the region. The Rwandan government announced new restrictions for the capital Kigali and eight other districts that go into effect July 1st, including a 6pm curfew, and the closure of schools and universities, non-essential offices, and restaurants. Travel between districts is restricted to essential services.

Available Lots:

We are currently evaluating offer samples from the first Kanzu outturns and will push to get containers moving as early as possible, in light of the expected shipping challenges. We aim to have coffee on the water in July/August for Sept/Oct availability.

Ethiopia 

Civil unrest continues to be the central theme in Ethiopia with the Tigray conflict at its core.  Restrictions against the press have made honest, relevant news hard to come by. In the midst of all of this Ethiopia held its elections for Prime Minister with many challenging the election’s fitness. Final results have yet to be announced.

As shipping season is now on its backend the trade is scrambling and struggling to find empty containers and available vessel departures for remaining shipments. Exporters scramble to allocate their final washed G1 lots which often get sold as G2 in the twilight of the shipping season. We also hear chatter on the export side of major internal market disruption due to larger exporters hiking prices to meet their contractual obligations. Akrabis (coffee traders/wet mill owners/parchment collectors) have ignored certain agreements to sell at higher market levels.

Both Kedir Jebril and the Kata Muduga Union are completely finished for the season with stock shipments and look ahead to the coming crop.  

Available Lots:

We’re well stocked with fresh washed lots from Agaro and Guji on all three coasts as well as including DuPuy Houston. Naturals from Nansebo and Bensa arrive to both California and New Jersey later this month.  

Mexico 

With the harvest completed across Mexico, almost all volume has been sold or contracted with milling being finalized on remaining parchment and final shipments moving to port by early July. Limited direct shipping routes, container/ship space availability, and frequent rollovers from most or all shipping lines have continued to slow the export and import processes, but we’ve been working with shippers to get coffees out with more fluidity and success. Rainy season has settled in across the southern growing region. After a contentious and highly anticipated election season, the country continues to struggle with containing Covid and getting the population vaccinated in a timely manner. However, most businesses are operating at full capacity and the economically important tourism sector has picked up in recent months.  

Available Lots:

Mexico arrivals continue to fly off the shelves almost as fast as we can bring them in, but we do have an array of lots in Continental NJ, and DuPuy Houston. Newly arrived at Continental, we have Familia Garcia Lopez, from Casimiro and family in the Loxicha area of the Pluma region in Southern Oaxaca, with 29 bags available. We also have a new offering this year which just arrived with 18 bags available. Coming to us from a producer group in a remote part of the Mixteca region, Garra de Jaguar is dynamic and sweet with tons of dried fruit notes.

Ecuador

Due to excessive rainfall at the beginning of the year, producers we work with are expecting a decrease in production this year in Ecuador, and particularly the Pichincha region. Arnaud Causse of Las Tolas and Terrazas del Pisque in Pichincha tells us he’s expecting a 20% decrease in production this year and a delayed peak in production as well. He also said he’ll be focusing less on natural processed coffees this year due to the lack of sun and excess humidity. In other areas of the country, such as Napo, where high amounts of rainfall are normal, there are high expectations for a great year for production and processing. 

According to media sources, about 11% of the population are vaccinated. The country still requires masking and recommends residents to stay home as much as possible. There are mobility restrictions across the country which producers expect to impact this year’s harvest.

Kenya 

From our friend Kennedy Keya at C. Dorman:

“Kenya main crop sales in the auction market ended in April. About 420,000 bags (60kg) were traded. Farmers were a happy lot with many factories paying on average equivalent of $0.70 per kg of cherry. We have been on recess for two months. Auctions resume tomorrow with only 8,000 bags on offer. It has been chilly resulting in slow parchment drying. We estimate about 160,000 bags from the fly crop this year. Auctions will be held every two weeks until volumes stabilize. The next main crop to be harvested from October is expanding well. If weather patterns don’t cause any damage we expect decent volume of the main crop, about 25,000 metric tons. 

The Covid situation is stable with new infection rates ranging from 5% to 10% daily. But again, numbers of those tested are too low. Life is picking up though many sectors of the economy are struggling, for example the tourism and hotel industries.

The port is operating at a slow pace. A big challenge is getting empty containers. Imports have been low. However, we are able to meet the shipment schedule by placing vessel bookings in advance. Some shipping lines, for example Hapag, are not accepting bookings for nearby shipments. They say their vessels are fully booked.”

Available Lots:

We have a small handful of truly superb Kenyas available on both coasts. 

Guatemala

Guatemala continues to struggle with over 1500 new Covid-19 cases reported daily. Like many countries, the majority of cases are not reported due to lack of testing, especially in rural areas. Our source in Guatemala City tells us “Covid is pretty much the same here, not getting any better.” 

Harvest has wrapped up in Guatemala. Like just about everywhere we are sourcing, there have been shipping delays, mostly due to lack of available containers.

Available Lots:

We contracted two containers this year with one going to each coast. The east coast bound container had an ETA into NJ 6/28, and has just a few bags from Santa Barbara, Huehuetenango available plus a larger lot from San Jose Poaquil in Chimaltenango. We expect to see this stripping into Continental around the second week of July.

The west coast Guatemala container has an ETA to CA of 7/6. We are continuing to see delays with containers getting picked up and stripped into The Annex, so best guess is end of July availability for these coffees including a 20 bag single producer lot from Los Arroyos in Huehuetenango. 

Yemen 

Both the ongoing Civil War and Covid issues have decimated the coffee industry. Moving coffee to port internally, loading onto passing vessels, and the larger global shipment situation have led to shipment periods of upwards of 60 days. Thankfully, the coffees we purchased this year have already landed and we have an extremely limited quantity available. 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.

Global Shipping Challenges & Planning Ahead for the Balance of 2021

Greetings from the cockpit in Oaxaca. As I’m sure many of you are now aware, the world is in the throes of a global shipping quandary. The main culprits are a physical container shortage and congested, understaffed ports across the world leading to containers left sitting at port docks. Fewer ships are running on transit lines as well, and each of these issues is further compounding the others at every step of the transit process. 

In the case of the West Coast we are seeing availability for pick up at The Annex from arrival to port of Oakland up from roughly 10-12 days to closer to 20. Ports of New Jersey, Houston and Charleston are moving at a more efficient pace, though slightly slower than pre-pandemic times. New container construction costs themselves have risen as much as 60%, and containers already in circulation are also moving slower for all the above reasons: delays leaving port, passing through interim ports, and being emptied and sent back. All of that has pushed shipping rates to recent highs—highs that we unfortunately expect to last through the year and beyond. 

We continue to place large emphasis on the work we do in the logistical center of the supply chain. We’re well aware that a tremendous measure of our value to you, our clients, is in delivering fresh coffee in the timeliest manner. We’re only as good as our last arrival into port from each and every producing origin we work in. We want you to know that our logistics crew are constantly exploring the quickest avenues to each of the warehouses we currently allocate coffee to in North America and abroad. In many instances, we are rerouting containers through different ports, or, in the case of Mexico, moving coffee by land to avoid delays and ensure your coffee’s integrity on arrival. These changes are critical for us to deliver the freshest coffee possible. 

Please feel free to reach out to me or your Red Fox rep directly with any questions or for more details—we’re here to support you in any way we can. We’re happy to talk through what this means for you specifically or more generally. 

Cheers,

Aleco

 

To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffeeSpotify, and YouTube.