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November 30, 2023

Rise In Oil Prices Leads To Supply Chain ‘Chaos’ For Coffee Industry

BY Shivani

Coffee supply chains that are already straining due to pandemics and bad weather are likely to worsen as oil prices rise, signalling even higher prices for one of the world’s most popular beverages.

According to coffee and shipping executives such as Thomas Hartley, president and owner of Hartley Transportation, the fuel-expense surge is hitting as the industry continues to struggle with a slew of logistics issues. These include higher transportation costs, a scarcity of shipping containers, and a labour shortage of truck drivers and other workers.

“It’s going to get more painful with rising energy costs,” Hartley said at a National Coffee Association virtual event.

While supply-chain issues have harmed few industries worldwide, coffee and some other crops have been particularly hard hit. This is because rising transportation costs are exacerbating the impact of a drop in crop production in Brazil, the world’s largest exporter of coffee, sugar, and soybeans. Arabica coffee futures increased by 76 per cent last year, ranking among the top performers in the Bloomberg Commodity Index.

Meanwhile, the existing supply snags are showing few signs of easing, even as the worst of the pandemic starts to subside.

According to Janet Collet Morse, vice president of Dupuy Group, a warehousing firm, her company is having difficulty hiring loaders and administrative personnel, and challenges vary by port. A lack of trucks entering ports to pick up containers has resulted in up to four-week delays, stifling the entire supply chain, according to John DeMuria, a trader with Vol Cafe, during a question-and-answer session at the coffee event. Nonetheless, coffee trade logistics remains “chaotic,” according to Hartley Transportation’s Hartley.

“Our vendors have been extremely challenged with extra demand since summer 2020, a turning point from the pandemic low,” said Scamardella of Mediterranean Shipping.

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