Supply Chain Logistics - The Clockwork of Coffee
If you consider the journey coffee makes- from farm to warehouse, mill to port, then loaded onto a ship to sail thousands of miles, followed by customs, storage and ultimately transport to a roaster- it is a wonder that the smooth delivery of coffee is more rule than exception. Even when a company applies vertical integration to move coffee as directly as possible from farmers to consumers, there are still multiple parties involved, with processes, transactions, laws, and regulations to be considered; a logistical journey to match the nautical one.
3 Minutes Read
By Grant Tennille
North America Traffic Coordinator
At origin, coffee moves by truck along roads that are often poorly maintained and sometimes dangerous; the difficulties of getting coffee “to market” becomes much less abstract when bouncing through potholes and through the occasional checkpoint. Delays are common, and at delivery points there may be long lines, as coffee’s seasonality can place uneven demands on already strained infrastructure. At ports, local agricultural authorities and other agencies have their specific documentation and customs processes that must be followed. Smaller countries’ shipping departures may be less frequent, and political unrest or labor strife such as transportation strikes can have sizeable impacts on the speed of export.
Currently in Nicaragua we have had to exercise greater caution regarding the movement of coffee, due to the heightened risks of theft or destruction resulting from the current sociopolitical crisis. This situation has caused much uncertainty, as there are rumors of a national strike which would stop all shipments. Coffee is still being processed, but there are questions concerning the ability to ship on time if the situation deteriorates further. We hope that in due course, peace will return to Nicaragua and that the situation returns to normal.
Once loaded onto a vessel, re-routing is not uncommon. This practice occurs when shipping lines decide to unload or pick up more cargo to make a voyage more profitable. Even a country like Australia can be deemed insignificant in terms of shipping volumes on a global scale; from South America to Australia, rerouting can manifest as a ‘detour’ to a port in Asia. Almost all shipments involve at least one ‘layover’ and vessel change at an intermediate port, a process known as trans-shipment; if weather or mechanical issues affect the timetables of either vessel, it is not unheard of for journey lengths to double from what was originally contracted.
The period while a vessel is in transit is also the time during which invoices, payments, and documents are approved and exchanged, all of which must be vetted for accuracy and consistency. Is the consignee correct on the Bill of Lading? Are the pricing and quantities on the export invoice accurate? Who is responsible for destination charges levied by the shipping line? Have they been paid, and has the shipping line confirmed payment? These are a few of the myriad details that must be monitored and resolved while coffee is afloat.
Once the coffee lands, import logistics, customs and regulatory agency clearance, palletizing, warehousing, and local distribution all require attention. Documentation must be timely and compliant with national requirements, or costly inspections and delays may result. Even if all documentation is in order, containers may be subject to random security inspections as well, threatening delays as well as damage to bags and boxes.
Upon delivery from the port terminal, entry of coffee into a warehouse requires the use of electronic warehouse inventory systems for logging and locating, and the assigning of ID numbers independent of those used by exporters and importers. Coffees are palletized and stacked amidst thousands of other bags for future release. Once on the road to a roaster, pallets can be subject to handling and vehicle switches at multiple freight terminals, increasing the potential for damaged or lost inventory.
Shipping any product internationally requires strict contingency plans and prompt communication between exporters, importers, shipping lines, warehouses, freight companies, and roasters; moving coffee smoothly means moving money and information smoothly as well. The perishable nature of coffee however brings an added urgency to ensuring that the hazards and challenges described above are minimized if possible, and managed if unavoidable. While the behind-the-scenes activities that bring you coffee may not always run like clockwork, companies that trade directly with farmers – and are involved with each link of the supply chain – are uniquely equipped to facilitate the fastest possible shipments. In doing so delivering not just delicious coffee, but also the inherent value added by freshness, longevity, and year-round, just-in-time inventory management informed by the harvest calendar.
“For the specialty coffee community to be able to taste the vibrancy of the finest Peruvian coffees, those coffees must be dried with a consistent drying rate at temperatures below 35 degrees Celsius.”
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