What Forward Booking Looks Like for Us in 2022

As a shockingly volatile C market, local labor shortages, climate change, and high costs of business from the farm level up combine to roil global coffee markets, forward booking has never been more complex than it is in 2022. Our top priority is as it always has been: to deliver coffee exactly as promised in terms of quality, timing, customer experience, and consistency in the value our work at origin will deliver lot-over-lot and season-over-season. In 2022, how we do that has had to change substantially. This shift has been most dramatic in how we think of forward booking, a process already complex in itself because it necessitates matching projected acquisitions during harvest with real-world coffee supplies post-harvest. What’s making the process so complex, and how has our strategy changed to ensure we’re delivering what we promise?

What’s going on with the C market?

On top of the global logistics crisis sending costs on a continuing upward climb since 2021, an array of climactic and geopolitical factors have set the C market on a wild ride since the summer. 

First, as we reported in our 2021 Q4 report, a slew of climate factors led to a melee for available coffee supplies in South America, driving the C market to levels not seen in over a decade. Devastating frosts in Brazil led the C market on a rapid climb, while heavy unseasonable rains in Colombia (coming on the heels of mass protests that halted the harvest and transport of coffee) drastically reduced supply there as well, compounding the issue. Coffee stocks in the global north continued to dwindle, and it looked as if nothing would interrupt the trend (as we reported on in our Q1 report) as forecasting for coffee availability remained (and remains) decimated. 

A rapid disruption occurred directly following the Russian invasion of Ukraine, creating a host of additional complexities (detailed in last quarter’s report). On the day of the Ukraine invasion, the market dropped nearly 10c and continued to drop from around $2.50/lb to $2.10/lb over the course of two weeks. Institutional investors became bearish overnight, fearing a further stressed global logistics crisis and a derailed global economy. Analysts feared that consumer spending would shrink even though supply side economics suggested coffee prices should continue to strengthen. 

At time of writing, coffee remains above $2.00 ($2.18 specifically), but below the $3.00 we and analysts expected going into Q1—however, that disparity comes with its own complexity. As all of the factors that would underpin a bullish C market in producing regions have continued or intensified (supply constraints coming from labor shortages, climate events, increased cost of production/transit, etc.), the lower C market price is out of sync with the prices local markets in producing regions are paying and the baselines that producers can expect for their actual coffee. So—as usual—the C market price both affects coffee prices holistically and is out of sync with their actuality.  

What is forward booking & why has it been so complex?

Forward booking, or forward contracting, can mean different things for different companies or industries. For us, forward booking is the process of allowing clients to enter into contracts on projected future coffee supplies, then matching them with a lot that meets their specifications at the agreed-upon price when the coffees come in. We typically do this at a reduced price compared to spot coffee (coffee we have on hand in the warehouse) since it allows us to buy coffee more accurately throughout the season, having a large portion of total coffee already matched with prospective buyers. For us, it’s a risk mitigation strategy that allows us to more fully support our supplier relationships. The more forward booked volume we have, the more coffee we can buy from producers without being concerned about having too much uncommitted inventory late into the sales cycle of any given origin

Where the process gets complicated is when coffee acquisitions become particularly competitive (due to elevated local prices from the largest actors for coffee at undifferentiated quality tiers) and prices make large jumps that cause uncertainty for both producers and consumers. If we’re buying coffees as they arrive into the cupping lab at origin and the prices change dramatically from week to week, how can we design contracts to account for that level of fluctuation? If we think prices might jump dramatically and producers may rush to strip-pick, depleting the supply in a given region, how can we sell coffee we aren’t sure we’ll have? 

How has our forward booking strategy changed?

If we aren’t sure we’re going to have a particular coffee quality tier, region, or quantity, or if we can’t project pricing accurately, we won’t forward book the coffee. In some minds, it’s better to sell the coffee first, then worry about delivery later. For us, we aren’t going to make promises we aren’t sure we can deliver on. This year, that’s meant that in some cases, origins or regions we’ve opened forward booking on in past years aren’t available to forward book because we’re making sure the details are worked out first, rather than simply prioritizing sales. 

In general, depending on calibration and relationships with roasters, we’re conservative in our estimation of costs, leaving room for us to reduce pricing if costs end up lower than expected—but, unfortunately, the reverse also needs to be true. With so much uncertainty, our goal is to craft relationships and contracts built on trust in our ability to source a specific quality and deliver against a specific timeline. Pricing, while critical to both roasters and us, is still secondary to that and requires the ability to have some variation based on market fluctuations and unpredictable freight cost.

What’s next?

There are some things we can’t project. We don’t know when the markets, both C and global, will stabilize. The climate is always an X factor we can’t control or predict. What we can say for sure is that we’ll always communicate with you and set clear, honest expectations rather than simply working to make a sale. If we aren’t forward booking a particular coffee at a particular time, it’s because we need to make sure we can deliver exactly as we promise. If you ever have a question or just want to talk, we’re always here, so get in touch. 

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

Ukraine War Increases C Market Volatility, Worsens Supply Chain Crisis

Red Fox Coffee Merchants Q2 2022 Origin & Shipping Update

Prefer to listen rather than read? Click here or find us on your favorite podcasting app.

As core issues from the last several quarters persist—snarled and effortful logistics, limited container availability, constrained shipping lines, domestic freight bottlenecks, elevated costs across the board, an elevated and extremely volatile C market, and the resulting global inflation hitting the most vulnerable the hardest—the Russian invasion of Ukraine has escalated all of those issues globally, adding more uncertainty, costs, and an increasingly unpredictable C market.

Combined with local shortages of coffee due to climate events, labor deficits, and cyclic down years for certain origins, price volatility has also created conflict between producers and larger traders as certain origins’ local market prices rise despite more recent C market drops. The market remains increasingly competitive as large players work to cover short positions, but our relationships are holding strong. We’re in the thick of Mexico season, final Peru shipments are almost here, first Rwanda and Kenya containers are here, and early Ethiopia shipments are on the water. As usual these days, the only constant is change, so stay flexible and read on to find out more. 

Logistics, Port, & Warehouse Updates 

The Russian invasion of Ukraine added new layers of complexity and volatility to global supply chains still reeling from pandemic disruptions, while another wave of Covid outbreaks in China threatens a cascade of new disruptions to the shipping industry. Port congestion and shipping delays remain an issue worldwide. Container shortages continue to cause delays and rolled and canceled bookings, especially in Brazil and East Africa. 

Congestion at West Coast ports has improved but remains seriously backlogged, while congestion at East and Gulf Coast ports has increased as shipping lines route cargo away from the West Coast. 

War in Ukraine and rising gas prices have caused spikes in bunker costs (charges added to steamships’ base ocean freight rates, protecting them from fuel cost increases). Those costs are passed on to shippers, increasing ocean freight rates across the board.

On land, domestic trucking capacity is still a bottleneck. Driver shortages continue causing delays transporting freight from ports to warehouses and hauling trailers from rail yards, while rising gas prices drive up trucking rates. Some freight lines have sold to larger companies to avoid folding, leading to fewer options. Less market competition allows for significant price hikes for LTL (less than truckload) freight.

Ongoing labor shortages across all sectors continue to hinder recovery from pandemic slowdowns. Trucking lines are particularly squeezed and are unable to invest time training new hires. Sheila at the Annex recommends that anyone relying on trucking companies for coffee delivery pay for the extra strap/wrap to protect the shipment from damage in transit. She also advises receiving freight with a camera ready—”take photos of pallets INSIDE the trailer before offload, and then again after the pallet is off the trailer. If there are any issues with the shipment, only sign documents to include acknowledgement of receipt with “requires further inspection” or “EXCEPTION/DAMAGE” noted on the paperwork.” She stresses that it’s not a good idea to refuse freight outright. “Freight lines respond better to a call asking for an inspection at the consignee location as part of a claim rather than a pallet sitting on their own dock.”

Supply, Demand, & The C Market 

Until the Russian invasion of Ukraine, the C market was headed towards $3/lb, hitting a high near $2.60/lb in early February with both supply and demand factors pushing the rise. The Brazilian real (currency) has strengthened against the USD since the beginning of the year, and while Red Fox doesn’t operate in Brazil, the origin is the largest supplier of coffee in the world and tips the scales whenever its factors affect price or supply. When the real strengthens, farmers’ motivation to export weakens. In Mexico, we felt this factor firsthand when the peso strengthened significantly during March, creating the same effect with Mexican domestic demand (among other supply factors) creating a highly competitive market for our sourcing team. Furthering demand woes and upward market pressure, the International Coffee Organization reduced its supply estimate to a deficit of over 3 million bags this season at the same time Minas Gerais in Brazil reported less than half its historical average production. All this comes after Colombia production and exports fell in February while US green inventories reported shrinkage in February.  

All those factors should underpin a bullish market, but on the day of the Ukraine invasion, the market dropped nearly 10c and continued to drop from around $2.50/lb to $2.10/lb over the course of two weeks. Institutional investors became bearish overnight, fearing a further stressed global logistics crisis and a derailed global economy. Analysts fear that consumer spending will shrink even though supply side economics suggest coffee prices should continue to strengthen. 

Our biggest uncertainty is not the coffee quality and consistency that Red Fox will source, but the unknown costs that will continue to add volatility and uncertainty. The price of oil will continue to put pressure on how we think about moving coffee. What will ocean freight and trucking costs look like over the course of the upcoming Mexico season? We can’t use historical costing data in answering this question and have had to become much more conservative as we look at forward booking, especially as almost all signs point to the cost of coffee increasing.

Mexico 

As you read this, our lab in the Oaxaca centro is at peak season and buzzing with activity. Harvest is nearly complete in our sourcing regions, we’re constantly cupping offers as more arrive, and deliveries are hitting the warehouse and dry mills. Our first shipment from Veracruz is almost afloat.

This harvest has brought particular challenges, some like those facing the rest of the coffee-producing world (rising cost of production, lower harvest, shipping and container issues/delays, inflation, etc.) and some unique to Mexico. 

Oaxaca is enduring a disruptive season of protest blockades in the city and surrounding areas, limiting mobility. A new tax law implemented this year and designed to reduce the informal economy and limit cash usage created new difficulties in how producers not yet registered in the tax system with a formal bank account receive payment, something not yet accessible to many smallholder farmers. In terms of productivity, Oaxaca’s harvest is looking to be about 50-60% of average production. As a region with heavy planting of Bourbon and Typica (which typically have a biannual cycle with a lower yield every other year), lower production was expected but not nearly to this degree, frustrating producers who finally see ultra-high C market prices coinciding directly with their harvest after so many years of a lower market. 

In Chiapas, much like Guatemala, labor shortages have severely affected picking, normally performed by migrant laborers who enter Chiapas through the Guatemala border on temporary work visas. The border is increasingly dangerous and effectively closed to legal crossing of people and goods. Without laborers to harvest it, cherry is drying on trees. 

Local cherry prices in Veracruz started the season near double last year’s price, setting off a country-wide scramble to acquire coffee by larger commercial buyers seeking to cover undelivered contracts from losses in Brazil and Colombia. Internal demand also continues to grow with national roasters looking to meet their needs and further pushing prices up. The competition for coffee is so extreme that it threatens to roll back years of quality recognition gains for the region as a whole, since most coffee is being purchased right in the field with no consideration for physical and cup quality. 

That said, we are genuinely seeing some of the best quality we’ve ever seen. We’ve opened up new supply chains in Chiapas with several new quality-focused producer organizations, and against long odds, we’ve also acquired the most volume we ever have in Chiapas. We expect to have several early shipments leaving in April and are working through shipping line headaches to get the fastest possible routing to the US. 

Ethiopia

In terms of our Ethiopia sourcing, we now have 5 FCL (full container loads) of Agaro G1 coffees from all of our usual partners (Nano Genji, Nano Challa, Kolla Bolcha, Duromina, Yukro, Gore Dako, etc.) afloat with ETAs into Port of New Jersey between 4/16-5/1 as well as 4 FCL of Agaro with ETAs into Port of Houston from 5/8-5/25. Our first Guji G1 containers from Gogogu Wate have current ETAs into New Jersey and Houston in late April, though we actually expect them to be May arrivals. We’ll also see the first of 3 FCL of G1 naturals from Guji Uraga hit the water this week. Updates on those to come. 

Generally, Ethiopian offerings continue to be volatile with rising prices in the face of a C market that’s dropped 30c/lb over the course of the two week period prior to writing. Even with Grade 2 prices climbing above $3.50/lb FOB (with certified organic G2 from $3.80) and Grade 1 prices now well above $4.00/lb, FOB demand appears relatively strong, especially for spot and afloat lots. The Ethiopian trade’s confidence in their differentials remains high as we hit peak shipment period.  

Exporters also continue to hoard parchment in hopes of the Ethiopian Government’s reversal of the Forex Retention Rule, which would let them retain a higher percentage of inbound dollars on green coffee exports.  

Dry mills are operating at full capacity even with limited overseas interest as larger roasters work to cover their positions short-term rather than taking positions in an expensive market (in some cases playing chicken with prices they don’t want to pay). In the trade at large, early season contracts are now somewhere between Addis and afloat en route to their destinations.   

Last quarter, we reported on how civil unrest pushed us into sourcing from just over the border. Now, a unilateral truce has been declared between the Ethiopian government and the TPLF as of March 25th. All hopes are that this leads to the end of the civil war.

Kenya 

Red Fox saw phenomenal quality out of Kenya this year. We’re finished contracting there for the year (Kenya’s main crop officially ended prior to Q2) and have 4 containers on the water, the first having just arrived into Port of NJ. We expect all of our Kenyan coffee stateside by May/June.

Outside of Red Fox, buying continues at an active pace into spring, especially on the top lot front. Larger buyers seem to be active in their own spot markets (eg. European roasters covering shorts from European spot markets) causing stocks in Kenya to remain strong and prices beginning to turn downwards. The fly crop has a strong outlook as long as rains arrive soon to activate cherry ripening.

Shipping woes continue to be a central theme with container availability very thin and shipping lines not offering much in terms of vessel bookings.  

Guatemala 

Guatemala harvest is in full swing and we’ve been cupping offers from both the San Jose Poaquil community in Chimaltenango and Finca Los Arroyos in Huehuetenango. Despite migrant labor shortages due to pandemic restrictions, quality is exceptional this year. Container shortages continue to be an issue. We expect first containers to go afloat in April with May arrivals to both NJ and TX. 

Peru 

We’ve concluded our current Peru shipment season with the last containers of the season arriving to US ports now.  

For next season, the coffee harvest has begun at lower altitudes, while the producers we purchase from are still a month away from the start of their harvest. While they wait for cherry to ripen, producers are preparing for the upcoming season: calibrating depulping machines, maintaining and upgrading wet milling and drying infrastructure, and participating in internal inspections conducted by producer groups to prepare for certification audits. Meanwhile, producer groups are meeting with banks and other lenders to line-up financing for the upcoming harvest and undergoing Fair Trade and organic certification audits. Many of the producer groups also held general assemblies in the month of March to review the prior year’s financial performance and accomplishments, receive their final payments and quality premiums, and elect new board members to replace those whose terms are up. 

Rwanda 

Our final Kanzu lots have arrived on the East Coast and we expect warehouse availability in the next couple weeks. Lots are also now available in the Annex for West Coast customers.

As for next season, this year’s harvest began in late January with peak cherry picking occurring in mid-to-late March. Cherry prices are high following the increased C market; competition is already intense. We expect to start seeing offer samples in late May/early June. 

Earlier this month, the Rwandan government fully reopened the country’s land borders two years after closing them in an effort to curb the spread of COVID-19. We’ll have to see how this impacts export logistics for the upcoming shipping season. Bookings for ocean freight routes from East African ports continue to be challenging. 

Colombia 

Expectations for an extended rainy season through the La Niña year persist, and with them expectation for reduced production for both 2022 harvests. Sufficient ripening come June/July requires extended periods of sunlight and warmth through spring.  

Differentials continue to rise as larger trade actors continue to cover their short positions through a lack of available coffee on the production side.  

Ports continue to see limited container availability and service from shipping lines. Buenaventura remains the most congested of the three ports while Cartagena faces the largest struggles finding efficient routes to Oakland and Charleston. Santa Marta shows increased container availability, but doesn’t have the infrastructure to handle a high volume of shipments.  

Primary Southern producing regions like Nariño, Cauca, Huila, and Tolima begin harvest in late April. We’ll have a much better sense of what to expect from the 1st Semester harvest from supply chain partners in Inzá and Tablon de Gomez as we get closer to summer.  

From Geovanny Liscano in Inzá: “The December 2021-January 2022 harvest was inconvenient due to heavy winter conditions/heavy rainfall. A lack of flowering creates concern for the harvest beginning May 2022. Prices remain high across Inzá for any parchment available.”

From Gildardo Chincunque in Tablon de Gomez: “The initial outlook for the coming season is weak due to heavy rainfall. We look forward to working together come July/August regardless.”

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

Red Fox Logistics: Jajaira Guerrero is Key

As a green coffee company, Red Fox has always had a particular focus on logistics as a critical factor in coffee quality and utility—coffee delivered on time after as little transit as possible as close as possible to the original harvested crop, that comes exactly when customers expect and need it to, is coffee at its most valuable. As Covid-19 scrambled global logistics in every way imaginable over the last 2+ years, it’s a critical arena in which we’ve further doubled down. There’s a lot that’s gone into that process, and the work and systems of Logistics Manager Jajaira Guerrero have been key.

Communication

Now more than ever, constant effective communication from the cooperative level all the way through shipping is essential to moving coffee. Logistics Manager Jajaira Guerrero owns this task and has made it so that in a year where it can take over 20 days to get a booking where in previous years it would have taken one, we’re tracking very close to our shipping timelines and can consistently and accurately project when and where coffees are moving. 

As soon as we’re ready to start moving a coffee, Jajaira starts by communicating with the coop about how individual samples they’ve sent us have been bulked together into contracts or individual shipped lots. She then works with them to coordinate the timing of the transportation in order to keep the coffee in the best possible climatic conditions for as long as possible before they move into Lima—which means also coordinating when the mill and ship dates are.  

She gets the coffee to Lima and coordinates dry milling with both the dry mill team and our team, including prep specifications for the mill and on-site supervision by our staff. 

After that, the heaviest pieces of logistics have to come into play: handling customs, getting containers inspected for phytosanitary certifications, making sure containers get loaded and moved to port at the proper time, and making sure the vessel gets loaded and shipped on time. All of that is impossible without constant and transparent communication. Throughout this process, our team is also kept aware of where coffees are within their journey by both active communication and cloud-based databases. 

Efficiencies

Another critical factor in shipping effectively in 2022 is the efficiencies Jajaira has helped create for our team. With an employment background including customs management, freight forwarding agencies, traffic for a large importer/exporter, and working directly with a coop for five years, Jajaira understands all sides of the process and brings that knowledge to the rest of the team. 

One of the main efficiencies Jajaira has built into our systems is how we work with coops in exportation. We consolidate coffees from different producer groups into a single container and then work directly with coop leaders to determine who’s the designated exporter at the time. We’re also certified as an exporter in Peru, but exporting is a critical metric for the coops we work with in terms of how they measure their own success. So in order to make sure every group we work with gets to meet this metric, we rotate between coops and coordinate who is listed as the exporter—most importantly, while getting all the different groups into one container and getting it moving as a consolidated shipment. There’s a lot of work that goes into that in terms of figuring out and dividing up costs and making sure all documents are in order and in the right place. That’s allowed us to move coffee a lot faster while also maximizing and optimizing container space, which is more valuable than ever and not looking to become less valuable any time soon. 

This strategy allows us further agility in that we don’t have to wait until we have enough coffee from one coop before we can move the container—instead, we can compose a container from up to five coops headed to a single destination while still meeting coops’ exportation needs.

Traceability

In addition to the previous systemization of multi-coop exporting, Jajaira helped move us into getting individual ICO numbers for each lot which is an immense help in staying organized and fully traceable when coffees arrive at the warehouse in the US. It wouldn’t be possible to ship mixed containers in this way if we didn’t have a great system for tracking them, and not only has this increased efficiency, it’s helped us go even deeper on traceability. 

Challenges & Persistence

We’ve covered it extensively in our Harvest & Shipment Updates, but the container shortage and compounding logistics struggles at every level starting in 2020 and snowballing through the present have made persistence a key attribute in effective logistics. The container shortage has had a trickle down effect on literally everything. 

For some context on the most recent Peru season, the Peru coffee shipping season starts in March—that’s long before our shipping season starts, but what it means is that the container shortage had already jammed up everything by the time we even began our season. Not just getting bookings for shipping but even getting dry mill slots was challenging—we’ve continuously been able to leverage our relationships and get priority in the dry mill but it’s still a bottleneck where it hasn’t been in the past. The same shortages the US is experiencing with truckers was exacerbated in Peru: what was already a really intense season for milling and shipping nationwide compounded by a limited number of truckers and dry mills (especially in our case where we partner closely with just a couple dry mills who mill microlots) led us into a tighter and more expensive competition for just about everything pre-export within our limited time frame. Even little things like getting bags marked became more competitive than it ever had been. Other surprises like the large earthquake in Amazonas led to collapsed roads, adding even more challenges. 

With all of those already tightly linked processes backlogged, the rainy season, which we would usually only see at the tail-end of our shipping season, brought its own set of complications, including mudslides leading to platform collapses. At a similar point, grape and mango season begin, increasing competition for refrigerator (“reefer”) containers. Doing things later makes things trickier—these challenges always exist, but usually only at the very end of our season. This year was different. And of course, costs and competition for containers and bookings went up and up and up, increasing by the month and sometimes week. 

Through all this, persistence and flexibility were key. We would book as many as four times the amount of bookings we would actually be able to retain so that cancellations didn’t have to change our schedule to the same degree, keep in close communication with every relevant partner, and stay in the competition. 

The Future

We don’t know when these challenges will ease up. What was once a simple matter of getting Covid-19 under control (no longer even a simple matter in and of itself) is now a deeply complicated backlog of literally every part of the conveyor belt that moves necessary goods from place to place. What we do know is that without the efficient systems created by Jajaira and further honed in the crucible of the pandemic and global logistics crisis, we wouldn’t be delivering coffee on schedule and in great condition. All crises are growth opportunities, and we’re lucky to be stronger than ever as we head into the future. 

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

C Market Volatility, Complex Logistics & Ethiopia Civil Unrest Spill Over Into Q1 2022

Red Fox Coffee Merchants Origin & Shipment Update: Q1 2022

Prefer to listen rather than read? Click here or find us on your favorite podcasting app.

As we sail into Q1 of a new year, a lot of the issues we dealt with through the third and fourth quarters of 2021 persist. Logistics are as tangled as ever on a global level and still require extensive planning and constant management, with ever-rising costs at every level of the supply chain. The C market price is ever more volatile and elevated, with new heights reached in the month of December. Civil unrest in Ethiopia has placed us in the region—but not in-country as we would usually be this week—cupping early offers and making commitments and firm plans, and we’re excited for the upcoming season. Despite logistical challenges, Peru’s shipping season saw early containers landing at the onset of Q4 and is now wrapping up. We’re on the ground in Mexico connecting with producers as the season peaks, and in Kenya tasting and approving offerings with first shipment already on the water. Despite the surrounding chaos, we’re managing details, landing coffees within our expected windows, and staying constantly connected with supply chain partners at all levels. More detail on all of this, in general and origin by origin, below. 

Logistics, Port, & Warehouse Updates 

The state of global shipping continues to be extremely challenging as we round the corner into 2022. Securing space on vessels is a daunting task. Even once bookings are secured, departures are repeatedly rolled, delayed, or outright canceled. Rates for all routes continue to increase and shipping lines are adding fees for port congestion on top of the already inflated rates. 

On the import side, trucking capacity is becoming a major issue. Shipments arriving to US ports are frequently sitting at port incurring demurrage fees (fees charged by shipping lines to importers when a full container is not moved out of the port/terminal within the allowed free days offered by the shipping line) and extra days of chassis (a special trailer that allows ocean containers to be moved via truck, required for shipments transitioning from sea to road) because of difficulty securing trucks to unload and move cargo to the warehouses. Costs continue to increase across the board. All services—trucking, rail, warehouses—continue to experience employee shortages (and the knowledge deficits that come with them), increased costs, Covid issues, and delays. Rail services are seeing particularly long delays. 

The port of Oakland, though still experiencing delays and not operating at full capacity, has seen modest improvements in recent weeks. However, we do expect congestion in West Coast ports to persist well into 2022.

Warehouses are reporting a lot of LTL freight shipments to customers still being sorted out from the holidays. Freight carrier holiday closures and winter weather in some states has affected many freight deliveries—some shipments are still stranded at intermediate terminals while carriers sort through the backlog. Freight is moving, but slowly. 

Supply, Demand, & The C Market 

We continued to see a meteoric rise in the ever-volatile C market this past quarter, which spiked past 250 in early December. The days of 2-3 cent moves being considered “volatile” are behind us when 5 or more cent rises have become commonplace (we’ve seen an average daily change of 5.6 cents over the period between 9/21-12/20). Expectations of lower global supplies due to unfavorable weather and supply chain disruptions continue to prop up the price of arabica futures even though the market has settled closer back to around 230 at the time of writing. It’s been quite astonishing to watch the C market price rise to levels higher than what our baseline price for some qualities has been in prior years in Peru (as covered in the last quarterly update, we’ve of course adjusted our purchasing prices this season in Peru—producers deserve the benefit of elevated base prices in low C market years as well as in high C years). Reports anticipate the events of drought and frost in Brazil may curb growth potential for the country’s coffee crop for the next two years. USDA production estimates Brazil coffee exports to drop by over 15 million bags recently, also citing La Nina’s heavy rains in reducing Colombia export estimates. Supply chain disruptions continue to wreak havoc on transit times and port congestion continues. Bloomberg reports shipments out of Brazil are taking as long as 100 days where the old normal was 30. We’re fortunate to have exceeded our expectations on transit time out of Peru so far without much additional transit time from prior harvests.  

What does this mean for you? It certainly feels like the days of sub $2/lb C market are behind us for the foreseeable future and some analysts feel bullish that we could see the market rise closer to $3/lb. We’re thinking about this daily as we begin to enter Mexico acquisition season to ensure we continue to pay the highest prices and quality premiums to our partners. We are well positioned with the communities/producer groups we work with due to strong relationships developed over the years from our base in Oaxaca that we continue to grow year over year.

Mexico 

As Mexico enters peak harvest season, a number of challenges face producers and traders alike. Our team at origin has already been busy for a few months making pre-harvest visits to producing communities across the country and getting a sense of how the harvest will shake out this year. 

Harvest at lower and mid elevations began in mid December and peak harvest of higher altitude coffees will be mid to late January and into February. Late rains have delayed the start of harvest in some regions. In areas of heavy Bourbon and Typica production (like Oaxaca) the bi-annual cyclical nature of these varieties is in a down year, which should bode well for quality but less well for total yield from these already lower-yield varieties. Strong rains and gains in farm renovations in the offseason and past few years appear to have boosted the predicted crops from Veracruz and Chiapas. 

A high C price in the outset of the harvest has created very high local prices for lower elevation coffee in Veracruz and Chiapas and led to strip and underripe picking to get coffees into the mills and sold quickly. Milling and exports of top quality coffee are expected to begin the second half of March/first half of April with first arrivals to the US in late May/early June. As always, we’ll keep you informed of any changes on that front. Port congestion and container availability are expected to be challenges again this year, but we are developing strategies early to thwart significant delays. On the positive side, costs for ocean freight out of Mexico don’t seem to be increasing much over last year. 

Economically, inflation is hitting Mexico very hard and is at its highest level in 20+ years, with gas and other basic goods (mainly food) prices increasing exponentially. Coupled with a rise in the national minimum wage scheduled to go in effect in January, costs of production are necessarily much higher all around compared with the 2021 harvest. Coupled with the rising C market, prices for quality and specialty coffee will be significantly higher this season and we expect to continue to pay substantially higher prices than other buyers for the qualities we’ve been working closely with producers to develop. Pepe Arguello of Finca Santa Cruz and manager of Cafeco is reporting increases of at least around 40%-50% over last year for both labor and parchment prices in Chiapas, where much of the labor for picking cherry has historically come from Guatemalan temporary migrant workers, but the compounding border issues (including refugees coming from Haiti and Honduras, among other countries, being stuck at the Guatemala/Mexico border in Chiapas due to disastrous US policy), and lack of visa permits are preventing many from coming for work.  

On the Covid side, Mexico is experiencing another surge in confirmed cases after a downturn last fall when the vaccine became widely available to adults and young adults across the country (children under 15 have not yet received vaccines, despite increases in pediatric hospitalizations). Only just over half of the population have received their vaccines, although they are widely accepted among adults and haven’t been politicized as in the US (for example, 95% of adults in Mexico City have received their first round of vaccines). The booster campaign just launched for senior citizens, teachers, medical workers, and other essential workers. The government has so far resisted any restrictions on foreign travelers or internal mandates.  

Ethiopia

We are wading into the great unknown this season in Ethiopia. The political situation, and contradictory reporting within the country, keeps us just over the border at the moment. While we would typically be on the ground in Addis by the beginning of January we are currently outside of the country, though in the region, working to execute our first half shipments from Agaro and Guji. As you read this we have our spoons in 15+ containers’ worth of offerings from Nano Challa, Nano Genji, Kolla Bolcha, Duromina and more from the Kata Muduga Union. We also expect to see our first G2 offerings and the first Uraga arrivals to Addis before we leave.  

Fortunately, our Ethiopian supply chain is older than Red Fox itself at this point. We have confidence in our small handful of trusted partners who are still working from the capital. While the global shipping crisis may keep us from our standard Feb/March arrivals in North America, we don’t expect delays past April at this point. More to come on that over the next few months.  

Price-wise, the state of the C market has pushed cherry prices upwards of twice their 2018/19 levels and 30-40% higher than last year. We are being quoted roughly 40-50c/lb FOB from last season’s levels. Top Ethiopia will be pricey in 2022.

From our trade partner in London, Scarlett Fishburn:

“In terms of updates, cherry prices continue to rise (now looking at 53/55 etb/kg) due to the higher NY and farmers’ speculation on the extent of the damage of extreme weather in Brazil last year. With little cash/tight liquidity, this is preventing big players coming to the market aggressively and so only really small guys are buying at these levels (which probably elevates the price outlook more than if the big players were factored in).

The National Bank announced last week that they are using their reserves to loan 12 billion birr to players in the coffee industry in an attempt to increase the amount of finance available during the harvest period.

Security seems to have improved since we last spoke. You will have seen that the US removed Ethiopia (and Mali and Guinea) from the AGOA program.”

In addition to Scarlett’s note, we are hearing that cherry in coveted producing areas of the south, specifically Uraga, are now upwards of 56 birr/kg as we head down the home stretch of the harvest. While the harvest is delayed in the south this season we do expect the first G1 stocklots to hit Addis by end January.  

Kenya 

As we wade into some unknowns with the Ethiopia season, things are off to a quicker start than ever in Kenya. Our first containers have left Mombasa and are now en route to New Jersey. We’ll be cupping through swaths of samples on the ground in Nairobi over the course of January to add reinforcements to our offerings.  

From our partner Kennedy Keya in Nairobi:

“Main crop cherry picking started earlier than usual. This was due to the early flowering that started in January 2021. Cherry picking usually starts at the end of October in areas near Nairobi (Kiambu and Thika)—but this season cherry picking for the main crop started at end of September and continued into December. Grade retention is fantastic and quality is great. We are seeing more bold beans with AA and AB grade making up 80 to 85% of outturns. We attribute this to proper use of farm inputs by farmers leading to well-fed trees and good weather conditions throughout from flowering to final fruit maturation.  

Prices have remained high and the high NY market is resulting in high historical prices for farmers.

Logistics remain slow. Shipping lines are constrained. Connecting vessels are full so bookings for nearby shipments are declined in most cases. Another struggle is getting empty containers. It takes a lot of advance planning to reduce the struggle to get empty containers.”

Guatemala 

The Guatemala harvest is underway in the lower elevations with picking of higher grown coffees just beginning. Overall, ANACAFE reported an expected 3% higher yield over last harvest, with regions such as Huehuetenango seeing slightly more gains than that. 

An anchor in Red Fox’s Guatemala sourcing for the past three years, Felipe Martinez of Finca Los Arroyos in La Libertad, Huehuetenango confirms early December pickings and expects to continue in earnest as the new year gets underway.

A trusted supply chain partner told us that despite the ongoing pandemic, he is expecting fewer disruptions this harvest and is already seeing an increase in their overall ability to collect and receive coffee, mainly through growth in projects in more remote areas such as Santa Barbara, Huehuetenango. We anticipate continued success in these investments, bringing in more volume from these small holders. 

Look for more updates as we get into the harvest. Currently we anticipate the usual May shipments for peak harvest Guatemalan coffees. 

Peru

The Peru shipping season is wrapping up with 17 containers currently en route to the US and the final handful of containers being milled to ship later this month. We will have warehouses in NJ, CA, and TX flush with fresh coffees soon and through spring.  

Peruvian ports, specifically Callao and Lima, have been some of the most affected during this global shipping crisis with general lack of container availability paired with shipments rolled on a weekly or monthly basis.  

Despite challenges with parchment competition in the early months of the harvest, container availability and the shipping crisis, we managed to increase our purchase volume almost 30% from 2019 and 2020. Our relationships across the country, though most specifically Cusco and Amazonas, continue to grow and be the backbone of Red Fox Sourcing Company Peru.   

Colombia 

Colombia has been the heart of the coffee sourcing struggle since entering the first semester harvest late spring 2021. Early pandemic lockdowns, violent political protests, prolonged port closures, the volatile C market, and intensive rains brought on by La Niña all equaled a massively decreased specialty coffee production. We brought in four containers from the peak summer season at FOB price levels near 50% above 2020 levels. As local prices continued to increase into the second semester harvest, producers across the country rushed to strip pick green fruit in order to deliver unselected parchment at exorbitant prices. Predictions for the coming summer crop also call for more intense rains as the ‘22 La Niña season peaks in the next 6-8 weeks. Availability for top quality Colombia may suffer until Q3 2022, but we’ll have a better assessment in our Q2 report come April.  

From our dry mill and export partner Frederic Boppe in Popayan:

“Production has decreased from last year, mostly due to excessive rains during the last semester. This affected flowering and maturation of the cherries, thus affecting quality and yields in certain areas. Drastic increase in price of fertilizers has also caused a serious impact in production, as producers tend to apply less. The harvest period was shorter than usual and production is over. Parchment is tight, with very few offerings from this area at this time.

This has been a very unusual year. Due to the drastic price increase of over 100%, several producers defaulted in their previous commitments on their deliveries to cooperatives and exporters. The spot market has ruled the trade, and most of the coffee which came out in the last semester was immediately purchased by companies who were short, driving the internal market even higher. All parchment was purchased for immediate delivery and paid to producers upon delivery at the mill. Future commitments are no longer being accepted and cash advances have become very unusual. Today, there is still very high demand with base prices around 2,250,000/carga for standard coffee, but exporters must pay a premium of at least 100,000/carga to secure decent quality. In the internal market, no transactions for future deliveries are taking place and all coffee is sold at the spot market. Longer-term offerings from exporters are very limited. The recent ICE market levels (reaching 2.50/lb) and record US/COL peso level transactions (breaching the 4,000 level), have undoubtedly generated a higher income for coffee producers, strengthening the coffee producing sector.

Logistics: Currently we expect that everything will be back to normal by Q3 2022. Shipping lines are calling off vessels and the lack of containers is dramatic. In general we expect an average delay of 45 days for upcoming contracts. The flow is normal for almost all destinations. In November, the US was the main destination for Colombian green coffee exports with a participation of 42%. Finally, we estimate freight costs have increased by 60% over the last year to the US.

Rwanda 

We’re eagerly awaiting the arrival of our Kanzu lots from Rwanda. Ocean freight routes from East Africa continue to be beset by delays in transhipment ports and lack of space on vessels, resulting in very long transit times. We currently expect US East Coast warehouse availability for Kanzu in the second half of February. 

Looking ahead to the upcoming harvest, the crop is developing well and weather conditions have been favorable. Cherry picking in lower altitudes is expected to begin in late January/early February with higher elevations ripening later in the season. Last season’s good prices are motivating farmers and the outlook for quality and volumes is good. 

Export logistics are expected to be challenging again this year. Landlocked Rwanda relies on its neighbors—Uganda and Kenya—for the transport of all imports and exports to and from ports. Covid testing requirements at border crossings have contributed to long trucking delays, sometimes as long as three weeks between Kigali and Mombasa. Low volumes of imports into the country have also made empty containers scarce. 

Ecuador 

After a few unexpected challenges, we have chosen to air freight all of our Ecuador coffee this year and it should be arriving in the states very soon. We’re expecting great lots from our long-term partners Hernán Zúñiga and Andrés Dávalos, Mateo Patino, and Gilda Carrascal from 1600 Estate. We’ll also have some stunners from newer producer partners Galo Davilos and Yesenia Murillo.  

On the Covid front, like much of the world, Covid cases are on the rise due to new variants. Fortunately, Ecuador has a high vaccination rate with over 77% of the population vaccinated. However, due to the rising case numbers, the government just put out a mandate that all eligible residents over the age of 5 get vaccinated.  

Get in Touch

As always, if you have any questions, concerns, or thoughts, let us know. We’re here to help.

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.

Ethiopia Supply Chain Partner Eden Kassahun On Managing Logistics Through Covid 19

 

Eden Kassahun is one of Red Fox’s most integral supply chain partners and has been since we opened in the business in 2014. Eden and Red Fox co-founder Aleco Chigounis’s history together goes back to her days at Technoserve where they first met in 2009. She helps us manage our Ethiopia supply partnerships with Kata Muduga, Kerchanshe, and Kedir Jebril. Her role couldn’t be more critical to our success in executing early shipments; she manages much of the internal transportation and logistics details within Ethiopia. We sat down with Eden in the Foxhole to discuss her history and unique position in the Ethiopian coffee world, her role in our many Ethiopian partnerships, and the impacts of Covid-19 on the past and upcoming harvest and shipping season. 

 

Aleco Chigounis: Hi everybody, welcome back to The Foxhole. We have one of the most special guests we could have, one of our most critical supply chain partners in all of the world. We’re broadcasting live from Addis Ababa, Ethiopia, today. Eden is in her office and I’m back in my hotel room. January is easily the biggest month on our coffee acquisition front in the entire calendar year. Part of what we do, part of the success of Red Fox is moving coffee from Ethiopia extremely quickly, something for which Eden’s work is key. We take pride in our ability to get coffee to market as fast or faster than anyone else in the trade. So in order to make that happen this year, I took all the precautions I could. Red Fox is learning how to travel anew all over again in 2021, and it’s a little bit stressful, I’m not going to lie, there’s a lot of concern—but this is what we do and we need to serve our client community, so we’ll be out here.

Now, for Eden. She and I have known each other for 12 years since her days back at Technoserve and she’s made an absolutely amazing career for herself since then. I often refer to her as the queen of Ethiopia for Red Fox. The role she plays in Red Fox’s supply chain is both behind the scenes and very much in the middle. That’s an important detail because there’s been a lot of talk over the years of middle men needing to be cut out or not playing the right role, and that’s really foolish and harmful. People play a critical role—from the producer all the way through to delivering that green coffee to the roastery and where it goes from there. Eden is a huge part of Red Fox’s success.

Eden Kassahun: Thank you Aleco, I’m happy to be here. 

Aleco: Could you give us a little bit of a background on how you got started in coffee and how your career has progressed? 

Eden: I joined coffee when I first started at Technoserve. My background education is computer science and software engineering, so I was supporting team Technoserve in IT. When I was working there, I was able to visit farms and learn more about growing coffee for the first time. The intention was for me to go and visit the office, which is up in the country, in Jimma. When I was there, I got the chance to see how the coffee farmers live, how they produce coffee, how they sell, which was not something I had imagined before that. I grew up in the city, and that was my first experience in the field. I saw how producers live and how that shaped their characters and the beautiful coffees they produce, and it was very attractive for me, and I wanted to go deeper into that side. I started to study the profiles, the terms, everything to do with coffee. Naturally I met very good people like you, Aleco, and that’s how I got started.

After a couple years getting closer and learning about coffee, including cupping, I started my small company operating in wholesale coffee. That’s how my business started 12 years ago. 

Aleco: I remember in 2009 when our mutual friend Chris Jordan told me about his project with Technoserve and the Gates Foundation in Limu, an area where a lot of us on the buying side were fairly certain that there wasn’t phenomenal coffee. Of course, you proved us to be incredibly wrong. Those coffees from Agaro, specifically the Nano Challas, the Durominas, the Yukros are just some of the most beautiful coffees in the world, undeniably.

I remember meeting you in the office when I would come in and cup and to see where you’ve gone from there is amazing. You’ve started your own company. You have your own crew there now.

How do you see your current role, responsibility, and objectives in the Ethiopian coffee industry now? How do you run the business?

Eden: Our company is responsible for filling the gaps between the supplier and the buyer, helping overcome the many barriers in that area. Technology is a barrier, language is a barrier, and even the culture, the culture of connecting producers and buyers. They very much need a bridge between them. On top of helping identify good coffees, we facilitate communication and shipment so that buyers get that good coffee on time and can deliver to their clients. It is a big role, and stressful sometimes, but it helps promote new coffees and growth for everyone involved.

Since we started working together, we’ve seen a lot of new coffees enter the field and develop better markets for their product. We’re able to identify and get top-quality coffees, which can bring a large amount of currency for us as a national entity. It also helps to get good coffees for good people, good coffee buyers.

Aleco: I think what you said about facilitating coffee moving quickly might be the understatement of the year. You’re a hero in that regard.

As I’ve mentioned before, Red Fox moving Ethiopian coffee quickly is really a big part of our success, and the role that Eden plays for us specifically in that is managing contact with all the producing groups over the course of the year, communicating with all of us. Once I arrive here—which is usually the end of December—she and I get into the warehouses immediately, like literally the day that I arrive in Ethiopia, and we start to bulk lots together and sample coffees. I roast the samples myself in my hotel room on an Ikawa and then cup them in Eden’s lab the next day. We make decisions really, really quickly. We try to get coffees into the mill as soon as possible which is very difficult in January because you have two very major holidays here in January: Ethiopian Christmas, which is usually the second week of January and then Timket, which is an even bigger holiday than Christmas. So to be able to operate in and around those moments is really tricky, and Eden is able to pull that off on a level I literally have yet to see anyone else be able to do here. It’s really a special thing.

Shifting gears a little bit Eden, can you talk to us a little bit about the pandemic and how COVID-19 has affected Ethiopia, how it’s affected the coffee industry over the last year?

Eden: The economic impact of the pandemic was very severe on the coffee trade in Ethiopia. The disease itself is not necessarily as bad as in many other countries, but it has affected a lot in the coffee trade and trade in general, especially during the lockdown when people were not able to move.

It’s now been three or four months where we can easily move without lockdown. But transport was limited—most of our people use public transport, and most of it was not operating or was operating at limited capacity. And there was little work, so it was really difficult for people to survive, especially in the big cities I think. Then when you go to the countryside, especially the coffee growing areas, there wasn’t much interest in the speciality side of the business, which brings relatively good money compared to commodity business. So that was a huge set of financial problems.

But if you ask about the awareness or people’s knowledge about that, I could say most of our people either don’t know or don’t really trust that there is a disease there. It was really rare for us to see people wearing masks properly, right Aleco?

Aleco: Yeah, especially outside of Addis.

Eden: Especially up in the field and the washing stations, people don’t care. Even people who are coughing—they go, it’s okay, I’m fine, I’m fine.

Aleco: It’s interesting to hear that the virus has been politicized in a different way but almost as heavily as it has in the US, that people think it’s more of a political thing and maybe it’s not actually real.

Eden: Initially when the pandemic broke out, people were in the middle of mass protests. Things were not politically stable last year during that time—of course, they aren’t stable most of the time, but this was bigger, so that every place was rallying for protests and gatherings. When they announced this state of emergency and told everyone to stay at home, not to gather and all this stuff, everyone thought that was to stop the protests. 

Aleco: Yeah, early on there was a heavier lockdown, right?

Eden: Yes, much, much heavier. We were all made to stay at home, schools, off the bus, the restaurants were closed. They were doing thousands of tests per day.

Aleco: How did the pandemic and lockdown itself affect the coffee industry? I know the lockdown happened in the middle of shipping season last year, and it affected interest from the global marketplace. Can you tell us a little bit about that?

Eden: It became much harder to manage the coffee. The coffee unions have a lot of management power, and at the time of the lockdown they were operating at just a quarter capacity in terms of labor. And it’s not only the quarter capacity, they also work just half the day. So we really couldn’t get the work done in the same amount of time. It took us more than a month to ship coffees post-processing. The logistics and the quality inspection parts were really terrible. And very little coffee was coming in. The national banks which do permitting were also operating at a quarter capacity, which slowed things down immensely for getting permits to export coffee. All the customs stuff, the truck movements. It’s one of the sectors most highly affected by the pandemic. Because most of the tasks are labor intensive—they require human intervention. 

Aleco: So, along with all of the myriad of issues that you just mentioned, I know that demand in the middle of the shipping season started to fall off. I heard about issues from Japan, from Korea, from North America, from Europe, buyers trying to wash contracts out of fear of what lay ahead for them in their own marketplaces and their own ability to sell coffee, which was a devastating moment here. I know a lot of folks were in trouble last year, and I hope that all of them were able to survive and come back online this year.

But  with that said, I’m curious what your expectations are for the market this year in terms of being able to regain momentum and sell levels of coffee like you had in 2019 in years past. Do you have any thoughts on that?

Eden: I think the impacts will continue affecting especially the high-end coffees, because still, globally we see that demand is still lower. On the other hand, we’ve seen that demand for low grade coffee is higher than it was pre-pandemic. Of course, the season is just starting, but when we see the buyers’ interest and what they ask for, I think the demand will go to the low end coffees instead of the higher side. 

Last year there were a large amount of washouts, especially for high-end coffees, which discouraged most of the people who produce those, especially at the dry mill or washing station level. They ended up having to sell their high-end coffee in the commodity market, even if the coffee had a high value. So it’s discouraged some producers from pursuing high-end coffee, and they’re also dealing with financial constraints as a result. I expect to have less interest from the people who produce special coffee. There’s still that demand for low grade coffee, which shows that a lot of people are drinking coffee at home. That’s how I see it.

Aleco: I can tell you from our perspective, last year we were terrified in March, in April, in May. We’re still a little bit terrified about what lies ahead for us in the marketplace, and concerns about what types of coffee will be of interest to roasters around the globe, and what you said confirmed some of our thinking there.

But I have to say, I feel like we are in a very fortunate industry. I feel like there is a whole lot of resilience in coffee, that people aren’t going to stop drinking coffee anytime soon, and that there’s still a lot of hope and a lot of opportunity for the folks that are able to muster enough moxie to get through this period and come out alive on the other side, alive in the business sense.

So we’re hedging our bets on what we think the market needs. We think that there still is a whole lot of room to sell top caliber coffees at appropriate price levels, at those higher price levels. But I think in general, yes, I agree that there will be a little regression in terms of what people are willing to pay for the moment so that they do get to the other side of this.

I know many farms around the globe are facing a pandemic-induced shortage of coffee pickers. Is this an issue in Ethiopia?

Eden: Not really. Again, you’ve seen that people are not really aware that there is a pandemic, especially at this point post-lockdown. Of course last year there was an issue because of the lockdown shutting down transport, preventing workers from traveling to jobs. But this year, no, it doesn’t really affect us.

Aleco: Eden, thank you so much. We’re going to let you go, unless you have a message or anything you’d like to share before we go. It’s been such a pleasure having you on.

Eden: Yes, thank you very much. Once again, I’m really happy to have met you and been part of this friendship, and I hope it will continue like this. I’m really looking forward to sending over the great coffees. Thank you.

Aleco: I can’t tell you how much we appreciate you and your efforts. Thank you so much. Talk to you tomorrow morning.

Eden: Yes, as usual. On with your roasting, so that you can cup tomorrow.

 

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

 

Red Fox Coffee Merchants Origin & Shipment Update: Q2 2021

Hello friends, coming to you in the second 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. Buying coffee, while never easy or uncomplicated, has become more complex than ever, and we want you to feel included, supported, and looped in as we navigate that process together. With the supply and shipping disruptions we’ve seen over the last year and which we know will echo into the future, every link in every supply chain needs to be managed more carefully than ever. We want to help keep your finger on that pulse 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

Logistics & Port Updates 

We continue to feel the impacts of the widespread disruptions in trade and cargo shipping brought on by the pandemic and magnified recently by the container ship the Ever Given blocking traffic through the Suez Canal. For Red Fox, the global shortage of shipping containers has made it challenging to find bookings for the fastest, most direct ocean cargo routes that we prioritize. We’ve seen higher shipping costs, more rolled and cancelled bookings across the board on all shipping lines, and big bottlenecks at US ports, particularly on the west coast, that result in delays in getting our coffees unloaded, through customs, and stocked into warehouses. Ports, warehouses, and trucking companies are facing staffing shortages due to Covid-19, causing further logistical challenges and delays. 

We push to get our Ethiopia shipments afloat as early as possible every year, and are especially glad to report that, with the majority of our containers already on the water or arriving on the east coast, Suez Canal-specific delays have only affected a couple of our later shipments from Ethiopia, some of which we have chosen to hold in Addis until bookings can be confirmed, rather than have them sit at port in Djibouti. We know that long shipping times and warehouse delays are frustrating for everyone and we will continue to bring you as much information as possible regarding ETAs, arrival times, and coffee availability as these challenging conditions continue. 

Supply, Demand, & The C Market 

After a near 2 year high of around $1.40/lb towards the end of February, the C market seems to have settled in the mid-$1.20s/lb at the time of writing (approximate 3 month moving average). As Red Fox does not trade or hedge using the C market, there was little direct effect on our US operations. However, as the C market price continued to rise during Mexico sourcing discussions, we kept that $1.40 price in mind while determining what competitive quality premiums look like right now.  While global shipping lines work to renew vessel schedules across the world’s ports, warehouse stocks of green coffee across the global north continue to dwindle per various market reports. This has led to grumblings around increased C Market volatility though we’ve yet to see any major movement to date.   

Mexico 

About 75%-80% of the harvest is currently processed and collected in the central warehouses for bulking and dry milling. The Pluma/Sierra Sur and Mixteca regions are closer to 90%, while some regions in Northern Oaxaca will continue their final round of picking/processing through the first half of April. Chiapas and Veracruz are almost 100% finished with harvest. Our lab in Oaxaca has seen the heaviest 2 week period in our Mexico sourcing history at the end of March and samples continue to arrive from producers and family clusters from new and established relationships. We’re busy cupping offers as well as early preships, bulking coffees, monitoring the dry mill, and making sure coffees are ready to make their way onto the water. April is the primary month for milling across all three states in Mexico where Red Fox sources. Our first container is milled and expected to go afloat this week and four other containers will be milled this week and next.  First arrivals will be primarily community lots from the Pluma/Sierra Sur region of Oaxaca.

There is more competition for container availability this year due to the global container shortage but the big advantage Mexico has for shipping to other North American ports is the frequency of vessels arriving and sailing (most steamship lines call to port of Veracruz every 3 days). We also plan to continue to use the port of Manzanillo on the Pacific Coast for West Coast shipments where transit time is 5 days on the water port to port. We still expect these coffees to arrive in May through June. 

Covid-19 case counts continue to be a problem across Mexico and while a vaccination program has recently begun by the government, the rollout is slow and disorganized. More wealthy Mexicans with travel visas are going to the US to get vaccinations. The government recently released data showing more accurate cases and death counts than was previously being released and were 30% higher than previously reported. Another surge in cases is expected  after the Semana Santa (Easter) holiday where many people travelled and family gatherings are very common. Most businesses are fully open, and while mask wearing is very widespread in public and on the streets, it’s less common in family social gatherings. 

Smaller, more vulnerable communities continue to publicize information and precautionary measures, but many of these precautions unfortunately aren’t up to date and don’t prevent spread effectively. Where the latest science overwhelmingly points to aerosols in gatherings in poorly ventilated areas without masks as the primary method of spread, the smaller towns still focus on hand sanitizer and spraying down the outside of clothes and cars with bleach as the way to prevent more cases entering. We hope to see better information and  realtime science reach these communities quicker in the future.   

Available Lots: Peñas Negras makes its return to the offerings of community lots out of the Pluma/Sierra Sur region, near Juquila not far from the Pacific coast, just straight up the mountain. This community is one of the first to start and finish harvest in Oaxaca and this year’s lot is very balanced and sweetness driven, showing notes of Honeycrisp apple, chocolate syrup, and fresh butter. This and other Pluma community lots in the first shipment arrive to Continental, NJ the first week of May and 2nd week of May to Annex, CA. We’ll also have coffees available by the end of May in Dupuy, Houston and Seaforth, Vancouver this year.  

Ethiopia

Harvest has officially concluded for the season, Addis warehouses are full of parchment and peak shipping period is now underway. Vertical Integration, which allows for producers to establish a price agreement with an exporter prior to the harvest season, continues to play an emerging role in the specialty sector with more direct business concluded than year’s prior. The ECX continues to receive and trade less coffee.  

The Suez Canal incident and rising fuel costs for trucks making the Addis to Djibouti run have caused massive delays for vessels leaving port.  

Covid-19 cases are increasing at extreme levels according to our network on the ground in Addis, though accurate reporting remains difficult to find. Ethiopia received 2+ million doses of AstraZeneca in March per the WHO’s initiative.  

Available Lots: We were fortunate enough to move our first dozen containers, split between Agaro & Guji, prior to the Suez debacle. Fresh crop has arrived to Port of NJ as of 3/30. We expect availability in Continental Terminals NJ in the coming week or so of both Guji and Agaro coffees. ETA’s for coffees coming into both The Annex CA and Dupuy Houston range from to mid-to-late April.  

Kenya 

Kenya is now also in peak shipping season as the main crop has now concluded. 320,000+ bags have been purchased through the auction system and direct purchases since January 1. The fly crop (Kenya’s second, smaller crop) begins later this month and will conclude late May/early June.  

Shipments are delayed per the Suez debacle with lines still unable to communicate new schedules. Some fear a backlog into or even through May. Food grade containers are also at a premium.  

Nairobi is currently in lockdown as cases are now on the rise. Our trade partners are only in their offices on a rotating, need-to-be basis. The first round of 1,000,000+ AstraZeneca vaccines arrived in Kenya early March. The government expects 3,500,000+ vaccines to be distributed across the 2021 calendar year.  

Available Lots: Our first shipment arrived to Port of NJ late February and has now been sold out.  Our 2nd shipment destined to CA maintains a mid-April ETD from Mombassa.  

Guatemala

We are hearing reports of another month of harvest in Huehuetenango. Early offers have been outstanding and we’ll see more volume this year from producers from the Santa Barbara municipality. Look for Guatemalan coffees clearing on both coasts in mid to late May.

While travel has opened up between departments, public transportation remains extremely limited. This has exacerbated the shortage of migrant pickers and harvesting continues to be a struggle in most regions.

In vaccine news, Guatemala became the third country in Latin America to start vaccinating its population through the COVAX initiative, which uses the AstraZeneca vaccine. Guatemala expects to receive a total 6.6 million doses this year to reach its goal of immunizing 20% of the population.

Available Lots: We’re currently finalizing selections for an initial container to go afloat later this month/early May.

Peru 

Even though in January 2021 the national economy showed a drop of 0.98%, Peru’s agricultural sector remained afloat and growing. For its part, the Junta Nacional de Café (National Coffee Board) hopes that this year will be strong for coffee production. They expect production to rise 18% compared to last season, and the Cajamarca, Cusco, Amazonas, and Pasco regions will benefit from it.

In mid-January, the Peruvian government declared the arrival of the second wave of Covid-19. The government established different risk levels for the country’s regions and implemented restrictions for each level. One measure ensured that people taking domestic flights from extreme risk regions must present a negative Covid test from within 72 hours before the flight, as well as foreigners entering the country. 

Added to the general political instability of 2020 was a national scandal called “vacunagate”, where it was discovered that influential figures including the former president and the health minister had secretly received free vaccines from Sinopharm months before negotiations were finalized and doses were available to the population. The news aggravated the feeling of disappointment with political leaders. Currently, a limited number of vaccines are available and the vaccination process has begun. The Peruvian government presented a National Vaccination Plan that has three phases that extend until the second half of the year. The country is also preparing to face presidential elections during April.

Available Lots: A broad range of all regions and qualities available on all three coasts (Continental NJ, Annex CA, DuPuy Houston). A rep from our team would be happy to walk you through our offerings from Peru and make recommendations.

Colombia 

Heavy rains have stunted both flowering for Colombia’s second semester harvest and maturation for the imminent mitaca fly crop across Southern Colombia. Ports from Cartagena to Buenaventura are dealing with congestion due to limited availability with primary shipping lines. Port Strikes in Brazil and Covid-19 are the main culprits. Container availability is not currently an issue.  

Geovanny Liscano reports that Asorcafe is business as usual with producers focused on maintenance in the current between-crops season.  First picking at altitude in Inzá should begin by the second half of June. 

Covid-19 cases are back on the rise. The government has put in place new travel restrictions for those traveling internally within Colombia. The first vaccines arrived in Colombia mid-February with the government maintaining their plan for 20,000,000 doses to be distributed in the 2021 calendar year.  

Available Lots: Red Fox’s North American stock is dwindling as we prepare for inbound Mexican coffee late spring. Expect fresh crop coffee from the mitaca to begin shipping late summer/early fall.  

Rwanda 

Cherry picking in Rwanda is underway, with peak harvest towards the end of March. Reports of weather and rainfall have been promising, and we are expecting good quality and volume this season. We should see offer samples in our lab in late May/early June.

Rwanda has imposed some of Africa’s toughest anti-coronavirus measures since the pandemic began, including one of the first full lockdowns on the continent in March 2020. More recently, Kigali went back into lockdown for 2 weeks in January 2021, after an increase in the number of Covid cases. Case numbers have since fallen and restrictions have been eased in the capital, though concern about new variants remains high.

Rwanda received its first Covid-19 vaccines in February of this year and has been rolling out a wider vaccination campaign in March, with doses of the Pfizer and AstraZeneca vaccines supplied through the WHO’s COVAX initiative. The government’s goal is to vaccinate 30% of its population of 12 million people this year and 60% by the end of 2022.

Available Lots: Lot selection late May/early June with a container to both East and West Coasts likely to go afloat before the end of June.

Ecuador

Ecuador’s rainfall eclipsed the summer season and there continues to be excess rainfall. It seems that summer weather is finally approaching, which could bring the harvest a bit early. The October-November flowering was abundant, but there was minimal fruit. Producers have let us know that they are optimistic about what is to come this harvest season.

Ecuador received its first Covid-19 vaccines in January 2021, but has been rolling them out slower than anticipated. The country has contracts with Covax, Pfizer, and AstraZeneca. There have been a high number of cases and deaths in the country with a majority near the large coastal city of Guayaquil. The country’s goal is to have phase 1, vaccinating 2 million people completed by the end of April 2021 and begin phase 2. For reference, there are over 17.3 million people total in the country. 

Available Lots: With only a few lingering lots left uncommitted, get in touch with your rep if you have interest in sampling any lots still on the offerlist. Sidra, Typica and Bourbon Tekisic variety separations still available.

 

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

 

Logistics Are Quality

Logistics are not just as important as quality: they are key to the actual delivered cup quality your customers see. Once harvested and processed, every coffee has a certain quality potential. Our job as a sourcing company isn’t just finding that coffee and ensuring that quality potential is maximized throughout growing and processing: it’s preserving that quality through the export and import processes—something we take particular pride in. Logistics are so integral to quality and quality is so integral to our mission that we prioritize supply chains across the globe in which we can play a leading role in logistics and preserve every bit of the producer’s meticulous work. Logistics may not be glamorous, but they’re critical to all the things that are.

Pre-Shipment Storage

Once coffee is harvested and processed, it’s critical to manage conditions in which coffee is stored prior to shipment. One way to do that is by managing where and when the coffee hangs out on its way out of the producing country. 

For instance, humidity is a challenge for some of the groups we work with in Northern Peru, like Coopbam and Santuario. Since the ambient moisture in the air would be enough to interfere with these groups’ careful drying practices, they preserve quality by storing all the parchment in GrainPro. Then, as soon as they have results from their cupping lab, they move the coffee to Piura, which is much drier. The coffee is stored at the dry mill in Piura before moving to port and shipping. Other similar examples in Peru are taking coffee from Puno’s Sandia Valley, around 1,000 masl, up to 4,000 masl in Juliaca, and from 1,500-2,000 masl in the Calca producing areas to 2,000 masl in the city of Calca. 

In-country transportation schedules wouldn’t necessarily be thought of as quality improvement measures, but in fact, this practice, which we use in many other regions as well, helps ensure that the flavors this group produced on the farm actually make it to the end consumer. This improves shelf-life, meaning both that quality is intact for longer and the eventually inevitable aging process happens more smoothly. The best climate for growing and processing coffee isn’t necessarily the best for storing it, and logistics help navigate that gap.

Exporting

It’s easy to go to origin and taste great coffee; the real skill lies in being able to bring that same flavor back just as vibrant as when it left. Nowhere is that more true than in Ethiopia. In Agaro, in Western Ethiopia, we have trusted relationships of over a decade in length that reach back to when the Ethiopia Commodity Exchange (ECX) was formed in 2008. 

When that happened, many small independent washing stations lost the ability to export their coffee directly, meaning that we had to change our entire sourcing strategy. What came out of that was the formation of a new cooperative called Kata Muduga, formed by trade partners dissatisfied with the larger cooperative unions that controlled much of the field. When the ECX ended last year, our relationship with Kata Muduga remained stronger than ever, as did the quality coming out of Agaro.

This long, trusted relationship partnered with strategic detail work helps us manage logistics to ship our coffee first and deliver that quality intact to consumers. It allows us to get into the warehouse first, cup quickly and accurately, and make immediate decisions. A huge part of the necessary detail work is being diligent about contracts that outline key shipping details—it’s not glamorous, but it’s what makes glamorous coffee possible. 

One of the most common misconceptions we see is that anyone with a skilled palate can go to Ethiopia, taste coffee, and deliver it to their customers. While palate skill matters, without strategic trade knowledge and partnership it’s all too easy to end up in a situation where that great coffee will show up last, having spent months of its life hanging out in a variable climate and lost a ton of potential quality and shelf-life. Getting containers out of the country, timing them correctly to avoid jams, and using relationships strategically all take logistical expertise that is a key component of end quality. 

Importing

When importing coffee, we look carefully at logistical details with quality preservation as a key focus. Many importers prioritize delivering the lowest possible price to their end consumers, and that’s a valid approach, but it’s not at the core of what we do. We prioritize delivered quality even when it isn’t the cheapest option (and it often isn’t).

Part of this is in timing—we typically choose the fastest route into the US. We are specific in our contracts and avoid trans-shipping (where the coffee stops at one port and gets moved to another ship, continuing its journey from there), which often leads to delays in questionable climates. 

In the case of Mexico, we’ve also experimented with trucking the coffee overland rather than shipping. Last year, even though our primary warehousing spaces are in New Jersey and California, we sent a container north to Texas, then split it up and sent it to its final destination overland to get it here faster and have better control over travel conditions. 

Warehousing 

We warehouse in third-party warehouses, meaning that we rent space from other warehousing companies and they work with our customers to coordinate shipping through trucking companies (we help facilitate, but it’s not under our aegis). Working with third-party warehouses allows our customers to consolidate their orders, but it’s not without its vulnerabilities. 

Damage to bags within the warehouses, mixups that end with the wrong coffee going to the wrong person, these are logistical concerns that occur in the warehousing stage that we are accountable for but not in control of. If you’ve ever been on the receiving end of one of these issues, you know how much warehouse logistics have the power to affect quality on your menu. 

Trucking

If you’ve ever encountered an issue with your coffee after a rough truck run, you’ve had a firsthand demonstration of how important in-country transit logistics are to quality. Our role in this process is as a resource: we help customers get fair freight quotes under the umbrella of our relationship with freight companies, and help them coordinate shipping and release from the warehouse. 

Since this is a process we are adjacent to and don’t control, we do everything we can to help, but we also know this is a place where logistical failures outside our purview can have a massive effect on quality. We can do everything to carry the torch and ensure as much preservation of coffee quality as possible leading up to trucking, but if your coffee accidentally gets soaked or contaminated on the truck on the way to your roastery, all of that hard work is compromised. 

Logistics Are Key

In the world of top-tier specialty coffee, there’s often a divide between the glamour of quality and the nuts and bolts work of logistics. It’s easy for the language of logistics to turn to static in the ears of those not deeply involved in their intricacies, especially because they’re often jargon-laden and complex. But the truth is, logistics absolutely have the potential to make or break quality. Coffee is perishable and extremely climate-sensitive. The greatest coffee on Earth is worth nothing if you can’t deliver it to its destination with all of its quality potential intact. It’s easy to go to origin and taste great coffee, but the real skill lies in being able to bring that same flavor back just as vibrant as when it left.