The blockage in the Suez Canal, caused by the grounding of containership Ever Green, could soon impact the supply of Robusta coffee to Europe.
The 400-metre-long container ship became stuck diagonally across the single lane stretch in the south end of the canal on 23 March and has remained that way until 29 March. Twelve per cent of global trade passes through the Suez Canal – particular between Asia and Europe. Only two major Robusta producers, Brazil and the Ivory Coast, don’t use the canal.
“For traders, they are going to scramble to supply their clients in Europe,” Jan Luhmann, Founder of JL Coffee Consulting and a former head coffee buyer at Jacobs Douwe Egberts, told Bloomberg.
“Resolving this is going to take a few days if we are lucky, but even so, a lot of damage has already been done.”
Hundreds of large container ships have been backed up at either end of the canal, waiting to get through. These vessels face delays of two to three days if the Ever Green is freed soon. Otherwise, they may be stuck outside the canal for five to seven days.
“Inventory in Europe is very tight and I expect the spot market will be on fire,” Luhmann told Bloomberg. “Inventory in Vietnam is comfortable, but what’s the value of that if you can’t get it to Europe?”
European roasters may be tempted to substitute Vietnamese Robusta with currently more accessible Brazilian beans, but this is likes to disrupt their flavour and roast profiles. Supply from other large Robusta producers like Uganda is also disrupted by the blockage.
Several container lines had considered diverting ships around Africa to avoid the Suez blockage, however, that would still lead to delays.
“Can roasters support two to three weeks of delays? Probably not,” Raphaelle Hemmerlin, Head of Logistics at Swiss coffee trader Sucafina, told Bloomberg. “I don’t think they have the buffer stock that they normally have.”
Image: Suez Canal Authority