STiR coffee and tea magazine

STiR coffee and tea 11 The Worsening Logistics Situation Shipping charges from East Asia to East Coast ports in North America averaged $20,695. They averaged $17,377 for West Coast destinations on Oct. 15, making the cost of loading and transporting a 40-foot container of tea from Vietnam greater than the value of tea it holds. Rates were $7,200 for containers on routes from Northern Europe to the US East coast, and a 20-foot container traveling from India to Argentina was recently quoted at $6,900, according to Freightos shipping index. 1 The price of a container traveling from Kolkata to Rotterdam was $9,500 in October. Add the price for Covid-19 limited labor to load and premiums paid for ground transport to port, and costs easily approach $20,000. Freightos FBX reports containers averaged $10,396 on Oct. 15. The Shanghai Containerized Freight Index is up 464% to an average $4,614 cost per container. Danish logistics data researcher Sea-Intelligence 2 reports that delays tie up almost 13% of the world's cargo shipping capacity. According to the company, the schedule reliability in August was at a record low of 33.6%, meaning two-thirds of shipped goods are arriving late. Airfreight is the preferred method for transporting specialty tea. In normal times, using a parcel service adds about $6.50 to the cost of each pound of tea, about 40-cents per ounce. But in recent months, rates on some routes have doubled – and doubled again. Rates to fly goods from Frankfurt to Hong Kong grew by 2.2 times in the past three months to record highs of $3.53 per kilogram, according to the newly launched Freightos Air Index (FAI) that competes with TAC Index. Freightos WebCargo platform monitors cargo volume for 30 major airlines and cargo prices for 10,000 freight forwarders totaling 40% of global air freight. FedEx is upping its fees by an average of 5.9%, UPS by 4.9%, and DHL Express announced it would increase its rates by 5.9% on Jan. 1. Retailers who typically offer "free shipping" are upping order minimums to $50 and $75, and many are charging $15 to $25 to ship packets that weigh less than 500 grams (one pound). During the pandemic, airlines relied on freight to generate a third of revenue (up from 12% pre-pandemic). Cathy Roberson, head of research and consulting firm Logistics Trends & Insights LLC, told the Wall Street Journal 3 that "Retailers may need to rethink the whole 'free shipping' offering that they provide to their customers," she said. "It's going to end up having to be trickled down to the customer, because the shippers— such as retailers, manufacturers, wholesalers, and so on—they can't keep absorbing higher costs. They've got to pass them on in some form or another." US imports by volume increased by 5% in September compared to 2020 prompting the Biden Administration to ask US ports to step up operations to 24-hours a day, seven days a week, to reduce congestion. The problem is nationwide at every container-optimized port but most acute in Los Angeles and Long Beach, two ports that account for a third of US container imports, moving 950,000 containers in August. There were 86 ships idled this week in Los Angeles and Long Beach awaiting a berth, down from 97 in late September, according to Marketplace.org. 4 According to the New York Times, the Port of Savannah, Georgia, reported 4,500 containers remain on the dock after three weeks despite 15,000 trucks coming and going daily. In China, in late September, 242 ships were waiting to unload. Frequent power outages and labor concerns reduced port capacity at Ningbo and Yantian, and tea from Vietnam was disrupted by Covid lockdowns. In ports around the world, contain- ers are piling up as China experiences an acute shortage. The crisis is anticipated to continue through 2022. Links/references: 1 https://fbx.freightos.com 2 https://www.sea-intelligence.com/press-room/97-sched- ule-reliability-drops-to-all-time-low-33-6-in-august-2021 3 https://www.wsj.com/articles/dhl-raising-rates-for-u-s- shippers-by-5-9-11633089600 4 https://www.marketplace.org/2021/10/11/ why-everything-is-out-of-stock-right-now/ The National Retail Federation tracks container traffic. US retail import cargo volume is surging to an estimated 26 million TEUs (twenty-foot-equivalents) in 2021. Two-thirds of ships globally are late arriving, and container prices for tea reached levels that often exceeded the value of the tea within. Up Front

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