STiR coffee and tea magazine

STiR coffee and tea 11 India bypasses sanctions Shipments of tea from India to the Russian Federation are being offloaded for the first time since the EU and US imposed sanctions following the Feb. 24 invasion of Ukraine. According to the India Times, renewing bilateral trade with deliveries primarily through ports in Georgia was through Sberbank, which remains a part of the SWIFT network that facilitates the settlement of payments. Ajay Sahai, director general and c.e.o. of the Federation of Indian Export Organizations confirmed details of the rupee-ruble transactions that are struc- tured to bypass sales in US dollars. FIEO represents about 200,000 Indian exporters. Three hundred Indian companies operate in Russia, with many planning to increase their presence in the market. "Tea exports to Russia have begun," confirms Mohit Agarwal, director of Asian tea, a leading exporter. "We have just shipped five containers to Rus- sia." Russia annually imports around 43 million kilos of tea, mainly from As- sam. A combination of hostilities and sanctions has virtually halted shipments since March, according to Asian News. Tea traders offering orthodox teas grown in Southern India say they are determined to wrest market share from Sri Lanka by attracting buyers to the Kochi, Coonoor, and Coimbatore auctions. Exporters to the CIS (Confed- eration of Independent States) and Russia drove demand, buying 88% of the quarter-million kilos of tea offered last week. Prices are up INRs3 to an aver- age of INRs159 per kilo for Nilgiri whole and broken leaf teas. Since February, 470 western companies suspended or scaled back their operations, and 110 others announced they would postpone new invest- ments, according to a report in the Asian Times. Russia is currently the most heavily sanctioned country, with approximately 5,000 sanctions in force. Russia and India have been allied since the 1970s, trading oil, fertilizer, and grain for spices, rice, and tea. India relies on Russia to provide two-thirds of its military equipment. India did not import any oil from Russia in January and February but has since contracted for 26 million barrels, higher than the entire quantity imported in 2021. China, India, Turkey, and Pakistan recently increased trade with Russia to offset sanctions that virtually eliminated the exchange of goods from the EU and US. A fresh round of sanctions will soon disconnect Sberbank, The Credit Bank of Moscow, and the Russian Agricultural Bank from SWIFT, the international payments system. India routinely bypasses US sanctions im- posed on Iran, routing payments in rials for 35 million kilos of tea through the UAE and Turkey. Expect delivery delays to worsen First-flush teas that travel by air freight arrived on time this year, but ship- ments by sea for tea processed in May will encounter unusually long deliv- ery times. According to Winward, an Israeli maritime data firm, 20% of the world's container vessels are waiting outside congested ports. A quarter, or 412 ships, are stuck outside Chinese ports. Since March, delivery times between China and major European and US ports quadrupled pri- marily due to Chinese travel restrictions and test- ing requirements that prevent truck drivers from relieving congestion. After seven weeks, Shanghai, the world's biggest container port, is still in lock- down. There are currently 384 ships waiting to berth with delays adding an average of 74 days to destinations, pre-pandemic. The surge in e-commerce because of the pan- demic transformed the supply chain for manufac- turers, retailers, and distributors. E-commerce has increased supply chain complexity for tea, requir- ing additional primary and secondary packaging to enable a packaged product to enter the longer, more complex distribution chain of an e-commerce world to meet shifting consumer expectations. Warehouse stocks are declining as COVID-re- lated port closures curtail supply and the extended Shanghai lockdowns halted manufacturing of flex- ible plastics. China's flexible packaging manufacturers sup- ply much of the global tea industry's films, card- board, and packaging materials used in making everything from overwrap and tags for tea bags to PET bottles for ready-to-drink iced teas. The Chi- nese market, representing about 5% of the global packaging total, was valued at $39 billion in 2020. Seventy percent of the world's packaging materials originate in emerging countries that are currently struggling with logistics and pandemic-related re- strictions on transport. Higher prices seem inevi- table as inflation, fuel, and transport delays con- tinue. According to Smithers Research, although more expensive, a move towards sourcing 'local' packaging materials has been seen. Shanghai's vibrant packaging sector is the hardest hit in recent months. Typical is Shang- hai Zijiang Enterprise, the fifth-largest packaging company in China, which employs 7,000 people making PET preforms, PP bottles, crowns, anti- theft caps and labels, and metalized paper and BOPA films. It is a primary supplier for Nestle, Unilever, Danone, and Coca-Cola products. According to a BBC report, according to of- ficials, 90% of Chinese are vaccinated nationwide, but only 38% of those older than 60 received three vaccinations in Shanghai, a city of 25 million. Meanwhile, restaurants are closed, delivery services are curtailed, and streets and shopping centers in Beijing are empty as Covid-19 commu- nity infections rise. The city shut down many of its subway stations, and residents in controlled ar- eas deemed to be at risk are not allowed to depart the city. Millions of residents are still forbidden to leave their homes in 27 cities impacting up to 185 million residents across China. The Colombo Tea Auction postponed Sale No. 18, May 10. Business leaders called on Sri Lanka President Gotabaya Rajapaksa to appoint a new government and then step down immediately. Photo by Business News. Up Front

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