STiR coffee and tea magazine

STiR coffee and tea 29 Tea led to the expansion of Chinese trade with the West, initially by caravans winding their way across the Tibetan plateau, establishing a silk road that re- turned riches. Ten centuries later, China is repeating that eco- nomic conquest to benefit the world's tea and coffee supply chains. Colombia crossing Colombia is the only South American nation with Atlantic and Pacific coasts. Hong Kong investors, likely backed by the Chinese government, are plan- ning a 136-mile (220 km) "dry channel" connecting the Colombian Port of Buenaventura on the Pacific by rail with Panama's Margarita Island on the Gulf of Mexico, providing ready access to the Atlantic Ocean for multimodal containers. Colombia and Panama are members of the Belt and Road Initiative, two of seven South American countries with agreements to obtain Chinese financing. More than 100 PRC-based companies operate in Colombia, with 38 ongoing projects totaling $2 billion. Meanwhile, China Harbor Engineering will soon complete a 158-mile highway stretching from the Andes to the Gulf of Uraba. Peru mega-port China is nearing completion of a deep-water mega- port in Chancay, Peru, to access commodities, in- cluding coffee, corn, soy, and copper, to bypass the Panama Canal. Chinese trade with South America has grown by 1200% to $130 billion annually, exceeding trade with the US for the first time as expanding pros- perity increased demand for commodities and miner- als from Brazil and Peru. The $3.5 billion port took ten years to build; part of China's $1 trillion investment in the Belt and Road Initiative (BRI) is majority-owned by Cosco Shipping. According to Reuters, it is a direct gateway to a re- source-rich region, a hub for copper from the Andes and soy and coffee from Western Brazil that currently transit the Panama Canal. Chancay is 50 miles (80 km) north of Lima. The port, scheduled to open in November, will accommo- date the largest container ships from Asia and cut up to two weeks in transit for China-bound soy from Western Brazil, including Rondonia, Acre, Mato Grosso, and Amazonas. "China's trade muscle has helped it win allies and gain leverage in political forums, finance, and technol- ogy," writes Reuters. Tea exports... Chinese exports in 2023 were valued at $1.74 billion, far and away the largest sum globally, but value fell by 16.3% year over year, and volume declined to 367,529 metric tons, down 2%. By Mainbayar Badarch Belt & Road Dynamics Favor Chinese Traders Seasonal tea Commodity teas take months to reach grocery shelves eliminating the ad- vantages of seasonality enjoyed by tea drinkers in tea-producing countries. Freshly harvested lightly processed green teas are handled like produce in many countries. The most significant advances in shipping green tea are tied to improvements in the cold-goods supply chain. During the pandemic as CSCs worked 24 hours a day to maintain quality and hygienic standards, they discovered glitches in their processes that forced food and pharmaceutical supply chains to invest some $800 million in improvements. Annual growth in the CSC sector will exceed 22.5%through 2023, according to Research and Markets. Improvements to the $88 billion cold-chain equipment sector have since enabled on-demand cold-chain shipments of temperature- sensitive matcha from Japan to Germany and routine transport of green tea to the Americas where it is stored in temperature-controlled warehouses. Slow boats Slower vessels reduce ocean noise, and the risk of fatal ship strikes, which threaten whales globally, especially endangered blue, fin, and humpback whales in California waters. Summit Coffee Roasting Company participates in the Protecting Blue Whales and Blue Skies program that saved 16,000 metric tons of greenhouse gas emissions in 2021 by reducing speed over 124,000 nautical miles. Shippers on average reduced speeds for approximately 60% of their voyages, indicating vessel operators' continued commitment to ship more sustainably. In January Maersk launched the world's largest methanol-powered vessel, one of 24 dual-fuel container ships under construction. Maersk said it had secured enough green methanol to cover the ship's maiden voyage and is working to source solutions for its methanol vessel fleet. On the horizon Logistics professionals predict disruptions will continue to ripple through the supply chain. The Russian invasion of Ukraine has roiled Black Sea transit for three years. In 2024 conflict between Israel and Hamas militants forced major shipping companies to avoid the Suez Canal. This adds to the cost of European bound coffee and tea from Africa, South Asia, and the Far East. Alternate routes via the Cape and Pacific will ensure sufficient supplies and the added expense is manageable so long as oil prices remain stable. See pg. 30: Shipping Crisis Logistics experts at Herman Logistics Services identified several strategies coffee and tea traders can employ including diversification of suppliers and strategic partnerships with growers supported by long-term contracts. Real-time visibility is now possible but often requires monitoring several websites, making data analytics essential: "Embracing technology that pro- vides real-time visibility into the supply chain can be a game-changer. Ad- vanced data analytics tools can help companies monitor inventory levels, track shipments, predict demand fluctuations, and identify potential bottle- necks," writes Herman. "You don't need to buy a complicated package of software – you can now find the good, reasonable subscription-based solutions that can give you an understanding of what's happening in the freight market in terms of costs," says DCS webinar panelist Aleksandrs Sidorecs of Cognizant Inventory management must be far more rigorous. The coffee sector adopted policies that reduced idle inventories leading to more precise esti- mates of world stocks. Tea would benefit from doing the same. Forecasting is flawed in tea where unusually high stocks are forcing warehouse to discard surplus driving down prices. Proactive scenario planning and risk management allow roasters and blend- ers to identify vulnerabilities and devise strategies that will inevitably be tested in a complex and interconnected global marketplace, writes Herman.

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