STiR coffee and tea magazine

Volume 5, Number 2

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STiR tea & coffee industry international 65 Spot rates plummeted in 2015 to the point that the smaller vessels (favored by coffee traders) are too expensive to operate. Are larger vessels, like the Triple E Class ships, which can hold 18,270 TEU the solution? Offloading just one these massive ships will fill 30 trains, each a mile long stacked two con- tainers high. At the present time there are only a few ports capable of handling Triple E vessels and even fewer companies can afford them, but Triple E is a very efficient transport. Last June Maersk Line ordered 11 of the second-generation Triple E ships, each with a capacity of 19,630 TEUs. The price tag: $1.8 billion. The top five shipping firms, ranked by capacity on order, include Maersk, MSC, Evergreen, CMA- CGM, and OOCL. With the ongoing consolida- tion of container lines, Leck predicts that at the end of the cycle there might only be 10 shipping firms left worldwide. South American overload The largest vessel operated by Hamburg SUD holds 9,600 TEU. Hamburg SUD has the world's largest capacity of 2,100 reefer (refrigerated) con- tainers. These ships are nicely matched to the ports of Brazil the largest exporter of coffee in the world and Europe's top supplier of coffee. Santos is the main coffee port in Brazil. The port accounts for 71% of the green coffee ship- ments (handling 81,374 TEU per year) followed by Vitoria which ships 17% of Brazil's coffee (19,995 TEU), and Rio de Janeiro which accounts for 9% of coffee shipments (10,773 TEU). "Santos is completely overloaded as it is situ- ated near Sao Paulo handling not only coffee but many other products as well," observes Leck. "Heavy winds, fog, and the poor hinterland road connections make it very difficult for on-time de- liveries. One solution would be to transfer the cof- fee shipments from trucks to trains. Unfortunately there are only very limited or poorly functioning railroad tracks." Another challenge in Brazil is un- predictable labor union strikes. Shippers operating their own terminals reduce the risk of strikes but might increase the overall cost, he said. Central America lacks infrastructure Roasters ordering shipments from Central Amer- ica and Colombia encounter different challenges. The coffee regions are about 450 to 600 miles (700 to 1,000 km) from the main ports. Trucking coffee from the coffee farms to the ports poses huge security issues. Trucks containing thousands of dollars of coffee are hijacked and in some parts of the region insurrectionists or narcotics dealers require bribes for safe passage. Although there have been some investments into the infrastructure of the roads in Central Frank Leck , senior sales manager import, area central Europe. Hamburg SUD container ship dockside Filling a container with green coffee in Cartagena, Colombia Photos by Frank Leck Intermodal infrastructure is lacking Photos by Edson Japy America, they are still very modest when com- pared to European standards. There are no train or river connections to the ports, only roads, which make it extremely challenging, observes Leck. "The existing train connections in Colombia are not reliable and very poorly operated and man- aged," he said. Strategies for the future "First and foremost the overall shipping expenses have to be reduced," he said. "This can be accom- plished with larger vessels, slow steaming and op- timizing the sailing schedules. In addition hub and feeder service has to be improved and the ship- ping industry has to outsource more processes," he said.

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