in the New Millennium
By Suzanne Brown
Coffee transportation first made history when Captain Gabriel Mathieu de Clieu, a 16th century French naval officer, stole a coffee plant from the Royal garden of King Louis XIV, and hand carried it on ship to the island of Martinique. De Clieu carefully placed the uprooted shrub in a container crafted especially for this voyage. The container was covered with a glass frame to absorb the sun’s rays, which would retain heat on cloudy days. The coffee plant never left de Clieu’s eyesight. Even through pirate attacks, stormy seas and drought, de Clieu held onto the plant, even feeding it from his own watering can when rainwater wasn’t available.
Not much as changed since the 16th century. Today, coffee crosses the seas on ship and in containers, but the accommodations are much better. Ships provide appropriate air temperature, containers are 20 feet long and more stable. Pirates today drive trucks and lurk among growing countries, particularly in the southern hemisphere.
We are aware of the transportation process, but it’s the importers who carry the brunt of the financial burden. They track, process, negotiate prices, establish bookings and make certain the same coffee that arrives at the destination port is the same as they bought. If you’re not in the growing, exporting or importing niches, it’s still important to have an inkling of the process. After all, transportation does affect end price and those costs are fixed.
In talking to Richard Palumbo, who is in charge of logistics for Paragon, one of the long-time coffee importers, transportation has varied little over the years because of little change in infrastructure of the third world markets. “We track the entire process, from country of origin, where we actually visit farms, purchase the coffee, and negotiation the transportation and delivery to the manufacturer,” said Palumbo. Importers like Paragon have a huge responsibility because of the unforeseen problems that could happen. According to Palumbo, it’s the importers who have the negotiating power with major shipping companies to finalize pricing. Too, the importers are stuck when the coffee originally purchased is hijacked before it gets to the export port.
“This is particularly a problem in countries such as Honduras, where the port is so far away from the growing area,” said Palumbo. Agreeing with Palumbo, Bob Gaffney, manager, international sales for New York Port Authority said that the steamship lines and importers bear most of the costs. Some of that cost goes to the warehouses, where green coffee is stored in 20-foot containers that they were shipped in. According to Gaffney, the three primary destination ports in the U.S. are the Port of New Orleans, New York and Miami, all certified by the New York Board of Trade. Houston, which is becoming more popular as an import port is pursuing certification process. Other active coffee ports in the U.S. are San Francisco, Oakland, Portland and Los Angeles. Although there have been rumors of warehouse space running low, especially at the Port of New Orleans, Allen Colley, owner of Dupuy Storage, which is a major warehouse of coffee, says it isn’t true; that he has plenty of storage space available.
While there seems to be a trend among smaller roaster/retailers and partnerships between governmental organization and non-governmental organizations, still the logistics are a primary concern and historically have been the responsibility of exporters and importers.
Overall, transportation has helped the booming coffee industry. In a discussion about the status of transportation networks, long time coffee operations expert, Gerald LaRue, general manager, Partners Coffee, said he felt the industry has benefited from the consolidation of surface freight companies and benefits standardization provided by transportation companies. “The additional cost of fuel has been absorbed by increases in freight handling both at origin port, shipping lines and destination ports,” said LaRue. Through improved and lower-cost international communications, transportation has become more efficient as systems have been put into place by government organizations such as the Drug Enforcement Administration with programs such as Operation Columbus and Operation Conquistador in Central and South America.
With the Internet playing such a viable role in selling both green and roasted coffee, such action will help to eliminate the trail of paper so cumbersome and time-consuming to the transportation process. Recently, the New York Board of Trade formed a partnership with on-line commodity exchange, Intercommercial, to facilitate trades over the Internet.
Not to be left behind, five major international ocean carriers recently combined in a joint effort to fund a new Internet portal to handle the increasing demand for simplicity, standardization and visibility of information within the transportation industry. The five carriers are Maersk Sealand, P&O, Nedlloyd, Hamburg Sued, Mediterranean Shipping Co., and CMA CGM. The portal, located at www.inttra.com enables international transportation users with a single point of entry for tracking cargo movements with multiple carriers. Additional services are: track and trace, container booking requests, proactive event notification, exception management, activity plan, bill of lading information, various reports and statistics.
If the Internet is opening new transportation opportunities, one is buying direct from the grower. Smaller growers, such as Café Britt in Costa Rica offer roasted coffee directly to consumers. Still, there are other issues at hand such as costs.
Transportation costs have to be factored into the final product, as well as sourcing appropriate delivery service. Additional costs include roasting in smaller batches and packaging.
For destination areas in the U.S. from Central America, DHL and UPS are creating competition to the airfreight carriers. LaRue, who set up the initial delivery process for Café Britt, commented, “The cost of transporting finished goods as final roasted products is expensive and after adding all other exporting costs, there is great possibility for failure.”
Internet Exchanges such as www.coffeeconnect.com, www.ecaravan.com, www.intercommercial.com and so forth have set up partnerships with importers and coffee roasters to facilitate and deliver products. Still, no matter the market prices, transportation still has the same steps; they have just added new dimensions to carry them out.
Suzanne Brown is senior consultant at Hope-Beckham, Inc., Atlanta, Georgia. She can be reached at: firstname.lastname@example.org or (404) 636-8200, ext. 232.
Tea & Coffee - February/March 2001
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