West Asia crisis, sea route disruptions hit India’s coffee exports to the region, Europe, U.S. Business News & Hub

Some 300 containers (each carrying 20 tonne) of India’s coffee exports, meant for West Asian market, are currently stranded at various ports or slowly moving through the Strait of Hormuz, throwing the country’s coffee exporters into a sea of uncertainties and cost escalations, thanks to West Asia Crisis and subsequent entry restrictions or closure of Strait of Hormuz, according to coffee exporters.

Ramesh Rajah, President, the Coffee Exporters Association of India (AICEA) told The Hindu that West Asia crisis has badly hit coffee exports from India to the region and also to several European destinations, the largest importer of Indian coffee with a share of 60%, as most shipments on route to Jebel Ali Port in Dubai are either hugely delayed, rerouted, or getting offloaded in various safe-labeled ports in West Asia that are far away from destinations or are returning to Mundra Port in Gujarat, Nhava Sheva Port in Mumbai, New Mangalore Port or Kochi Port.

According to Mr. Rajah, some of these containers were declared as ‘’end of voyage’’ and got offloaded at Khor Fakkan in UAE, Sohar or Salalah in Oman or in Jeddah, far away from the buyers’ destinations.

After offloading, even midway shipping lines won’t take any responsibility for the consignments. Then they become exporters’ sole responsibility, first to locate the containers (port destinations keep changing depending on war situation), hire trucks and deliver the shipments to buyers, paying a trucking cost of some $3000 to $4000, all sitting in India. It also attracts additional freight costs of $3000 such as war surcharge and insurance cost, Mr. Rajah narrated.

`This situation has thrown the Indian coffee exporters community into complete confusion. Under the current scenario, per container delivery cost has escalated by $5000 to $6000, in addition to the $800 to $1000 paid as freight charges per container. Even calling the consignments back to India is also a costly affair, plus bringing back the containers through different ports requires different kinds of paperwork, procedures and fees,’’ he explained.

Confirming the crisis, Salman Baseer, Chairman, Karnataka Planters Association (KPA), a body that represents growers that account for over 70% the country’s coffees, said, the Iran-Israel conflict and disruptions in shipping routes significantly impacted coffee exports, escalated freight and landing charges significantly as logistics costs and insurance cost increased and eventually dampened the sentiments of coffee markets in India. “Coffee containers are stranded or slowly moving on various ships. This disruption has led to huge inventory delays, price volatility, market uncertainty, affecting producers and global buyers alike,’’ Mr. Baseer said.

Also, all coffee shipments meant for West Asia were supposed to have reached before Ramzan, however, they are still stranded on various seas and therefore all customers need not accept the consignments paying a huge additional landing cost.

Mr. Rajah further said, the exporters body has already reached out to the commodity apex body, Coffee Board of India, a fortnight ago, and the board in turn informed the Ministry of Commerce, however, the ministry is yet to make any statement regarding this.

Most of the existing coffee contracts with global buyers would be honoured even at huge extra cost for both exporter and buyer, however, new contracts may not happen until per container shipment charges, which is currently $4000 range, are rationalised.

Indian coffee exports to U.S and Europe got costlier by 50 to 60% as per the revised freight charges and the transit time also got longer by 10 plus days. Meanwhile, exports to Japan and Australia remain unaffected. India’s inability to reach coffee consignments to global markets in time threw open additional opportunities for coffees from Africa, Uganda, Costa Rica, Etyopia, Brazil and many other South African and Central American coffee producers.