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  • Small lot logistics

     
     

    Exporters and buyers of small lots that are less than a container load face both logistical and cost constraints. Indeed, many importers will not consider anything less than a container load: 18 to 20 tons depending on the type of coffee.

    This effectively bars many potential small producers of specialty or organic coffee from direct participation in the overseas market. As a result many small pockets of quality or exemplary coffee in producing countries go unrecognized, simply because they vanish in the mainstream of a country’s total exports. Yet, improved and simplified processing technology today allows even very small grower groups to produce quality coffee. But if this cannot be marketed successfully, then what is the point?

    The Cup of Excellence program (see 06.02.01) and the specialty industry as a whole have identified many pockets of excellent quality in different countries but the logistics of getting small lots from A to B are daunting. Few if any carriers today will even quote freight rates per ton, let alone accept mini-lots. Simply put: on container vessels there is no room for break-bulk or loose cargo, only for containers.

    Within modern shipping there are few alternative options and it is true to say that transport now represents the one great limitation on smaller producers wishing to access the specialty market.

    Potential options include

    Combine or consolidate cargo: Finding compatible cargo to fill a standard container at least close to capacity can be difficult, and still means having to wait until a full load is assembled. Organic coffee may not be shipped in the same container with other coffee because of the risk of contamination.

    Mini-containers within a single, large container could be a solution but these would probably have to be disposable because of the difficulty of attracting suitable return cargo. This is where flexible intermediate bulk containers (FIBCs or bulk bags, super bags, jumbo bags – go to http://www.fibca.com) can possibly play a role. However, most roasters, especially smaller ones, are not equipped to handle bulk bags. But, when hermetically sealed such bags can also help preserve quality, especially important for the more expensive specialty coffees. For more on this visit for example http://www.grainpro.com.

    In many countries freight consolidators (specialized freight forwarders) do arrange for the consolidation of compatible cargo to utilize containers more effectively but this may not be so easily done from smaller ports in producing countries. Also, one would have to be absolutely certain that the other goods in such a consolidated container load will not impact on the coffee and that the buyer is in agreement.

    Another and probably less complicated variant, depending on the buyer, is to combine a small parcel of top coffee with a parcel of easily sold, cheaper quality, for example 50 bags exemplary and 250 bags of a generally traded, run-of-the-mill coffee, together in one container shipped as FCL.

    In some countries (Nicaragua for example) producer associations help growers of certified exemplary coffee to create container loads by combining different shipments for specific markets. There are also instances where specialty buyers join together in combining shipments. But all this requires much organization and great support from exporters and importers alike.

    Pay for dead freight: Some buyers or shippers sometimes simply absorb the cost of dead freight (the cost of any empty space in a container) especially when the coffee in question is of high value. How much dead freight can be absorbed will vary from transaction to transaction but there is little doubt that producers of very small quantities stand little chance of becoming regular exporters if they cannot consolidate with others. It does not really make sense to ship a container with just 25 or 50 bags in it.

    Air freight: Alternatively, if a small lot of expensive ‘exemplary’ coffee can bear the cost of paying freight for a full container then it may sometimes be just as cost effective to use airfreight instead. However, customs and security issues play a role here – coffee is not normally exported/imported in this way and so airlines and airfreight companies do not always know how to handle the attendant administrative procedures.

    Finally, yet another problem facing shippers of small lots of top quality coffee is that quality can be lost if transit times are too long, for example due to multiple transshipments as discussed in 05.01.09.

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