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Love Coffee? Your Favorite Beverage May Get Dearer If the Suez Canal Remains Blocked by Cargo Ship

A man waits for coffee to brew at a cafe in Hanoi, Vietnam. (Image for representation/ REUTERS)

A man waits for coffee to brew at a cafe in Hanoi, Vietnam. (Image for representation/ REUTERS)

Most of the coffee beans from East Africa and Asia -- which are two of the world's top robusta producers --flow to Europe through the Suez Canal. The critical shipping waterway that was built in 1869 carries over 12 per cent of world trade by volume.

The crisis in the Suez Canal is turning into the longest ever accidental closure of the most important maritime shipping passage looms large. Its impact may soon be felt across the world after massive containers carrying crude oil, liquefied natural gas and robusta coffee’s — the type used in instant coffee mixes — shipments delays could upend food markets. On Tuesday, the 200,000-ton container ship Ever Given ran aground while passing through it, bringing the critical shipping artery that links the Mediterranean and Red Seas through Egypt to a grinding halt. The blockage has stalled shipments worth almost USD 10 billion through the waterway. As the logjam around the canal is increasing, authorities are trying hard to dislodge the massive vessel but it could take days or even weeks.

According to The Mint report, most of the coffee beans from East Africa and Asia — which are two of the world’s top robusta producers -flow to Europe through the Suez Canal. The critical shipping waterway that was built in 1869 carries over 12 per cent of world trade by volume. Due to the recent blockage, European bean roasters are already worried about their shipments that arrive from Vietnam. The South-East Asian country is the world’s largest producer of this particular variety and its shortage may potentially disrupt global food trade. And just as availability started improving, the canal blockage brought another headache.

The report also cited Luhmann, founder of JL Coffee Consulting and a former head coffee buyer at Jacobs Douwe Egberts BV, one of the world’s largest coffee roasters, “For traders, they are going to scramble to supply their clients in Europe."

“Resolving this is going to take a few days if we are lucky, but even so, a lot of damage has already been done," Luhmann added.

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With such uncertainty and the shortfall from Vietnam, a few European coffee roasters recently turned to supplies from East Africa. As a result, traders have seen more demand for beans from Uganda and other milder varieties from East African nations. But these coffee shipments also take the Suez to reach European markets. Traders’ are making most of the situation by charging hefty sums to have them stored in European warehouses.

As the logjam looms large, container lines A.P. Moller-Maersk A/S and Hapag-Lloyd AG said they are considering sending ships around Africa to avoid the Suez gridlock, while Torm A/S, a Danish owner of tankers, said its clients have asked about the cost of options to divert, the report further mentioned.

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first published:March 26, 2021, 15:09 IST