U.S. coffee processors are reporting significant cost increases in their operations, mostly related to transportation, and expect to raise retail prices soon. Mid-sized and smaller roasters have been hit hardest, but even larger companies say they are coping with higher costs, reported Reuters (March 3).
Here’s a look at the issues at play:
According to a report from S&P Global Platts, rising freight prices may have added nearly $10 billion to corporate costs on U.S. inbound routes in the fourth quarter of 2020.
Global trade data company Panjiva found that U.S. seaborne imports climbed 20% year over year in January.
Executives say increased demand for shipping services and extra safety procedures during the pandemic are increasing costs in the U.S.
“There are supply constraints, not because of production, but simply hurdles brought upon us by COVID-19 and safety guidelines. It is a systemic issue,” Jorge Cuevas, an executive at Sustainable Harvest Coffee Importers in Portland, Oregon, told Reuters.
DEMAND FOR SHIPPING CONTAINERS
Coffee companies also noted that transoceanic shipping costs are rising due to imbalances in the flow of containers caused by the pandemic.
Additionally, roasters have reported delays in receiving coffee shipments from Africa and some South American nations.