shipping container

‘ZERO SLACK’ SHIPPING COSTS SKYROCKET AS STARBUCKS AND OTHERS IMPACTED

According to the International Chamber of Shipping (ICS), 11 billion tons of goods are shipped each year. That’s about 1.5 tons for each person, which gives insight into global consumerisation and how important it is as we go about our daily lives.

There is no cheaper way to move bulk commodities like coffee or cocoa. In fact, the ICS calculates about £0.03 ($0.04) of a cup of coffee that might cost £2.50 is attributed to the shipping.

For some months, however, there has been a shortage of container availability, leading to rising prices. Shipping company Drewry, reports that some routes are 546% higher than average for this time of year.

The problem is not restricted to the availability of containers, but a confluence of different factors, including the capacity of ports, who are struggling to clear backlogs, built up over months of lockdown during the pandemic.

There is zero slack in the system – Lars Jensen, CEO of consultant Vespucci Maritime in Copenhagen

However, the price differentials are not consistent across the board, and long-distance routes appear to be the hardest hit. That’s bad news for Starbucks which uses large quantities of arabica beans from Asia. Robusta beans used to make instant coffee, often sourced from Vietnam and exported across the world, are also impacted.

The expectation is that the problems will persists for at least the near-term.

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