Even coffee supplies under threat amid global transport woes

[CHICAGO] Some of the world's largest coffee traders are bracing for supply-chain disruptions as the coronavirus pandemic threatens to cause delays to ports and other transport operations.

Volcafe Ltd told clients that logistical holdups are expected to become "more widespread" throughout major producing countries, according to a memo sent to clients. Sucafina SA encouraged buyers to place orders as soon as possible to ensure they receive their beans in time, the Swiss trader said in a separate memo.

The spread of the disease is scrambling supply chains in everything from crude oil to copper and foodstuffs, with many countries reporting a shortage of containers. The memos also come at a time coffee supplies are already tight and there's uncertainty over whether stevedores in top producer Brazil will eventually go on strike after a meeting Friday.

"In relation to vessel, truck, rail or container deliveries we have seen some additional safety measures put in place in various countries," Volcafe said in the memo. "We should highlight that there are already delays in some areas and we expect this to become more widespread throughout most major coffee origins."

Coffee futures jumped as much as 11 per cent in New York on Wednesday after reports that stevedores in Brazil would go on strike indefinitely. Prices later pared as the action was averted, but are still up 5.6 per cent so far this week.

Sucafina said the company doesn't currently foresee disruptions to services from its warehouses or offices. Neither is it expecting any shipment delays, but the situation is "fluid and evolving," according to the memo.

"This may be a good time to consider taking advance shipment of coffee you have on contract or think you might need in the near future," the company said in the memo.

"We have encouraged all of our global clients to act pro-actively to mitigate risk during this period of unknown," David Behrends, head of trading and a partner at Sucafina, said on Thursday in a response to Bloomberg questions.

Both companies have made contingency plans and many employees are working from home, where possible.

Still, "we remain very concerned that government mandates or the lack of third party personnel to provide essential logistics services could create disruption that may be hard to manage or effectively control", said Trishul Mandana, managing director of Volcafe. "We are monitoring and managing the situation closely."

BLOOMBERG