We are all currently operating in a different environment than what we are used to. Courier companies and postal services are taking longer to get our documents and samples to their destinations; customs officers appear to be more fastidious than usual and banks are taking much longer than usual to execute transfers and LCs… all these issues are probably a direct consequence of the social distancing measures implemented by different organisations around the globe trying to follow governmental directives. Similarly at origin we are experiencing delayed shipments. The reasons for these delays are:
- Shipping Lines have reduced the number of vessels calling at East African ports therefore the number of spaces available are less and containers are getting left on quays not being loaded. Furthermore, admin staff shortages at shipping lines means that we are getting less timely information regarding bookings and container positioning; some lines have also experienced container shortages due to big changes in trade flows resulting from the pandemic; some have even had software problems.
- Warehouses and Mills are working with reduced staff, resulting in lower processing and loading capacity. Furthermore, ECX has reduced the number of days shippers can access the trading floor causing a bottleneck on the flow from agrabe to shipper.
- Many banks are experiencing a liquidity crisis and as a consequence are restricting credit to shippers that have contracts and opened LCs, stopping them from buying coffee to cover their commitments.
Last week the Ethiopian Government had decreed a State of Emergency, on Saturday we learned some more details:
- The decree has banned gatherings of more than four people unless there is an absolute necessity, in which case permits need to be acquired from authorities.
- Handshakes are also not allowed.
- People now also have to wear masks in public,
- Public transport operators have to cut their seat occupancy by half, while hotels and restaurants are not allowed to have more than three customers on a table.
- Landlords cannot evict tenants and neither can they increase rent.
- Employers are prohibited from laying off workers on the grounds that business has slowed down.
In Addis day-to-day life seems unbothered by these announcements, mask usage and social distancing is not being implemented, and some places like markets remain as crowded as ever.
Meanwhile, trading at ECX and at FOB level continues, albeit on a smaller scale than we would have expected under normal conditions. Minimum registration prices are currently much more in line with expectations as the Coffee & Tea Authority appears to be listening to stakeholders, although some prices still baffle, why is the minimum price for Lekempti lower than Djimmah?
The birr has not been allowed to devalue at the same accelerated pace as other origin currencies, although the pace increased in March/April vs February/January, so far in 2020, the local currency has been allowed to lose a little over 4% to the greenback.
by Charles Seara Cardoso
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