We are going to have to discuss shipping again! We thought that things could not get worse but they have. One of the main shipping lines out of Djibouti would normally operate 1 vessel a week however during the whole of April operated 1 vessel and again in May will only operate 1 vessel, with only 2 scheduled for June; this totals 4 vessel in 3 months, whereas we would have expected 4 vessels a month! MSC this week advised shippers that they would have containers to stuff but that they would not be given a booking on a vessel and if containers overstay the allowed time at the port in Djibouti any port demurrage charges would be for the shipper to bear. This is risky both for the shipper and the buyer since the shipper is exposed to open ended demurrage charges and for the buyer since quality will be negatively impacted if containers lay about in Djibouti for weeks on end waiting for a vessel. Alternative shipping lines are available however current freight rates vary wildly between shipping lines which strain costs, particularly in the current upward spiralling cost environment (increasing interest rates, warehouse rates and trucking costs). Furthermore, ocean transit times are once again out of control, we have cargo in transit from Djibouti to Antwerp which was shipped over 8 weeks ago while at the same time, on the same route, with the same shipping line we have cargo arriving within 3 weeks. Planning has become guesswork! In this environment we are bracing ourselves for delays, increased costs and a lot of frustration!
Shippers’ prices ideas when worked as differentials uninspired buyers this week, trading activity has been limited. Although the wide ranges seen on the terminal market over the past few days would normally allow for some business activity, asking prices are simply too high to attract serious interest. Afterall, 200 c/lb FOB when KC is at 250 is not the same as when KC is at 220! It is taking some time for overseas price ideas to be reflected upcountry, in farmgate prices, however soon shippers’ offered prices will start to better reflect the lower KC levels that followed the Russian invasion of Ukraine and the subsequent exit of speculators from the coffee markets.
The BBC reported this week on clashes between Christian and Muslim groups, for more on this please follow the link:
Birr 51.42 = USD 1
Have a good weekend.