Supply Chain & Export
geopolitical risk in supply chain coffee is underrated
I
early 2024, Houchi began to shipping in the Red Sea. In a short time, about 15-30% of the global volume container must be reroute through Cape of Good Hope. Plus 2-3 weeks transit, plus fuel costs, Reroute cost cost that cost real and substantial.
This isn't the first example. Once there was a pandemic stop shipping, there was a 2021 Suez Canal block which a week stops the supply container.
From the curency side, the USD / BRL is in range 5.0-5.6 over 2024. Make arabika priced in C-market in USD, this fluctuations instantly impact prices in real-estate farmers level. Brazil as the largest producer of arabika, that fluctuation of real that affects how much they want to supply into the market.
In Indonesia, exporter of invoice in USD but operational in IDR if the IDR is weakened, revenue in progress but if the IDR is strong, margins can be squeeze.
The procurement and risk management of this condition should be taken seriously.
This isn't the first example. Once there was a pandemic stop shipping, there was a 2021 Suez Canal block which a week stops the supply container.
From the curency side, the USD / BRL is in range 5.0-5.6 over 2024. Make arabika priced in C-market in USD, this fluctuations instantly impact prices in real-estate farmers level. Brazil as the largest producer of arabika, that fluctuation of real that affects how much they want to supply into the market.
In Indonesia, exporter of invoice in USD but operational in IDR if the IDR is weakened, revenue in progress but if the IDR is strong, margins can be squeeze.
The procurement and risk management of this condition should be taken seriously.
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