Rethinking coffee logistics through the lens of digitalisation
Among the many logistics problems caused by Covid-19 was the lack of warehouse space. Image: T&CTJ
Digital Coffee Future held a series of webinars earlier this year that sought to explore the intersection between logistics and technology in the coffee industry. The article below discusses several of the topics addressed in the three webinars. By Marta Salazar
“Since we have had so much volatility due to external factors over the last few years, we have been forced as an industry to create tools and to pay much more attention to inventory and logistics.” Don Lawrence, Intelligentsia Coffee
Even when it may seem obvious that supply chain management and logistics are fundamental steps in the coffee value chain – given that without them coffee simply wouldn’t arrive at its final destination – they are some of the least discussed stages of the coffee journey.
The crisis generated by Covid-19 changed the coffee industry as a whole, but more particularly the logistics sector, which has experienced huge issues related to container and vessel availability, lack of warehouse space, and changing priorities on the part of ocean carriers. According to Don Lawrence of Chicago, Illinois-based Intelligentsia Coffee, “before the pandemic, we simply anticipated that coffee would arrive on time.”
Yet the world has changed significantly since the first lockdowns, and these transformations have compelled coffee professionals along the entire supply chain to focus more on digitalisation and logistics in an attempt to navigate the new scenario. However, information on the available digital tools, their functionalities, and their pros and cons is not always readily available in a way that makes sense to many of us. For this reason, Digital Coffee Future (DCF), an interactive platform focused on digitalisation in the coffee industry based in Udine, Italy, launched ‘The Logic of Coffee Logistics’, a series of webinars that sought to explore the intersection between logistics and technology in this industry.
The importance of data organisation
It is a reality that most companies still use Excel sheets to keep track of their logistics. While this tool is excellent for keeping data organised, it is often not powerful enough when companies seek to scale up. Small and medium-sized companies around the world are already taking small steps to move towards solutions that provide them with more flexibility. A good example is Daye Bensa, an Ethiopian coffee exporter that decided to create its own technological solutions based on their needs once the tools they were using turned out to not be enough to allow the company to grow and keep good communication flows between teams. Meanwhile, Colombian-German exporter Col-Spirit looked for options already available on the market instead of developing their own tool. Either option may be far from perfect, but they allow these companies to have their data organised and make better decisions. For Kenean Dukamo of Daye Bensa, it’s all about “really striving to make it as easy as possible for the team to use the software, and to make their lives easy.”
Larger companies go through similar processes. Mercon Coffee Group’s IT and commercial operations director, Felipe Cam, described how they went through a ten-year development process: “Basically, we created a whole culture of process automation and digitalisation among the different Mercon teams. What we did first was to replace all the email-based data, to create the standard logistics style, such as itineraries, the transfer from the warehouse to the port and vice versa.” This was done in phases and included a change in the leadership culture and the integration of information by all actors involved to create an algorithm that could automate the data.
The range of responses to the different situations experienced by companies is diverse. In this sense, creativity and teamwork are variables that must be combined to achieve better results when it comes to data organisation.
The challenges of coffee logistics
The digitalisation of coffee logistics can be a complex process with an ever-evolving set of challenges. One of them is access to digital tools in producing countries, especially for small and medium-sized entrepreneurs and at affordable costs. Obstacles such as language and digital illiteracy must be overcome, but also aspects such as transparency and trust. For Kume Chibsa, founder of AfroValley, technology can add a layer of trust when it includes information verification processes, such as Know Your Customer (KYC) solutions, which her company, a platform that connects farmers and buyers, has successfully used.
When it comes to connecting the value chain, from the farm to the warehouse at destination, a single digital solution may not offer all the answers. María Grajales, co-founder and COO of exporter Col-Spirit, explained how they were forced to find multiple tools due to language barriers and legal issues.
In addition, Grajales explained how operations at Col-Spirit are still adjusting to the container crisis generated, among other reasons, by the Covid-19 pandemic. She described how before the first lockdowns “it was easy to know that, normally, from Cartagena to Hamburg it [would] take a specific number of days.” However, the situation since has changed dramatically, and the accuracy of available tools is not always good. This lack of reliability applies to shipping bookings and ETAs, among many other crucial details for exporters, which make planning and forecasting a struggle. “So, actually [it is not easy to find] a platform where you can have all the information integrated at the same time,” said Grajales.
Colleen Walsh of Olam Specialty Coffee agreed, “The logistics sector is still in the process of developing solutions that can impact and integrate the value chain on a daily basis… Even now, what is available isn’t necessarily always accurate.”
Nevertheless, Aleksandrs Sidorecs of Cognizant is optimistic about what he sees in the market, “I am personally following LogTech start-ups and there are already around 900 worldwide, oriented to [developing] affordable models for another market segment that [has not had] access to this kind of solution [before]. [You] can track freight rates, costs, market analysis, cargo monitoring, among others, to give customers solutions based on data and maximise the value they have.” With these type of possibilities, a window opens to overcome the digital divide that still exists in the industry.
Walsh gave an account of their daily challenges as an example of how different actors in the coffee supply chain had been faced with an array of varying challenges during the global Covid-19 pandemic. For her, the struggle lies in finding space for moving coffee. “Coffee is not considered a high value product [by ocean carriers], so they don’t prioritise things for us. The other problem is that coffee moves in 20 feet and it is difficult to get containers with these dimensions to move coffee,” she explained. This shortage of shipping containers stems from the fact that their owners decided to scrap or sell them for other purposes during the early days of the pandemic, as it did not make financial sense to keep them given the slowing down of international trade.
If we try to look for solutions, Sidorecs thinks the situation will possibly be alleviated in 2024, taking into account the technical factors that caused it, “Container availability is very low, and that will persist continuously, including the capacity at the docks, in terms of building new vessels.” Although new vessels are currently being built, they will replace old ones that do not meet the new CO2 emission standards that come into effect in January 2023. This will keep the pressure on logistics professionals – in particular, those who must move coffee and other foodstuffs.
The future of digitalisation requires collaboration
Beyond the need to physically move coffee, the need for a change in the way developers approach digitalisation is pressing. Designing and developing digital solutions has historically been done, for the most part, individually and with little room for system integration. However, to make the most of the digitalisation processes, we need to change the way we approach their development. To Brianna Dickey of CropCone, the issue is clear, “We have multiple different systems in multiple different languages, recording data in multiple different ways, and then we have silos of data. It’s no wonder why it’s really challenging to have a seamless transfer process… We have to start thinking about what data is being recorded and how it’s being recorded, what terminology is being used, [and] how we translate that from one system to another. We have to really start thinking as an industry about different standards that we can set.”
Another issue is the slow adoption of digital alternatives. For example, at the moment, only 5 per cent of the documents required for export and shipping are electronic, so to make this more operational, collaboration between the private and the public sectors is needed. Although very slowly, this cooperation is already happening. Guillermo Grassi of edoxOnline explained how different initiatives are already being promoted, including standardisation of processes and digitalisation of documentation. A game-changing example is the adoption of the electronic bill of lading, which is being advanced by a variety of relevant international organisations, including the International Federation of Freight Forwarders (FIATA). “These initiatives have the ability to transform global trade through the standardisation of [key] processes, and among them, the electronic shipping document. So we believe this will provide massive traction soon,” he said.
The three webinars hosted by Digital Coffee Future addressed the dynamics behind the need for technological tools and how companies should build this path. Although the learning curve of each of the organisations has been different, they have in common the wish to seek digital solutions that improve their operational efficiency and minimise errors. The future is optimistic: digitalisation – if well managed and used extensively and in partnership with others along the supply chain – can alleviate part of the pressure and can contribute to the transformation of how the coffee supply chain is managed.
The recordings of the webinars are available on Digital Coffee Future’s Youtube channel in both English and Spanish.
- Marta Salazar is programme coordinator at Digital Coffee Future, and is also the CEO of Venus en La Tierra. She is based in Colombia.