Red sea attacks disrupts tea/coffee supply chain

Coffee and tea shipments are being rerouted to avoid the Red Sea following repeated drone and missile attacks. Shippers are heeding warnings to avoid the Bab el Mandeb strait at the southern entrance to the Red Sea where there have been 30-plus attacks on merchant vessels. Rerouting is inconvenient and costly but unlikely to seriously disrupt global supply chains.

Since December, a passage from the Gulf of Aden through the Suez Canal has become 1,200 treacherous nautical miles. Shipping companies rerouting to avoid the dangerous straits face higher labor and fuel expenses and costly war risk insurance premiums.

War risk premiums spike

The cost of insuring ships had increased significantly compared to October when shippers paid APs (additional premiums) based on 0.05% of the vessel’s hull value.

There are growing fears the conflict between Israel and Gaza-based Hamas will spread to Yemen and possibly include Iran, making a Suez passage too dangerous to consider.

Source: STiR Coffee & Tea (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka

alUnicodeMS;mso-bidi-font-family:ArialUnicodeMS;color:#1F4E79'>The United States market leads the organic tea market in terms of market share in North America.

ØUnited Kingdom’s organic tea market is another significant market in the European region.

Source: Future Market Insights (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka