Coffee Insurance is NO Routine Cup of Joe with Modern Shipping!

Share this post

For years the traditional method of shipping coffee from far away origins was confined to huge break bulk shipments.  Usually, pre-slung pallets of 60kg jute bags were lowered into cavernous holds of bulk cargo vessels.  Vessels would stow thousands of metric tons of coffee on any one voyage. 

When ships arrived at destination ports, slings were transferred to trucks and drayed to nearby warehouses pending deliveries to local roasters.  At unloading, it was a rare occurrence when all the bags shipped were outturned clean.  Instead, stained bags were identified and set aside along with the customary coffee “sweeps” left at the bottom after all the bags were removed. 

The important element was the relative ease for stevedores to see the damage.  Surveyors could be called in immediately, salvage operations initiated, responsibility clearly delineated, and claims quickly processed.  Cargo insurance for coffee shipments was as welcomed to Underwriters as that morning cup is to all of us on these brisk winter mornings.  

It is without question that Keith Tantlinger and Malcom McLean’s vision of the modern container in the late 1950’s would revolutionize the world’s shipping community in terms of affordability and efficiency.  However, it is not without its demerits.   

Today, we are faced with several different coffee shipping methods, each with its own unique problems.  Seasoned insurers are more important than ever to help bridge the understanding between the perils shippers face and the coverages they buy – a potential mismatch that can cost thousands! 


To vent or not to vent? That is the question. 

A much anticipated container of specialty Rain Forest Alliance certified coffee arrives and upon opening the doors, alas, it looks as if the actual Rain Forest was purchased. 

While some basic and simple container preparation methods are always prudent to prevent condensation, various studies by members of the trade have yielded opposing results as to whether vents should be held open or taped shut. 

In any event condensation losses routinely occur in container shipments, especially for some more notorious origins shipping from the tropics. 


Paper or Plastic? 

Natural jute bags continue to be bags of preference.  While some synthetic alternatives are slowly creeping into the trade, they are NOT contract approved by the GCA nor the ICE.   

While buyers and sellers always have the option to agree to their own standards, it should be noted that while synthetic bags look great it is much more difficult to see stains and potentially damaged coffee within, presenting a headache to the buyer/seller relationship possibly weeks after delivery is completed.  

That said, jute bags themselves are no panacea.  Minimum jute weight requirements of 700 grams are necessary to maintain bag integrity and tender on the ICE.  Care should also be taken in the type of process used to make the jute bags to ensure that food grade bags are used in accord with accepted standards.  Finally, stenciling should be done with a dye that will not bleed through to the beans. 


Incoterms of Endearment? 

Yeah, not so much.  Incoterms were established by the International Chamber of Commerce to act as a guide to better delineate expected logistic responsibilities in international trade.  However, when a fully loaded container is tendered to the carrier and it is subsequently claused “shipper load and count” the reliance on a clean FOB or FCA turnover is eliminated – except for the outward appearance of the box itself! 

Incoterms are NOT contract terms and cannot be relied upon to solve responsibility.  

When coffee arrives short or wet damaged who is expected to be responsible?  Will the buyer’s insurers claim damage or shortage occurred PRIOR to their attachment – who can prove otherwise?   


Theft, Pilferage, and Non-Delivery 

This catch-all phrase seemed to lump together all other reasons why coffee would turn up short at outturn.  The fact is, it does.  I am willing to bet that every large merchant can relate an incident where a container was landed and some unknown substance was found instead.  I have heard sand, trash, cement blocks, and dirt to name a few. 

There are more illegal ways to enter a container maintaining intact seals than legitimate entries!  Who is responsible for such loss?  Can damage be pinpointed to an event?  What does a clean B/L mean?  How well do you know your supplier? 

Of course, disappearance of the whole container also occurs – and that might just be the easier claim. 


Do you smell that? 

I have met very few people that disagree with the aroma of roasted coffee.  Furthermore, the incredible and subtle nuances of differing flavors between varieties, origins, and blends are the want of marketers in every coffee company.  

But, I have yet to find the “phenol” flavor in the latest edition of Le Nez du Café.  Is an “off taste” a physical loss or a quality claim?  Where would you pinpoint the damage occurring?  Can you dictate how close to the ship’s exhaust the container is placed?  Did something seep into the container floorboards? 


Buying in Bulk? 

This is the most recently developed mode of green coffee container shipping where origin mills line containers with one large single “bag” and then “blow” in 20 MTs of green beans.  This method is highly attractive to large commercial roasters where minimal labor can control large quantities of beans “dumped” directly into processing lines and storage hoppers. 

Great and efficient … until a hole is discovered in the container … or the bottom stratum of beans is wet and moldy and it is unknown how many affected beans have already been dumped.  Is the whole line now affected? 


Vermin or worse 

Let’s leave this one to your imagination or perhaps a later story… 

Modern shipping has indeed dramatically changed the face of shipping.  But every change comes with its own pitfalls and perils.  In each of the above scenarios a very murky “gray area” exists.  Knowledgeable insurers are key to maintaining the efficiency that containerized shipping now offers and providing piece-of-mind to truly savor that morning cup of Joe! 

Article originally published in Tea & Coffee Trade Journal.

Image used above is Ai-generated.

More articles below: