Dear friends and colleagues,
As you have heard and seen during the past weeks, the strike situation has worsened. As you may imagine a strike of this magnitude creates huge disruptions across the board. Normally the foods are one of the first sectors to be affected by a strike of this type. We are receiving reports losses specially of perishable foods such as milk which is being dumped as well as fruits and vegetables. Still, this transcends other industries where the disruption of raw materials forces factories to stop.
FNC has been actively taking measures to try to move as much coffee as it is possible, but as the strike worsens, the supply of truckers willing to move cargo has thinned out. There are several contingency actions done by our logistics team including massive reallocations and reprogramming but these have all been dependent on the truckers delivering their commitments. As a result, these reallocations have multiplied the logistic burden dramatically. An example of a contingency action taken is organizing caravans with security escorts (from the purchasing stations to the mills as well as from the mills to the ports). Depending on road blockages as well as security concerns, these caravans are increasingly being cancelled. A cancellation forces our logistics team to reprogram the trucking (if they can get it) as well as rebook shipments among other operational activities. Most of this is not automated and it is labor consuming. Unfortunately, this has been a daily issue for an important volume of containers. As time has passed, there are less guarantees for the truck drivers’ safety, worsening the disruption and flow.
We are still shipping out as much coffee as we can but in a very limited capacity.
The government is working hard to solve the situation but as in any negotiation like this, it is complex. We will let you know any additional positive news on finding an agreement.
What this means in terms of shipments will depend on when the strike ends and how bad the bottleneck is (truck level, mills, roads, port, vessels). Please note though that the bottleneck transcends coffee business as all goods are being affected.
So we want to reflect on the operational side:
If the strike ends soon (before the end of July), It will take about a month to recover the PAST backlog (shipments prior to July). In this sense, by the end of August, all the shipments prior to June should be shipped out and July partially. This would leave a catch up time for the balance of July, most of August and hopefully partially September during September and so on.
Please understand that this is out of our hands and we are doing our best to cope with the situation and move as much cargo as we can in a safe manner. Although we are aware of the bottlenecks that will come, we are planning to be ready for when the strike ends but it will still be a challenge, however, seeing the abovementioned restrictions, we will have to work very hard to get up to speed once the strike ends as many variables are out of our control.
We will appreciate your understanding as well as feel free to communicate with us on any additional questions that you may have.
In the meantime, we will try to keep you updated.