How does theft hit Vietnam's robusta coffee exports?

Cargo theft at Vietnam's Cat Lai Port has cost exporters more than 19 tons of goods, including about 10.3 tons of coffee beans and 8.2 tons of pepper worth roughly 2.7 billion Vietnamese dong. The Vietnam Pepper and Spice Association says the incidents began in September 2023 and have continued, straining trade credibility.

Drought linked to El Niño cut Vietnam's pepper and coffee output, and May 2024 coffee exports fell 47.8 percent month on month to 79,358 tons. First-half exports reached 817,514 tons, down 5.8 percent year on year, keeping local purchase prices near 118 to 120 million Vietnamese dong per ton. Higher Brazilian robusta output has partly filled the gap.

Vietnam, as a major global exporter of coffee and pepper, has recently attracted widespread attention due to port cargo theft incidents. According to reports, multiple cases of coffee bean and pepper theft have occurred at Cat Lai Port, involving several companies, with total losses exceeding 19 tons. Meanwhile, drought caused by the El Niño phenomenon has led to a decline in Vietnam's coffee and pepper production and reduced export volumes, driving coffee prices continuously higher. Increased production of Brazilian robusta coffee has partially filled the market gap, but Vietnamese exporters face dual pressures on finances and reputation due to contract breaches and theft incidents. This article will review the sequence of events, responses from various parties, and the impact on Vietnam's international trade, while also focusing on related product developments from the Front Street brand.

Vietnam is the world's largest pepper exporter and also the world's second-largest coffee exporter. Recently, due to the impact of the El Niño phenomenon, Vietnam has suffered from drought. Although Vietnam entered the rainy season in May, the rainfall was not enough to alleviate the damage to crops caused by the drought.

Therefore, in the first five months of 2024, Vietnam's exports of various types of pepper reached 114,400 tons. Although this represents a year-on-year decrease of 13.2%, the pepper export value reached US$493 million, a year-on-year increase of 20.6%.

Due to the decline in Vietnam's coffee production, coffee export volumes have also fallen in tandem. According to Vietnam Customs data, in May 2024, Vietnam exported 79,358 tons of coffee, down 47.8% from the previous month. In the first five months of this year, Vietnam exported a total of 817,514 tons of coffee, down 5.8% from the same period last year. This has also kept coffee prices high. Locally in Vietnam, the coffee purchase price is 118 million to 120 million Vietnamese dong per ton.

However, recently at Vietnam's Cat Lai Port, there was also a theft of export goods including pepper and coffee. According to reports, the losses amounted to 19 tons, including about 10.3 tons of coffee beans and 8.2 tons of pepper (worth about 2.7 billion Vietnamese dong).

According to reports, the Vietnam Pepper and Spice Association (VPSA) stated that the theft incidents began in September 2023 and have continued to the present, with a total of 8 batches of goods lost, including 4 batches of pepper and 4 batches of coffee beans belonging to 5 companies. The lost goods accounted for 7-28% of the shipment volume, all occurring in the unloading area of Cat Lai Port, totaling 19.2 tons of goods, with the largest single batch being more than 4.6 tons of coffee beans.

The companies that suffered the losses stated that after the goods were delivered to foreign partners and they received notices from those partners, the Vietnamese companies began internal investigations. Preliminary results showed that the weighing slips of the containers loaded at the factory matched those upon entering Cat Lai Port.

Therefore, many merchants suspect that the goods were lost while the containers were being unloaded at Cat Lai Port awaiting export. However, the company responsible for the port, Saigon Newport Corporation, believes that the process of moving goods from the seller's warehouse to the buyer's warehouse must go through multiple stages in the supply chain, such as maritime transport, arrival at the port of unloading, and transport from the port to the importer's warehouse. Therefore, verification is necessary to avoid misunderstandings that could affect the company's reputation.

Regarding this incident, VPSA believes that the loss of goods will cause Vietnamese exporters to compensate or pay penalties to their partners, resulting in direct financial losses for the companies and also indirectly affecting export companies' future contracts.

Moreover, Brazilian coffee has now entered the harvest period, with Brazil's robusta coffee harvest progress at 51%. In recent times, Brazil's robusta export volume has been continuously increasing, alleviating many of the gaps caused by reduced robusta coffee production in Vietnam and Indonesia. In addition, the Red Sea crisis is affecting Eurasian shipping routes, so many traders have turned to purchasing Brazilian robusta coffee beans.

Not only that, Vietnam's coffee trade had earlier experienced defaults due to coffee farmers being unwilling to sell coffee beans. Combined with this port incident, the reputation and image of trading companies and Vietnam in the international market will also decline, which is not conducive to Vietnam's economic development.

The above content is compiled by CoffeeHunters, a coffee news website.