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Welcome to the Daily Coffee Pro by Map of Forward Friends. I'm your host Lee Safar, and this is the final episode, episode five of a solo series with me. We are talking about what the current conflict in West Asia or Middle East as we have referred to it previously, but how that conflict between Iran and Israel slash America is going to impact the global coffee industry. I have said it through the series a number of times, but I will continue to say it.
The consequences of this war will be far reaching into the coffee industry. And so if you have supply chain partners, employees, business partners, whatever, that simply do not believe the seriousness of the impact that this is going to have on the coffee industry, please send them this series. We need as many people paying attention as possible. If you think that because you live in the US or because you live in Latin America or because you live in Europe or in Australia that you think that this is not going to impact you, please, I implore you to watch this series or listen to this series and understand the first, second and third order reasons why this is going to impact you significantly as a part of the coffee industry.
And as a global citizen, this is going to have impacts for us as citizens in the cost of living crisis because of the things that we spoke about previously in this series, the cost of inflation to energy, the cost of inflation to freight and again, the second, third, fourth, fifth order impacts that they're going to have. Now, in this episode, we're going to talk about what you should be paying attention to in the coffee industry or what the coffee industry in general should be paying attention to through this conflict. And we're going to look at specific signals here. So what are four signals that you should be looking at as a member of the coffee industry to keep track of what's happening through this conflict?
Now, I want to be very clear here. I'm not going to make predictions here. I want you to not think about what predictions should you be making either. I want you to look for signals and I want you to think about making strategic decisions based on what you think those signals are doing and where they're going rather than listening to unfounded hype about what could be real and what might not be real, et cetera, et cetera.
Now, it's important to understand those signals could be influenced by speculation. That's OK, because those signals are going to impact you whether they're influenced by speculation or they're influenced by fundamentals. OK, so the first signal that we're going to start looking at is shipping routes. So I want you to watch those three bodies of water that we talked about.
We talked about them being related to the Red Sea for shipping that's going from Asia through to Europe. And we talked about the Strait of Hormuz that was going to be impacted by because Iran has closed the Strait of Hormuz and oil moves through there. So, but for coffee shipping, we specifically want to look at shipping routes that are going from Africa and Asia up into Europe. And that's the Red Sea and the Suez Canal.
Please pay attention to those shipping routes. And please pay attention to container availability. Container availability was a massive one through COVID. It will contain is got very expensive and more than anything, no matter how much you want it to pay, they simply weren't available.
All of these things, the opening and closing of the Red Sea, the Suez Canal being closed because of the conflict, the Strait of Hormuz being closed and oil getting, getting shipped, all of these things are going to impact freight costs. And so that is the first signal that I want you to think about paying attention to. You can find information on how to do that if you follow our walk and talks. But more directly, you can simply just go to direct sources for the governments of the countries that control those ports.
And so for the Suez Canal, that will be Egypt, for the Strait of Hormuz, that will be Iran, that is controlling that right now. For the Red Sea, that borders Saudi Arabia and borders parts of Africa. And so it's a quick Google search. Is the Strait of Hormuz open?
If you have coffee that's headed towards you or you are sending coffee out and you're an exporter, you already know how to do this. Another way that you can do that is by contacting brokers. But again, a quick Google search will let you know this. Why do you want to know this?
Well, because if these continue to accelerate in their volatility of being open and closed and open and closed, all their remain closed, those things that we were talking about with regards to unpredictable shipping routes, unpredictable shipping timing and the availability of your coffee actually leaving ports, containers being available, all of that gets impacted. And that will mean the price of everything goes up. Signal number two is going to be energy markets. So on top of keeping appraised of what's happening with shipping routes, I want you to understand what's happening in shipping markets.
So when we're talking about energy, we are talking about oil prices and we are talking about natural gas prices. And if oil stabilizes, supply chains stabilize. If oil spikes, coffee prices globally will end up spiking because the cost of production is going to go up. And this is where I want to speak to coffee producers.
If you're a coffee producer and you're listening to this, or you are a company that connects roasters with coffee farmers for direct relationships and you manage the logistics, if you are either of those two people, I want you to consider making sure that you hold the line with your pricing so that you can cover the increase in production that you're experiencing. And this is going to be very, very important to the long-term viability of your business because, guys, it's not getting easier to grow coffee. The availability of coffee is not becoming something that magically fixed itself because there's a war between Iran and Israel. That's still a problem.
That's not fixed itself. So it is important for you to keep a very keen eye, no matter where you are in the supply chain, on energy prices. It's going to continue to get harder now because fertilizer prices are up. It's going to continue to get harder for farmers to grow coffee.
Getting that fertilizer to them is a part of the energy piece. That is going to increase the cost of fertilizers. It's going to increase the landed cost of those fertilizers. So keeping a clear understanding of what's happening with the energy market is going to be an important part of this piece.
Now, let's talk about single number three, trade consolidation. So what we end up seeing when things like this happen is that smaller businesses get eaten up by bigger businesses. So in the first episode, I think we talked about how there are going to be opportunities here that some will benefit from and others will not. Some businesses will survive and other businesses will go out of business.
The businesses that go out of business oftentimes, we will see that in crises in oftentimes, that businesses are going out of business just because of forces outside of themselves. And that is going to be devastating to watch. Sure, there will be some businesses that go out of business because they're just where shitty actors and it is just time for them to close. They're the kinds of businesses that have been paying nothing for coffee for year upon year upon year.
And this shift in pricing should have broken them. It didn't. This will be the thing that breaks them. I'm not upset about that.
What I am going to be upset about is those businesses that went out of business because of all of this chaos and they were running a great business. But this ended up being the hair that broke the camel's back. And we are going to see that. And as they go out of business, what you're going to see is the corporations and the bigger businesses are going to start taking advantage of picking up leases, picking up equipment, picking up opportunities to capture more market share.
This is going to happen across the supply chain. We're going to see farms go out of business and we're going to see corporates try to secure their future supply chains by buying these farms. We're going to see development companies come in, convert agricultural land into housing or into eco tourism. We're going to see exporting and importing companies that are smaller, get consolidated into bigger, get bought out by bigger actors.
So we'll see fewer people responsible for the movement of coffee, if the middle is gutted out. We'll also see the same thing happening with roasters and with cafes. We are already starting to see this with roasters and with cafes. As that happens, we are going to see a complete reorganization of the global coffee supply chain and the global coffee industry.
The second and third order impact of that is going to be something that we were not planning for. And this is, you know, as I think about the energy that we came into 2026 with after a year like 2025. It was almost as though the industry was split between people who were braced for bigger shocks in 2026 and people who thought, no, we've been through it. 2026 has to be better and easier than 2025.
The people who were braced are the people who I think that had considered the consolidation was either an opportunity for them or a consequence for them. The people who hadn't braced for that and thought that there was going to be business as usual are going to be the ones that are going to be the shocks for the most in my opinions. And so that's something that we really seriously need to be considering as we move forward with all of this. Now, the fourth signal that we need to be looking at is supply chain resilience.
So companies will likely diversify in their suppliers because, as I mentioned before, there are some actors that were prepared for this and there were other actors that were not prepared for this. So diversification to share the risk or spread the risk in case some supply chain partners go out of business. You have to, if you are a roaster, if you are an exporter, if you are a cafe, you have to spread your risk and you have to hedge against, perhaps one of your suppliers is going to go out of business. And so being resilient means assessing that potential.
Do you believe that the people who you have been doing business with have the capital to be able to survive this conflict that is going to impact all of us? Or do they not? Are they aware of it? Have they been talking to you about it?
I would encourage you to start thinking about who are going to be the supply chain partners that are getting ahead of this now quickly, talking to you about what their hedging strategies are, making you feel more comfortable about their comfort levels with their own supply chain. Are they coming to you and saying, look, this is where we're exposed and because we're exposed, you're exposed. They are the kind of supply chain partners that you want to have right now. And if you don't start looking for them, and the place that you can start looking for them is the people who advertise on this podcast, not because they advertise on this podcast, but because I have vetted them as people who do act like that, you cannot become an advertiser on this podcast until we have had many conversations about the way that you do business.
It is not just about the money. The people who advertise on the podcast become quite surprised by the price to advertise on this podcast because it is much, much lower than what we could be charging. But my job is to make sure that if you are advertising on this podcast, you are actually going to solve problems for people, not create problems for people. So if you are looking for supply chain partners that I would trust and that I would do business with, start with the advertisers on this podcast.
Then look at the guests on this podcast. That is the kind of place where I would encourage you to start looking at, to start solving these things. And then third, I would invite you to just ask people who was good to deal with, not based on personality, but based on business practices, okay? The next thing that we need to look at under supply chain resilience is increasing your inventory buffers.
So if there are delayed shipments, if you are a producer that looks for cherry from other farms so that you can process it and mill it and get it out there so that you can fulfill contracts, you need to think about if my suppliers don't have enough, how am I going to make sure that I have enough stock to get me through? What are the buffers? What is the length of time that I'm giving myself, or amount of stock that I'm giving myself before I run out? So when we work with clients, we like to look at having inventory and cash buffers that extend us three months beyond what our usual limit would be.
And in moments like this, that will be more imperative than it ever has been. And the third thing that I would like you to think about with regards to supply chain resilience is to reduce your reliance on single shipping routes. So that if, let's say you are shipping from Africa up into Europe and the Red Sea gets closed or the Suez Canal gets blocked from too much traffic, what, how have you prepared extra cash and extra lines of credit to cover that cost of going down around Africa and up the long way, the extra 14 days, the added fuel cost that that's going to take, have you created a buffer and have you considered that? Are you even preparing for those scenarios?
Our industry spends so much time guys on talking about cup quality and terroir and processing methods and coffee competitions and trade shows. A situation like this is why I have been talking to you so intensely about making sure that we expand the conversation beyond that. Because it seemed pretty obvious to a lot of people that the world was headed towards either a major financial event, crisis, situation, however you want to put it, or a major geopolitical event or situation. I believe we're on the cusp of both of those things.
We definitely have started one of those things. And on a geopolitical side, we have started many of those things. And if this expands to a world war, we're going to have to be having a very different conversation. When that happens, we'll be looking at things very differently.
And so I hope that you take this series with the spirit, which is it is intended, it is not intended to scare you. It is intended to light a fire under your arse and get you moving. It is intended to get you to focus on the things that you need to be focusing on. It is intended to get you moving away from focusing on those things that we focus on during business as usual, and focus on the things that we need to be thinking about.
And we grow up as an industry and stop thinking that the most important thing is the cup quality. I'm not saying that it's not important. What I'm saying is the most important in times of crisis, which we have been in a crisis for some years now. We need to be thinking about logistics.
We need to be thinking about energy markets. We need to be thinking about geopolitics. And I hope that this podcast has played a role in your journey, a role that you see as valuable in helping to get you informed with the guests that come on this podcast, that I'm deeply privileged to have on this podcast, that get us there. I wish you safety.
I wish you to be kind and gentle with yourself. I hope that you can receive the spirit with which I am recording this series. We have a long list of guests that are coming on this podcast to go deep, deep, deep into all the different elements of this. Over the coming months, I'll be working very hard to make sure that we get you the information that we need to get you.
The best way that you can continue this conversation, if you would like to be talking to other people who talk in this level, and you would like to be involved in those discussions, is to join our monthly discussion groups with Patreon. It's 20 US dollars a month. The conversations are amazing. We're now running two every month, one that is great for the Northern Hemisphere time zone, one that is great for the Southern Hemisphere time zone.
But there's a lot of overlap from those time zones, and you're welcome to attend both of those meetings. And the conversations are inspiring. People end up doing business with each other. They end up increasing their network.
They learn a lot about different parts of the supply chain. They will attend it, and we hope to keep growing that space and creating more spaces that you can have conversations with people outside of your own echo chambers, so that you can not have to rely on going to trade shows to hear about what's going on. We have a question that we ask every guest at the end of every episode when the future version of you comes back and listens to this. What do you hope for her?
And what I hope for her is that we have learnt from this moment. We have learnt to lead ourselves before we learn to lead others, and that we have learnt that leading others is a responsibility that is more about creating harmony and success than just about creating profitability for our shareholders. We have some serious times ahead of us, but we are together, and we have never abandoned you through any of the crises that have existed while Mapper Forward has existed over the last nine years, and that's not going to change now. If anything, we are going to look for more ways to be able to support you through this, and we hope that you will let us know if there's any information that you need more of so that we can make sure that we provide it here.
As always, get in contact with us through the links that are in the show notes, and I will sign this series off with Peace Love and Peanut Butter. Have an amazing rest of your day. Bye. If you enjoyed this episode, consider supporting Mapper Forward, our guests and advertisers on social media.
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