Week 3 – US Specialty Coffee
Providence, RI
Day 1
I’ve been in Rhode Island before, but I’ve never spent any time in Providence. This is my first time. It’s small. Very collegiate, with Brown, RISD, and Johnson & Wales all in close proximity to downtown. This is one of the first chilly weeks of the year, and it is very rainy. Despite the dreariness of the city, I like it. The architecture is nice, and the rain, wind, and chill just add to the gothic ambiance of the place. Across the street from the hotel, there is a “weird” shop (their word, not mine) dedicated to HP Lovecraft. He’s from Providence, after all.
Day 2
Providence is a rather small office for us. It houses part of our US Specialty Coffee business. The office has a different vibe from the rest of the company. They have the fourth-floor loft in an old building overseeing a church. The dress code is business very casual. There is a pleasant smell of roasted coffee about the office, and they often have special snacks brought in like apple cider and peanut butter and jelly donuts. Providence is our hipster office.
Seeing the sales side of specialty coffee was an interesting experience for me. In Indonesia, I was immersed in the buying side. Here in Providence, I am reviewing deals for which I saw the actual coffee beans clear on the other side of the world.
Day 3
Getting the coffee from one side of the world to the other is remarkable. It’s astounding how many times one container of coffee may change vehicles from warehouse-in-origin to the customer. The coffee will leave the warehouse on a truck, bound for the port. It will be loaded on to a container ship, and depending on origin and destination, it could change ships along its voyage (just like how airline passengers may have to connect). Once the container reaches a port in the US, it could be loaded on to a railcar and shipped clear across the country. Once it arrives at its destination city it will have to take a short truck ride to a warehouse (I learned this week that this portion of the trip is known as drayage). At the warehouse the container will be “stripped” and the coffee will be stored at the warehouse until it is ready to ship to its customer, when it will hitch one final truck ride.
The responsible party for the goods across this journey is governed by a set of law and trade rules known as Incoterms. Contracts stipulate the Incoterms for every trade. If a buyer wants a cheap price, they can buy FOB, meaning free on board. That means it is the buyer’s property as soon as the container is loaded on to the container ship. The shipping line will provide a bill of lading to the owner, indicating that the container has been taken on board and ownership has passed hands from the seller to the buyer, in the custody of the shipping line. Traditionally, sea captains would sign the bills of lading. Under FOB Incoterms, the buyer is responsible for shipping and insurance, plus must take care of land transportation once the container reaches its destination port. If the buyer does not evacuate the goods from the port in the stipulated time period, then they will pay a penalty fine known as demurrage.
CIF, meaning cost, insurance, and freight, means that the seller must foot the bill for the sea voyage. DAP means delivered at place and leaves the seller responsible for the goods until they arrive at the specified customer warehouse.
The bill of lading is one of several important documents. The goods must clear two national customs regimes – one at origin and one at destination. This requires a certificate of origin, phytosanitary certificate, invoices, packing lists, and customs declarations. Customs brokers must get involved to make sure everything goes smoothly and follows the predilections of the law. Screw any of this up and you could find your coffee impounded in a warehouse in Oakland or Newark or paying a hefty fine ($10,000 for a late US customs declaration, to start).
Day 4
A few people have asked me how coffee is decaffeinated. I found out today that it is a wet process that submerges the green coffee beans in a chemical mixture or a charged-water compound. Both have the effect of extracting the caffeine molecules from the coffee beans. The trick is to not extract the flavor of the coffee alongside the caffeine. It seems that the charged-water compound is best at this, and it does not deposit any artificial flavors either. After soaking, the beans must be re-dried before they can be roasted and ground.
Day 5
The weather is much better now. Warmer and brighter out. I got to see a little more of the downtown. The old theater is a beautiful building.
I did a little FSMA work today. FSMA is the Food Safety Modernization Act (you can thank or curse Obama for this one, based on your opinion of the law). The law has many parts, but an important component is risk identification and mitigation in the food supply chain. Companies have to identify where food could get contaminated, put preventative measures in place, and test for contaminants when they could easily arise. The federal government has not finalized rules and regulations for FSMA, so at this point, we just need to stay ahead of the game, so we are prepared when the Feds come knocking.
That’s it for the big US audit. Next stop: Republic of Congo for wood products.