The prominent coffee exporter Kerchanshe Trading PLC thrives on the international arbitration stage of litigation in London, where it was sued in a disagreement between two claimants.

The buyers, Equatorial Traders Ltd. and Kamba Coffee Ltd., filed complaints with the British Coffee Association (BCA) Arbitration Service alleging that the supplier, Kerchanshe, one of the top coffee exporters in terms of earnings and volume, was not fulfilling the terms of the parties’ entered contracts.

A disagreement emerged between the parties on the non-shipment of 2,240 (60 kg) bags of coffee, which was a partly contracted volume, in the Equatorial case.

Equatorial claimed in a September 20, 2023 claim that it had paid 170 US cents per pound (USc/lb) for 384 metric tons of coffee on a consignment of 6,400 (60 kg) bags and to export in February 2023, while the local company had transported 4,160 bags.

It claimed that after replacing the bean it had purchased at 184 US cents per pound from the market, it had sent the respondent a debt note for the USD 41,481 price difference on 2,340 bags, which the respondent had not paid. In response, Kerchanshe used the European Standard Contract for Coffee (ESCC) and contended in several articles that the client’s claim is void since the ESCC’s time restriction has passed.

“Whilst 4,160 bags were shipped in August 2023, this in no way implies that the whole contract had been changed from shipment in March 2023 to shipment in August 2023,” the Tribunal that recalled the contract was signed under the ESCC.

The Tribunal’s findings indicated that the contract was concluded with a shipment period in March 2023 for 6,400. Furthermore, it stated that the claimant neglected to place the respondent in default by the appropriate deadline for shipping in March 2023.

In another case, Equatorial also charged Kerchanshe for the delivery of 192 metric tons of beans, claiming that bean size did not meet the requirements set out by the Ethiopian Commodity Exchange (ECX) for export.

The Ethiopian Coffee and Tea Authority (ECTA) certified Sidamo 4 coffee was transported, according to the supplier, who also claims that “the ECX coffee contract is obsolete and bears no relevance to the international export of coffee.”

In its statement, it stated, “They continue to offer the parcels at a profitable margin describing goods as Sidamo grade 4 despite claimants requesting invoicing back and describing coffee as under grade (UG).”

The arbitration highlighted that both the claimant and the respondent had admitted that the arrival quality’s bean size was small, and that the claimant had later offered and sold the goods in accordance with the terms of the original contract.

According to the arbitration, “this has been evaluated by the Tribunal, as have the arrival samples.” The claimant presented a sample claiming it to be the pre-shipment authorized sample.Although the tribunal reported that it discovered that the coffee shipped had smaller beans than the unsealed pre-shipment approved sample, the landed sample outperformed the pre-shipment sample in terms of taste attributes, according to the Independent Coffee Laboratory’s evaluation in London.

Consequently, Kerchanshe Messer Equatorial Traders was sentenced by the tribunal to pay US cents 10.00/Ib.

The quality of the coffee that was delivered to Hamburg was also a factor in the Kamba Coffee claim. The customer and Kerchanshe signed a contract for the supplier to sell 2.4 metric tons of coffee at US cents 430 per pound, but the buyer insisted that the quality of the coffee it received fell short of expectations.

The claimant formally brought the case to arbitration on August 7, 2023, and the BCA registered it on September 5. The claimant contends that while the arrival parcel quality was assessed 78 percent below screen 14, the ECX grading guidelines suggest that the parcel is 85 percent above screen 14.

According to the responder who claimed that the ECX coffee contract was out of date, “the ECTA confirmed that the goods that were shipped were of Anasora grade one.”

It replied in the arbitration that “the claimant denied the respondent the opportunity to sample and evaluate the parcel.”

The tribunal declares that the claimant’s request for arbitration in this issue is time-barred, finding in favor of Kerchanshe.

Ethiopian Shipping and Logistics (ESL) announces its intention to increase the number of ships at the main Ethiopian cargo lifts in order to fill the void created by certain international operators who are downsizing their fleet to the Red Sea.

According to the firm, vessels operating in Djibouti have reduced their activities and, in some cases, completely suspended their operations at the main port for Ethiopian goods due to security concerns in the Red Sea region.

ESL reports that large ship operating firms, who have slot agreements with ESL to carry import cargoes, have scaled back on their trips to Djibouti and some have even ceased operations.

“As a result, the company has increased the number of vessels it operates in ports where Ethiopian cargo is lifted,” ESL said in a statement released on Wednesday.

Regarding the export industry, ESL stated that Ethiopian cargo, especially the transportation of coffee beans, has encountered difficulties due to inadequate ships loading from Djibouti.

Exporters are encouraged to use these routes since “our vessels have a regular fleet to Chinese ports in Tianjin and Shanghai (Taicang), Jebel Ali and Sharjah of the United Arab Emirates, and Mundra and Nhava Sheva ports in India.”

Using its own ships, ESL has sent 401 TEU containers to ports in China, India, and the United Arab Emirates in the first nine months of the current budget year. Equipped with 10 ships, ESL is the sole deep-sea vessel operator in Africa.

Some Ethiopian-based businesses use the Mombasa port in Kenya due to security concerns in the Red Sea and Gulf of Aden, even though its operating costs are greater than those of Djibouti given its distance from the center in Ethiopia.

Ethiopian coffee, which is the major source of hard currency for the country, exporters assert that it is difficult to deliver their goods on time for their clients due to the most recent problem, which happened in November of last year on a vital waterway in connection with the Houthi attack in Yemen.

They said that the shortage of ships that lift goods from Djibouti was the reason the cargo became trapped there.

It is also claimed that the decrease in vessel arrivals has made it harder to find enough empty containers.

Maersk, one of the largest logistics companies globally, has reversed its previous decision to suspend operations in Djibouti. In a statement, the company explained that it had previously cancelled all reservations to and from Djibouti due to the situation in and around the Red Sea.

“We are writing to provide you with an update on our latest findings,” the statement continued, announcing that Maersk is once again accepting new bookings for travel to and from Djibouti.

“The situation in and around the Red Sea / Gulf of Aden, including the Bab-El-Mandeb strait, remains volatile, with all available intelligence indicating a considerable security risk,” the statement added. “Nevertheless, we are pleased to announce the reopening.”

This week, Ethiopian Shipping and Logistics expressed concerns about the security situation in the sea, stating that several large vessel operators have reduced their trips to Djibouti and others have halted their operations. This has had an impact on Ethiopian cargo imports and exports.

Maersk had previously announced in late January that it would cease operating the Blue Nile Express (BNX), a service that crosses the Red Sea en route to Djibouti. Due to concerns about maritime security, the Danish container shipping company had temporarily suspended reservations for its BNX service to Djibouti from Asia, the Middle East, Oceania, East Africa, and South Africa.

Abdillahi Adaweh Sigad, CEO of SGTD, recently emphasized to Capital that Maersk is a major client of the largest container terminal on the East African coast. He argued that both commercial and security perspectives should be taken into account in these matters.

While Maersk has discontinued one of its services, the CEO of SGTD questioned the rationale behind their actions. He explained that Maersk claims to be concerned about being targeted for security reasons, and given the political motives of those obstructing traffic, it is understandable that they are among the primary targets. He acknowledged that incidents have occurred in Somalia before reaching the Red Sea and the Indian Ocean. Therefore, Maersk’s priority is the safety of its sailors and avoiding any risks associated with these areas.