Category: Logistics

Tobacco Theft Down in Brazil

Photo: Souza Cruz
A program to prevent container theft in southern Brazil is proving successful, according to the Interstate Tobacco Industry Union, SindiTabaco.
In 2019, the sector recorded 26 thefts throughout the region; in 2022, there were only eight, and only one of these occurrences took place in Rio Grande do Sul, the center of Brazil’s cigarette tobacco industry.
In 2023, the industry lost six containers to theft, including four raw tobacco cargoes and two containers with processed tobacco for export.
Iro Schuenke
During a Dec. 12 meeting with public security officials, SindiTabaco president Iro Schuenke urged stakeholders to remain vigilant as movements of containers intensify during the next months.
Thieves are increasingly targeting processed tobacco, he noted, citing recent thefts of cargos heading to the port of Rio Grande.
During the meeting, participants discussed theft-prevention measures such as increased police escorts, traveling in truck convoys and predetermining stops for drivers.
Tobacco exporters and shippers, meanwhile, are evaluating ways to reduce the time it takes for the containers to arrive at the port, so as to avoid, for example, evening transportation.
“If evening transportation is absolutely necessary, the companies can previously contact the security organs asking for an escort to accompany the truck”, said Regional Police Chief Officer Luciano Fernandes Menezes.
To help tobacco shippers improve security, SindiTabaco has prepared an information leaflet with best practices.
December 22, 2023
BAT Taps Arvato for German Vape Logistics

BAT Germany has selected Arvato as its logistics and fulfillment partner for its e-commerce operations encompassing e-cigarettes and heated tobacco products.
Since the end of June, BAT Germany online orders have been processed centrally from the site in Marienfeld, Guetersloh district. At this site, Arvato, a leading supply chain and e-commerce service provider, operates a state-of-the-art distribution center spanning approximately 32,000 square meters, serving multiple clients in the technology sector, according to the American Journal of Transportation (AJOT).
The comprehensive logistics services provided for BAT Germany at the facility encompass goods receipt, storage, order picking, packing, and shipping, as well as returns management.
“BAT’s goal in awarding the e-commerce logistics contract was to guarantee the most efficient and fastest delivery service for its customers. Our customer-centric approach allowed us to accommodate BAT’s specific processes and requirements,” says Thomas Becker, executive vice president at Arvato.
The logistics service provider commits to delivering within a 48-hour timeframe. To optimize warehouse operations for efficiency and speed, Arvato heavily integrates automation technology. Automated carton setup and closure processes significantly enhance the speed of operation. Moreover, product information is automatically included with orders through flyer dispensers.
“With its experienced team, Arvato provided us with very flexible and reliable support in setting up our logistics and distribution concept,” confirms Robert Juhnke, distribution manager at BAT Germany. “Even throughout the offer and final negotiation phase, the collaboration has been exceptionally cooperative.”
Sustainability is a growing trend in the vaping industry. Arvato is dedicated to doing its part, according to the AJOT story. In an effort to reduce plastic waste, the company adopted wet adhesive tape made from recycled paper, resulting in the annual saving of approximately 16 tons of plastic, as an alternative to polypropylene adhesive tape. Arvato’s approach to optimizing shipment sizing and processing minimizes the consumption of packaging materials.
October 31, 2023
Choppy Waters

Photo: Igor Groshev
As the Covid pandemic ebbs, the tobacco shipping business faces new challenges in 2023.
By Stefanie Rossel
At the beginning of last year, forwarding businesses that specialized in the shipping and storage of tobacco were groaning under the burden Covid-19 had placed on their operations. The pandemic had severely disrupted the global supply chain, causing shortages of containers in places where they were needed and surpluses in places that had no use for them.
As economic movements and production came to a halt, large numbers of containers accumulated in North America. In order to control costs, carriers lowered the number of vessels at sea, slowing imports and exports as empty containers were no longer picked up. When Covid eased and Asian traders became the first to resume business, retrieving containers turned out to be challenge. A reduction in container production during the pandemic, raw material shortages and Covid-related port closures contributed to the crisis, resulting in significant delays in turnaround times and an unprecedented increase in the costs of transporting goods by container ship.
Since the beginning of 2020, shipping rates had risen between five times and seven times over the initial freight rates depending on the route. The price of shipping cargo to the U.S., for instance, increased 530 percent since the start of 2021.
The good news is that toward the end of 2022, scarcity of containers was no longer an issue; on the contrary: global container depots, where empty containers are stored, are now filling up or are full. Freight rates have fallen accordingly. According to the December 2022 Drewry World Container Index, the average rate of a 40-foot container has dropped to $2,139, which is 79 percent below the peak of $10,377 reached in September 2021.
The falling prices should provide freight forwarders room to negotiate better rates with shipping lines in 2023, experts say, but margins for forwarders will also be tighter as they operate in a market that is anticipated to consolidate. They will have to optimize operational cost and carefully monitor demurrage and detention charges, such as insurance charges or claims, according to industry watchers.
Slowing Trade
In general, however, supply chain concerns are expected to persist in 2023 as new issues have come up. ING Think, the economic and financial analysis arm of ING Research, believes that the new year could prove to be even more challenging for global goods trade due to faltering consumer demand, returning oversupply and the mounting cost of energy as a result of the war in Ukraine. More than 80 percent of world trade is seaborne.
While major ports, such as Los Angeles-Long Beach and Shanghai, have managed to work off the backlogs caused by the pandemic, global congestion of ports is far from over, analysts point out. Shipping times may have improved since their peak at the beginning of 2022, but they still amount to approximately double the pre-pandemic lead times of 80 days to 90 days. According to Sea Intelligence, schedule reliability stood at 46.2 percent in August, which is trending upward but still significantly lower than the 2018–2019 average of 74 percent. Some 7 percent of the global fleet, ING Think says, is still stuck in queues in ports around the world, and 11 percent of goods are sitting on waiting container ships.
For 2023, analysts predict the moderation in the transportation sector to continue in light of recession scenarios and hesitant consumer demand. With energy prices expected to remain high, purchasing power continuing to erode and manufacturers struggling with labor and material shortages, ING Think forecasts that receding demand will meet oversupply. While trade in consumer products is expected to remain below growth average, decreasing new export orders and declining order books also indicate a slowdown on the industrial side, with Europe being hit particularly hard by the energy crisis.
With minimal Russian gas flows, the 2023–2024 winter season will likely make it more difficult to build inventories. Further sanctions on Russian oil and refined products are anticipated to lead to a shift in global trade patterns; on Dec. 5, 2022, the European Union and the U.K. banned the seaborne imports of crude oil from Russia; from Feb. 5., 2023, they will also embargo Russian oil product imports.
Labor shortages and material shortages will continue to challenge the transport sector in 2023. Strikes for higher wages and better working conditions took place in all parts of the world last year—a situation that could worsen with the war in Ukraine. At 10.5 percent and 4 percent, respectively, Russia and Ukraine supply significant shares of the world’s sailors. If Russia announces a full mobilization, the shortage of deckhands could intensify.
According to ING Think, 2023 will see enhanced capacity management of container liners, increasing operational costs and larger capital investments in new, more environmentally friendly vessels and more expensive compliant biofuels as well as in wages. Global supply chains are still fragile and exposed to volatility. As the analysts observe, “Normality is still way off as we approach 2023.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2023
Taking Freight

Photo: Transcom Sharaf
The Covid-19 pandemic continues to disrupt tobacco shipments and storage.
By Stefanie Rossel
While the tobacco industry, famed for its resilience, has fared comparatively well during the Covid-19 pandemic, an essential part of the business continues to face challenges: the segment specialized in the shipment and storage of leaf tobacco.
The outbreak of the coronavirus severely disrupted the global supply chain, leading to a persistent worldwide shortage of containers. As the pandemic spread from Asia, many countries enacted lockdowns, thereby halting economic movements and production. Temporary factory closures caused large numbers of containers to pile up at ports. Carriers reduced the number of vessels to control costs and avoid the erosion of shipping rates. Such moves strangled import and exports. Consequently, empty containers were no longer picked.
This problem especially affected Asian traders who couldn’t retrieve containers from North America. When Asia’s economy started recovering and China resumed exports even as other countries were still dealing with restrictions, a reduced workforce and minimal production, almost all remaining containers in Asia headed out to Europe and North America, but they failed to return quickly enough for the next shipments.
In the U.S., which is also struggling with labor shortages and more complicated customs procedures due to stricter border controls, containers began to pile up. According to Hillebrand Freight Forwarding, out of every 100 containers that arrive in the U.S., only 40 are returning to Asia, with the remainder accumulating in ports and storage facilities.
A global slowdown in container production due to the Covid-19 pandemic as well as raw material shortages have added to the crisis, as have Covid-19-related port closures. In July 2021, only 36 percent of ships arrived on time, according to Invest Monitor. Unsurprisingly, the costs of transporting goods by container ship have gone through the roof over the past two years.

Guy Harvey
Limited Availability, Exploding Rates
Kyle Kok
For logistics and storage providers, the situation remains serious. “Our biggest challenge has been obtaining suitable equipment for packing and shipping,” says Guy Harvey, CEO of Transcom Sharaf Group, which is headquartered in Beira, Mozambique. “With reduced vessel callings caused by congestion, slower container turnarounds and reduced imports, it has been a struggle to find enough containers. Some shipping lines prioritized the evacuation of containers to Asia to take advantage of the inflated ocean freight charges and high demand. The increased demand for empty containers also meant empty container free days were drastically reduced and detention charges increased. The reduced vessel callings have made it extremely difficult not to incur demurrage and detention by the time the vessels arrive and sail.”
Susceptible to pests and diseases, leaf tobacco is a demanding good to transport and store. “The lack of containers has also meant we have had to lower the high standards we set for tobacco grade containers and have had to heavily invest and incur cost upgrading containers ourselves and in partnership with the lines,” Harvey continues. “With fewer vessel callings, shipping has been slower; we have gone from four or eight vessels a month to two at best. Two of the bigger lines have had limited or zero space availability at all to Europe for most of the season due to congestion at their transshipment hubs and overbooking on their European routes. This has meant more pressure has been placed on one shipping line to export the tobacco and reduced competition that affects service delivery and pricing. We have seen transit times to destination more than double as well and often extended dwell times in less-than-satisfactory ports where cross-infestation of tobacco beetle is highly prevalent from past experiences.”
Kyle Kok, account executive for tobacco at Andromeda Forwarding and Logistics of Rotterdam, Netherlands, hopes that space will free up on vessels by the end of January or in February when the crunch in cargo from the holiday season is out of the way.
“However, please note that shipowners will not reduce their rates any time soon. What we also have noticed during this pandemic is that many shipowners have their personnel work from home, which does not result into a better productivity, getting answers or even making quick bookings.”
Lisa Rautenbach, Andromeda’s manager of the tobacco department, estimates that since the beginning of 2020, shipping rates have increased by a factor of five to seven. “But this also differs from which route is being undertaken. For example, cargo to the USA has increased by 530 percent since the beginning of this year.”
Harvey has seen the cost go up 10-fold on certain routes and in response has reduced orders for shipments to certain destinations. “The limited options and flexibility to some destinations being monopolized by one shipping line has caused costs to spiral,” he says.

Lisa Rautenbach
Increased Need for Storage
Transcom Sharaf and Andromeda Forwarding have been looking for ways to avoid the chaos that currently plagues global supply chains. “We have seen a lot of traditional routes, such as Durban, move back to Beira in some cases and vice versa, where often the decision is based purely on container availability at any given time,” notes Harvey. “Due to the lack of containers in the hinterland, there has been a huge increase in break bulk tobacco to the ports for containerization, which has also led to a bigger and longer storage requirement. We are fortunate that tobacco is a high-value commodity for the region, and as such, we can get some sort of priority on vessel space allocation, but again, it is dependent on container availability.”
“Vessels remains fully booked as the shortage of containers remains,” observes Andromeda’s director, Bart Brouwerens. “We are looking for all and any options, not only via the regular lines but also via outsiders with smaller vessels, which also want to take part in this market with these high freight rates! Furthermore, Andromeda tries to look at every shipment from every angle, truck/barge/rail connections, etc.”
To handle the bottlenecks in ports and longer-than-usual storage periods, Andromeda has secured some guaranteed space at certain lines and for certain vessels, Rautenbach explains. But this comes at a price. If forwarders and their clients are unwilling to pay such premiums, shippers may very well delay the shipment or roll the cargo onto another vessel in favor of more profitable cargo.
Harvey says that Transcom Sharaf has sufficient storage capacity. “But we also had lower-than-average production in the region this year—at the right time for us, fortunately. There have been some tense moments, though; we have had to re-look at the one-third to two-thirds split on container storage space versus warehouse space and will put this into our future development plans now that we have seen how fragile the supply chain can be. We are fortunate to work so closely with our clients and plan openly and accurately on all our movements and timings—without these relationships and the communication lines, the season would have been extremely problematic. We have to forecast months in advance in order to position sufficient empty containers in time.”

Supply chain disruptions have forced freight-forwarders to reevaluate the amount of space they devote to container storage and warehousing, respectively.
Uncertain Future
Just-in-time delivery is virtually impossible nowadays, or available only at premium rates, according to Brouwerens. Andromeda advises its clients to have loading schedules ready as soon as possible in order to reserve space well ahead of the shipping date. “At this stage, we are being forced into a situation that we offer cheap warehousing space in, among other [locations], Antwerp and Dubai and in any city requested via our vast agency network,” he says. “This [is] only because of the unreliability of the services the major shipping lines offer.”
Brouwerens adds that, regretfully, Andromeda must uphold its credit agreements with its clients strictly as rates are rising considerably. “Shipping lines demand payment either directly or after 14 days,” he says. “If we pay late, shipping lines will cancel the aforesaid 14 days immediately and will fine you with an additional percentage. This all has taken a part of the joy of good communication with lines away, but we, therefore, enjoy extra the good relation we have with our clients and will do so for many years to come.”
Despite disrupted leaf tobacco deliveries, Harvey expects the big tobacco companies to avoid the experience of the automotive industry, which has been struggling with a shortage of semi-conductors. “Despite the challenges, we have managed to meet our scheduled deliveries fairly well under the circumstances,” he says.
“I do not see the bigger players being affected or lacking leaf from this region during the current season. However, smaller buyers may definitely face challenges similar to [those of] the automotive industry. Those sourcing from other origins may also be negatively impacted where other commodities may be prioritized above tobacco. Should the situation deteriorate further, there will be an impact on all our customers. If production volumes increase substantially next year, this would also create further disruptions in the current supply chain.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2022
BAT Recognized for Supply Chain Excellence

Photo: BAT
BAT has been ranked 19th in the Gartner Supply Chain Top 25 for 2021—marking the first time BAT has made the top 20.
In its second consecutive year in the Gartner rankings, BAT has moved up two places from 21st in 2020. The Gartner rankings recognize companies globally who have demonstrated excellence in supply chain management, effectively navigating through the Covid-19 landscape.
As BAT evolves into a multi-category consumer products and brands business, its transformation is being powered by digital technology. This allows BAT to respond with greater agility and resilience to the complexity of its growing new category portfolio supply chain. According to the company, this transformation is underpinned by BAT’s commitment to put ESG front and center of its operations, with sustainability firmly embedded into its supply chain management strategies.

To move up the ranks during a global pandemic is testament to the hard work and excellence of BAT’s operations teams across the world.
Zafar Khan, group operations director, BAT
“We are honored to have our supply chain operations recognized in the Gartner Supply Chain Top 25 rankings for the second year in a row,” said Zafar Khan, BAT’s group operations director, who joined the company in February, in a statement. “To move up the ranks during a global pandemic is testament to the hard work and excellence of BAT’s operations teams across the world.”
June 9, 2021
Back in Business

Photo: Tobacco Reporter archive
The Uncommitted Tobacco Auction returns as an online marketplace.
TR Staff Report
The Uncommitted Tobacco Auction (UTA) is back. Reinvented as an online marketplace, the platform will offer tobacco companies an opportunity to anonymously sell uncommitted non-seller, distressed, substandard, damaged and stocks to the highest bidder.
Confidentiality and anonymity are desirable in the early stages of a transaction so that buyers don’t favor one supplier over another. When similar types/grades of tobacco are on offer at differing prices, the electronic exchange system soon establishes a “published” market price, with prices escalating in times of shortages and declining in periods of excesses.
The first UTA was created in 2006 by a group of tobacco veterans looking to inject new dynamism into the tobacco trade. Operating on thin margins, leaf merchants are keen to minimize surplus tobaccos on the balance sheet. Previously, their choice was to either sell excess leaf at a discount or pay for storage while waiting for prices to firm up.
However, the potential market was limited because of competitive issues—most tobacco dealers would rather not directly sell to or buy from their competitors. In addition, tobacco merchants selling discounted tobaccos want to avoid giving buyers the impression that their “regular” tobaccos are overpriced. The UTA exchange process eliminates these concerns as neither party knows who the sale is made to or where the product comes from—transactions are simply confirmed on a willing-buyer-and-willing-seller basis.
During the platform’s first iteration, warehouse operator Tabaknatie ran the physical auction at its premises in Antwerp, Belgium, and the UTA team handled the interactions between buyers and sellers. The process was supervised and controlled by trust office FTC, which also handled contracts and invoicing.
According to initiator Rainer Busch, who also leads NewCo, the first UTA was a success. The initiative, he says, received lots of attention, and numerous traders participated in the platform. “There are many reasons why a seller would want to put damaged or excess stock on the market,” says Busch, adding that the original UTA processed “several million kilos” of tobacco during its existence.
However, as the UTA gained momentum, Busch’s other business expanded even faster, requiring him to set priorities. With insufficient time to devote to both projects, Busch decided to put the UTA on hold. The first UTA ceased operations in 2009, but the concept clearly struck a chord. Over the following decade, customers continued inquiring about the platform at regular intervals, asking when it would return.

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Rainer Busch
Their patience is about to be rewarded. According to Busch, the time is now right for the UTA to make a comeback. The conditions that led to the original UTA—slim trader margins and a desire to avoid surplus tobaccos—persist, and plenty of surplus tobacco remains on traders’ balance sheets. Busch estimates that there is some 155 million kg of uncommitted packaged inventory sitting in warehouses worldwide, including 95 million kg of flue-cured Virginia, 35 million kg of burley, 10 million kg of tobacco byproducts and 15 million kg of other varieties.
At the same time, technological and societal developments have turbocharged interest in online platforms. The Covid-19 pandemic has forced many activities online, and technology has evolved to handle them smoothly. Online business-to-business interactions have generated considerable efficiencies in many industries, reducing travel expenses and increasing profits. Even the traditionally conservative tobacco industry has become comfortable with online transactions.
Unlike the first UTA, which featured a physical auction in Antwerp, the new iteration will be an exclusively online marketplace, eliminating the need for traders to send representatives. Bids will be visible to all involved, and multiple buyers can compete for a batch. If the buyer requires product samples, the seller will send two sealed samples to the UTA sampling room at Andromeda Forwarding & Logistics’ facilities in Antwerp. The UTA will forward one sample to the potential buyer and retain the other for mediation in case a dispute arises.
Alan Rosenthal
To ensure smooth operations, the new UTA will be managed by Alan Rosenthal in Dubai, who for decades has run a successful online spice trade platform based on the same concept.
According to Rosenthal, most bulk commodities are similar in that there is a product, specification, packing and price attached to all transactions. Spices and tobaccos tend to thrive in similar climates and are often cultivated in the same geographical areas. The relationships between farmers and buyers in the spice trade are comparable to those between tobacco growers and tobacco buyers, and the industries share many concerns, such as those about pesticide residues.
Of course, there are also differences between the sectors. Unlike tobacco, which is highly concentrated, the spice industry is characterized by thousands of manufacturers who produce, process, trade or manufacture finished food products around the world. While tobacco is a high value, high volume industry, the number of companies is limited due to the high capital cost of business entry and the enormous expense associated with launching new cigarette brands.
Rosenthal believes his world spice exchange has enhanced business where dynamic companies are willing to embrace the new technological advances in trading.
“The world is moving towards electronic trading, so either willingly or unwillingly we will be pushed into this style of business due to its wide reach and low cost,” he says. “Everyone can see how electronic trading has affected the futures and forex markets. It’s my belief that in a short space of time, the physical movement of bulk commodities will also be done by exchanges and electronically.”
Currently, Rosenthal’s company is in the developmental phase for an online marketplace for the B2B tea business, where traditional teas auctions still take place. Animal feed is also in developmental stages.
Busch and Rosenthal believe the tobacco industry, too, stands to benefit greatly from an online marketplace.
UTA procedures and requirements will guarantee suppliers’ integrity, and a team of industry experts is on hand to inspect shipments, which will also be handled by Andromeda Forwarding & Logistics. A full report will be generated to satisfy all industry standards.
Sellers will pay a one-time registration fee of $2,500. After registration, the seller will enter his stocks on an online platform, which any interested buyer can access. If a buyer is interested, he can request a sample for evaluation. After evaluating the sample, he can make a counter bid online. The seller will be informed by the UTA, and if he accepts the offered price, the sale is confirmed under the terms and conditions set by the UTA.
Before shipment takes place, the buyer must transfer the money to an escrow account of the UTA. The nominated shipping agent of the UTA will arrange the shipment from FOB origin to CIF destination port. After the arrival and approval of the tobaccos at the destination, the seller will receive his payment. The UTA will deduct its commission from the payment to the seller.
If the industry interest in the first UTA is any indication, the reinvented platform can look forward to busy times. While it is difficult to predict the volumes that will pass through the new UTA at this stage, Busch says the organization is determined to continually drive up the volumes and create value for the industry.
For more information on the new UTA, please visit www.utaproducts.com.
May 1, 2021
UKVIA Surveys Vapor Industry About Logistics

Photo: Andrey Popov
The U.K. Vaping Industry Association (UKVIA) has launched an online logistics survey for the vaping industry.
This action follows the decision of several delivery companies to stop carrying shipments of vaping products.
Reports have involved leading providers such as DHL, UPS and FedEx, resulting in varying degrees of disruption to deliveries in recent months. The UKVIA is keen to learn if any disruption is affecting products imported from countries within the European Union or if products imported from China and the USA are also being held up.
“The UKVIA is extremely concerned to hear of any disruption to deliveries of vaping products experienced by our members or any other businesses in the sector,” said John Dunne, director general of the UKVIA.
“We will be closely looking into the response to this survey to gauge the severity of the problems faced by businesses. The UKVIA will then be in a better position to take up these concerns on behalf of our members and the wider industry. I would encourage everyone eligible to take part in the survey or to get in contact with the UKVIA directly to flag up any individual logistics issues.”
The survey is at www.surveymonkey.co.uk/r/2YYZYJW.
April 26, 2021
Coping with Covid

Photo: Transcom Sharaf
Accustomed to dealing with unforeseen situations, tobacco storage and logistics companies take the pandemic-related disruptions in stride.
By George Gay
During a telephone call on April 10, 2019, Guy Harvey, the CEO of logistics company Transcom Sharaf Group, which is based in Beira, Mozambique, told me that while his business had suffered “a few blows” from Cyclone Idai, it would come out of it stronger than it went in and better equipped to deal with any future extreme weather events (see “After the Storm,” Tobacco Reporter, May 2019). The port was operating, and the infrastructure was there, “so it’s business as usual,” he added.
It is astonishing how resilient some companies are. For those who need reminding, Cyclone Idai, which struck Malawi, Mozambique and Zimbabwe in the middle of March 2019, was described by the U.N. as one of the worst weather-related disasters in Africa. Other agencies rated it as one of the worst in the Southern Hemisphere.

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Given what happened two years ago and Transcom’s response to those events, I wasn’t surprised when, at the end of February this year, I was in touch with Harvey again and learned that, while the Covid-19 pandemic too had delivered a few blows to the company’s tobacco business, these had been fended off with judicious changes to normal and planned methods of operation. Nor was I surprised that, in one sense at least, there was a feeling that the business might come out of the pandemic stronger than it went into it.
As part of an email exchange, and in answer to a question, Harvey told me the pandemic had to some extent disrupted leaf tobacco delivery times on those markets that use Transcom’s facilities. There had been a delay in getting sample test results and, as a consequence, delays in obtaining sales confirmations and shipping instructions, which had resulted in longer-than-usual storage periods of higher volumes, he said. In addition, some destination countries also had higher-than-usual tobacco stocks at ports or storage facilities, the result of their own shutdowns; so they could not accept new-crop tobaccos as soon as would normally have been the case. “A lot more shipments had to be carefully scheduled to limit volume arrival per month, which required careful planning,” said Harvey. “In some cases, financial pressures meant sales were rolled to 2021 completely.”

Guy Harvey
Different ways of working
Meanwhile, Rene Luyten, a director of b-Cat, which, as part of its business activities, works closely with tobacco warehouse and logistic companies, made the point that whereas the pandemic had affected all businesses, this didn’t mean necessarily that business activities were down in all areas; in some cases, it just meant that different ways of working had had to be adopted. Before the pandemic, it was usual to visit customers’ sites, whereas now, some of those “visits” had gone virtual—were being made via video calls, which in most cases worked well. And though some new projects had had to be put on hold last year, the company had been able to send technicians to install its Controlled Atmosphere Chambers, which, for instance, are used by some warehouse operators to control insects in tobacco stocks.
Rene Luyten
Harvey pointed out that Transcom had been fortunate in at least one respect because Mozambique had suffered fewer restrictions than other countries in southern Africa and, indeed, than those in much of the rest of the world. The only strict shutdown in Mozambique had occurred in April and May 2020, which was in any case the normal “off season” for tobacco. And while temporary government office closures and restricted working hours had added some documentation delays, the movement of cargo from Transcom’s facilities to and into the port of Beira had hardly been affected.
By the same token, Luyten considers b-Cat to have been fortunate to operate out of the Netherlands, which has operated a “Smart Lockdown,” thereby allowing the company to operate its factory as normal throughout the pandemic. On the negative side, he said, supplier delivery times had been extended, but even this had not affected b-Cat’s operations materially. One upshot of this business continuity is that, not only has the company been able to retain all its employees, but it is expecting to have to take on additional skilled technicians.

Due than higher-than-normal tobacco stocks at ports and storage facilities, some shipments had to be carefully scheduled to limit volume arrival per month during the pandemic.
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While getting tobacco to the port of Beira has been relatively straightforward for Transcom, shipping it out of Beira has presented challenges. During the past three months, some shipping lines have been moving their empty containers to Asia to meet the high demand there, regardless of export contracts already in place, and, in some cases, customers have had to pay higher ocean freight rates than those for which they would have budgeted.
Bart Brouwerens
And in this respect, it might be some time until things return to normal. Bart Brouwerens, a director of the Netherlands-based Andromeda Forwarding & Logistics, told me in an email exchange at the beginning of March that rates for containers from the Far East had quadrupled during the past year. Lots of clients were holding shipments in the hope that rates would decrease, Brouwerens said, but “regretfully this is not the case yet.” Vessels were fully booked and, for as long as shipowners were able to attract high levels of freight, they would require their clients to pay premium prices. “I do not foresee any changes to this in the near future,” he added.
As is suggested above, while for most industries and business sectors the pandemic has been hugely negative overall, some individual businesses, while suffering, have been able to take advantage of new opportunities. Transcom, for instance, has seen an increase in tobacco from Zimbabwe being routed through the Beira corridor because of the strict lockdowns and border closures that have been in place on the more traditional routing to Durban, South Africa. “This is an opportunity for us to show the services we can provide and hopefully grow more market share,” said Harvey. In a similar way, while pandemic-inspired restrictions on travel have been largely negative for a company that values face-to-face meetings and believes they cannot be replaced completely with virtual meetings, it believes also that, in the future, regular conference calls will comprise a useful addition to in-person meetings.

Despite the pandemic, b-Cat has been able to send technicians to install its controlled atmosphere chambers.
The importance of face to face
Luyten seems largely in agreement. He believes that making on-site contacts will remain important (and more fun than remote interactions), but that the travel this involves can be reduced and, indeed, rendered more efficient and effective by augmenting it with video calls, which he sees as being fast and efficient.
One aspect of b-Cat’s business that lends itself well to such ways of working is its vQm (modified atmosphere) packaging system, which is used mainly in the food industry and which is said to be taking off hugely. Luyten explained that this was a simple and flexible system that didn’t need installation support on-site. The client could operate the system without the physical presence of b-Cat personnel.
While dispatching tobacco has created challenges for Transcom, so, too, has ensuring receipt of the supplies necessary for conducting its business. Imports of spares and maintenance items from China and South Africa have been a lot slower than pre-pandemic, and the company has had to get used to holding higher stock levels than it would like to do and to planning further ahead. At the same time, it has been challenging getting the overseas contractors needed to work with some of the company’s specialized equipment and new project developments, which means that it has had to put some projects on hold and make alternative plans in respect of others.

Making a plan
Despite these setbacks, Transcom has retained and protected all its staff, none of whom had tested positive for Covid-19 by the time of our email exchange. Nevertheless, Harvey was not being complacent. Mozambique was currently facing its highest rates of infections, so preventative measures had been increased accordingly, he said. Transcom had introduced a program of continuous education and awareness, something that it hoped had benefitted society beyond the work environment. Strict sanitary measures had been introduced while the wearing of face masks and social distancing had been made compulsory. In addition, the company had introduced takeaway meals from its canteen according to a rotational shift system and increased the number of work shifts with lower staff numbers per shift. It had cancelled all external, noncritical visits to site for a long period, assessed on a case-to-case basis. Additionally, it had stopped all nonessential staff travel, and, where travel was essential, post-trip, home quarantine had been made a requirement.
It is a similar situation at b-Cat, where there have been no positive Covid-19 tests among employees, even those who have been travelling. Many precautions had been taken, said Luyten, both by b-Cat and by the clients on behalf of whom b-Cat had been operating. Strict protocols were in place, and all b-Cat’s employees had been provided with personal protective equipment while, at the same time, receiving clear instructions, including those concerning the need to respect the precautions being taken by client companies. Of course, Luyten added, none of this could eliminate completely the risk created by Covid-19, but, so far, maintaining high standards of hygiene and applying common sense had kept employees safe.

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It is too early to say what will be the full financial impact of the changes that have had to be made because of the pandemic, but this should be clearer by the end of this year. Harvey did say, however, that the pandemic had been a tough pill to swallow given that Transcom was still recovering from the effects of Cyclone Idai. The company had been proactive in business diversification planning and had taken advantage of the extra volume coming through the corridor due to the restrictions in South Africa. “We hope to show our new clients that we are a better alternative and establish long-term relationships with them,” he said.
So, what about the future? When, if ever, shall we be back to “normal”? Well, Harvey doesn’t think things will ever return to “normal” but that businesses, such as Transcom, will adapt to the “new normal,” perhaps by the end of this year, by which time, it is hoped, vaccination programs will have been rolled out regionally. Certainly, some protocols introduced because of the pandemic will remain in place indefinitely.
In addressing the question of the future, Luyten put his faith in science and, particularly, in the development of vaccines, though he said that the rollout of such vaccines to everybody was still some way in the future. And even then, he questioned whether life would return to what it was pre-pandemic. In the meantime, he added, it was incumbent on people to make the best of the situation and hope for an end to the loss of family members and friends to Covid-19.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.

April 1, 2021
If Warehouses Could Speak
A new book explores the architectural heritage of tobacco.
By George Gay
If you have to spend time waiting in the reception area of a company operating at some level within the tobacco industry, chances are there will be available to you a number of publications, most of which will comprise newspapers and magazines that specialize in business and financial matters, and, if you’re right out of luck, a couple of dog-eared annual reports and faded promotional brochures of the company you’re visiting. Not so long ago, however, the mix of publications available for perusal would probably have been broader and would have included some coffee table tomes illustrating various aspects of tobacco and its peripheral industries. At that time, most tobacco companies had libraries varying in size from a couple books to hundreds of books, and at least one had a librarian, but I suspect that few now have such facilities, and I know that at least one fair-sized library was cast aside in the name of “efficiency” and “progress”—read: cost-cutting.
Of course, it is not possible to take the moral high ground here. While the business publications available now tend to peddle only a gratuitous version of business, many of those coffee table tomes of yore also largely told stories that businesses wanted to get across: picture-based tales of smiling farmers working in sunlit uplands, who, in reality, even if they could have been considered to be tobacco industry stakeholders, more often than not simply wound up with splinters in their hands.
But relief is at hand with the publication of a fascinating book that will appeal to those focused on the tobacco industry, those with specialized interests that include but transcend tobacco, such as architects, historians, economists, town planners and sociologists, and those simply possessed by a natural curiosity: The Tobacco Warehouses of Thessaloniki: The Architectural Heritage of Tobacco During the 20th Century.
Indeed, if it is placed in reception areas, visitors might be tempted to slip this book into their briefcases as they leave. I say this because while the book’s title is somewhat formal—its contents are based largely on an academic study—it can be entertainingly educational—for example, when the basement of a warehouse designed in 1956 and completed in 1959 is described as having been designated for use as an air raid shelter under the applicable regulations of that time.
The book, which is in Greek and English, is in A4 format and, with 450 pages, weighs in at 1.6 kg (so only the more muscular visitors will be able to slip it into their briefcases).

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Following forewords by Nikos Allamanis, who is president of the board of directors of the Hellenic Association of Tobacco Processing and Trading Industries (HATPTI) and well known to readers of this magazine, and by Olga Traganou-Deligianni, architect emeritus of the Ministry of Culture, the book is divided into chapters on the historical background of Thessaloniki and Greece’s leaf processing and global trading industries; the development of the necessary warehouses and processing facilities; an architectural analysis of those buildings; and, by far the largest chapter, illustrated descriptions of those buildings, their ownership and the ways in which they were used.
The book is worth reading, or just dipping into if you’re in a reception area, simply for the history it provides about an industry that played a huge role in the economy of Thessaloniki—for a long time the main port for Greek tobacco exports—and Greece as a whole. Some of the history will be familiar to many readers: the boost given to the industry by Greece’s accession in 1981 to what was then the European Economic Community and the blow that was delivered to that industry in 2006 with the EU’s changes to its agricultural subsidies. Meanwhile, some of the history will be familiar, I should imagine, only to those with a close association with the Greek tobacco industry. For instance, the fact that it was the first wave of warehouse development, which occurred during the period from 1923–1939, that turned Thessaloniki into the most important Greek tobacco center. But some references will surely be new to all but a few. Apparently, between 1573 and 1589, two French importers grew tobacco in the suburbs of Thessaloniki.

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The Greek tobacco industry was built by a large number of family businesses that formed and were supported by regional associations. In such a competitive environment, what had been labor-intensive operations increasingly became mechanized, and, gradually, consolidation reduced the numbers of both businesses and associations. The industry changed from being a large number of small enterprises to a small number of large enterprises with the inevitable result that many warehouses became surplus to requirements.
And in this regard, while the book is of much historical significance, more importantly perhaps, it tells of a living history in which those fighting to preserve an important industrial heritage seek to rally support from citizens, warehouse owners and government institutions. The authors of the study on which the book is based, architects Sofia Gkouvousi and Spiridon Tavlikos who were supported and helped by the HATPTI, describe 88 warehouses in Thessaloniki, some of which no longer exist, some of which are in need of redevelopment and some of which have been reconfigured already to provide such things as commercial and office space, craft units, hotels and storage.
Is it worth the effort? Would it not be better to pull down the old and build anew? Having wandered through the book and some of the streets on which those warehouses stand, I would have to come down on the side of preservation where this is practical. For one thing, I would guess that the damage caused to the environment in reconfiguring a building would generally be less than demolishing and rebuilding. But there’s more to it than that. The operation of those warehouses not only provided work opportunities, social cohesion and economic prosperity, but their design and style also heavily influenced the buildings around them and therefore provide a link and a signpost to the past, a solid grounding of the present and perhaps even a pointer to the future.
The Tobacco Warehouses of Thessaloniki: The Architectural Heritage of Tobacco During the 20th Century is published by University Studio Press.
George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit,have earned him a loyal following among Tobacco Reporter’s readers.

March 1, 2020
A question of customs
A Bulgarian member of the EU Parliament has asked the Commission whether using an external company for loading and unloading excisable goods for the purpose of making customs checks constituted a breach of its regulations.
In a preamble to two questions that are due to be answered by the Commission in writing, Angel Dzhambazki said that, in Bulgaria, it was the practise for Customs Agency staff to be present at the loading and unloading of excisable goods, following which a report was filled out. ‘However, most consignments of freight are subject to a follow-up check at the customs control points located at border crossings,’ he said.
‘Under Regulation (EU) No 952/2013 of 9 October 2013 laying down the Union Customs Code, responsibility for the follow-up check and for loading/unloading lies with the Customs Agency, but at the Kalotina customs control point the Bulgarian authorities refuse to carry out this work, thus obliging carriers to hire an external company to do it.’
Dzhambazki then asked:
1. ‘Is the Commission aware of this problem?
2. ‘Does the Commission consider that using an external company for loading/unloading for the purposes of customs checks constitutes a breach of Regulation (EU) No 952/2013?’
January 24, 2019