#018 - The Logistics Bottleneck: Vertical Integration and the Global Shipping Giants

We founded Meiero following an entrepreneurial framework: First identifying a large and growing market. Then a niche through which we would have a competitive advantage. Then, solve someone's problem - through hard work, best practices, governance, technology, and capital. 

And there was a nice context for us to focus on specialty coffee from our region, Minas Gerais, in Brazil. We grew up with an abundance of coffee and a lack of capital. 

Supply of coffee never seemed to be a problem. Once we find the buyers, our problems should be solved.

We were also fortunate to speak with very professional people; everything seemed easy: producers, brokers, roasters, warehouse operators, lawyers, tax planners, notaries, accountants, landlords, freight forwarders, partners and even the banks. 

We gradually learned that each point in the value chain was very sensible. Everyone is an entrepreneur and an artisan! 

In this complex value chain, Maersk was the only resemblance to the corporate world. We chose Maersk due to its perceived resilience and professionalism. But that may have been the most dangerous point so far. 

We are not in a position to criticize publicly.

But we do want to create a corporate culture of intellectual curiosity. That is a healthy way to identify opportunities and improve a little bit everyday.   

So, we dove deeper into the maritime transportation. 

First, coffee is not a commodity transported in bulk. Coffee is a unique ingredient, transported in containers. Each container holds 320 bags, each weighing 60 kg. 

The container shipping business is dominated by five companies, which control about 70% of the global market. These are MSC, Maersk, CMA CGM, COSCO, and Hapag-Lloyd.

Shipping is a business of "scale", which has undergone consolidation. If you own a ship that carries 24,000 containers, your cost per "box" is much lower than someone with a ship that carries 5,000. So, the big players bought the medium players until only the giants were left. To keep things efficient, they formed Alliances where they share space on each other's ships to ensure no vessel sails half-empty.

Interestingly, "new" players aren't just shipping companies. During the supply chain chaos of the early 2020s, they grew tired of waiting for space, so they started leasing their own ships.

The value proposition has shifted: Maersk and CMA CGM turned from "sea companies" to "full logistics integrators". Theoretically, instead of just receiving the box at the port, they receive it at the factory in Vietnam and handle the truck, the ship, customs, and the warehouse in Germany. They are trying to turn a commodity service into a "concierge" experience.

Zooming in on Brazil reveals an even more concentrated market. 

Market Share:

Why the difference? 

We believe this is due to lower density, greater distances, and exposure to commodities. Brazil exports massive amounts of animal protein and fruit, which require Reefer (refrigerated) containers. Indeed, MSC and Maersk invested heavily in this specialized equipment decades ago.

Furthermore, Maersk has a "cheat code" in Brazil called Aliança. Because Aliança is a Brazilian-flagged company, it dominates shipping between Brazilian ports. This means Maersk can pick up a container in Manaus, sail it to Santos, and put it on a global ship—all within the same corporate family. It’s a level of vertical integration that’s much harder to pull off in the more fragmented global market.

In short, Brazilian exporters face high freight costs and potential disrespect. 

Weekly Highlights:

• Coffee Futures KC Price in NY: -4.01% weekly, closing at 286.10 cents/lb.

• Coffee Price in Brazil's B3 in USD: -3.85% weekly, closing at 364.50 USD per 60kg bag.

• BRL/USD fx rate: +0.39% weekly (BRL weakened).

• Proxy of 20' container freight prices from Santos to Rotterdam: down ~3% weekly.

• Starbucks Q1 FY26 Results: Global comparable store sales rose 4%, driven by a 3% increase in transactions, signaling a recovery in footfall despite consumer caution on ticket size.

• China Market Surge: Starbucks reported a 7% comp growth in China, fueled by higher transaction volume as the brand competes with Luckin Coffee through smaller formats and delivery speed.

• Record Global Surplus Forecast: Analysts at StoneX projected a 10-million-bag global coffee surplus for 2026, driven primarily by a massive production recovery in Brazil and Vietnam.

• Keurig Dr Pepper Revenue Growth: The U.S. coffee segment reported a 3.9% revenue increase, though performance was driven by pricing power as brewer and pod shipment volumes saw declines.

• Consumer Shift to Cold & Functional: Earnings reports from major CPG giants reveal a definitive trend toward "all-day" beverages, with younger consumers treating coffee shops as beverage hubs rather than morning-only stops.

• EUDR Regulation Uncertainty: The industry remains on high alert regarding the evolution of European Union Deforestation-Free Products Regulation (EUDR) rules, which are expected to impact supply chain certifications throughout 2026.

• U.S. Inventory Depletion: Green coffee stocks in the U.S. hit historically low levels (below 1 million bags in early 2026), making the market highly sensitive to the arrival of the new Brazilian harvest.

• JDE Peet’s European Performance: Reports highlight extreme price sensitivity in Europe, with private labels and discount channels gaining significant ground as shoppers push back against inflation.

• Vietnam Production Recovery: Following adverse weather in 2025, Vietnam’s production is forecast to grow by nearly 10% in 2026, contributing to the replenishment of global robusta stocks.

• Retail Ready-to-Drink (RTD) Growth: Starbucks' Channel Development (grocery/RTD) grew 19% this quarter, underscoring RTD as the strongest supplemental consumption channel outside of traditional cafés.

  
  

Production Outlook: Brazil’s Conab (surveyed February 2026) maintains a record forecast of 66.2 million 60-kg bags, a 17.1% increase from 2025, supported by the positive biennial cycle and favorable weather. Private sector estimates remain more aggressive; StoneX recently projected the 2026/27 harvest at 75.3 million bags, while Marex and Sucafina forecasts range between 75.4 and 75.9 million bags, citing structural improvements and a significant recovery in Robusta (Conilon) output.

Meiero examines the high concentration of the maritime industry, where five companies control 70% of global container trade, leading to a "concierge" logistics shift that impacts specialty coffee costs. We analyze the unique Brazilian context, where carriers like Maersk leverage "cheat codes" like the domestic-flagged Aliança to achieve vertical integration across the territory. This technical deep-dive explains how Brazilian exporters navigate higher freight costs and limited competition while managing the delicate transport of unique ingredients—320 bags per container—across a consolidated global supply chain.