According to a report by CNN on September 20th, due to various factors such as the conflict in Iran and extreme weather conditions, the costs for American businesses have risen, and supply chains have become more volatile. Many businesses are feeling that their current situation is even worse than during the COVID-19 pandemic.
Jeff Vojta is the CEO of Dilworth Coffee, a company specializing in coffee roasting and distribution. In 2024, the company faced a shortage of Brazilian coffee, leading to coffee futures prices reaching historical highs. The following year, U.S. President Trump introduced global tariffs, which further pushed up coffee prices.
This year, a war broke out in Iran, followed by the "super El Niño," which brought new uncertainties to coffee production in Vietnam and Brazil.
"Shipping is being hampered, containers are in short supply, coupled with the tense situation in the Red Sea leading to rising transport costs and fertilizer prices surging upward. We're currently facing a chaotic situation unlike anything we’ve encountered before," said Wojtas. "The uncertainty is simply too much."
In various parts of the United States, business owners from different industries have said that they are facing similar difficulties.
Earlier this month, a monthly survey released by the US Institute for Supply Management attracted attention. In this survey, several corporate executives compared the current business environment with that during the COVID-19 pandemic. Their conclusion was that conditions were actually better during the COVID-19 period.
The dramatic fluctuations in the supply chain and extremely unstable prices make it difficult for these American companies to develop business plans. And American consumers, who are already suffering from inflation, will also find it hard to accept further price increases.
"Without a doubt, this problem is more serious than the COVID-19 period." said Jack Buffington, Director of Supply Chain Projects at Denver University. "This is fundamentally an energy issue, entirely different from before.”
The Trump administration has always tried to describe the economic impact caused by the war with Iran as a temporary phenomenon, stating that once the war ends, inflation will quickly decline. However, the severe supply chain problems faced by American companies indicate that even if the war with Iran suddenly ends tomorrow, inflation problems will not disappear easily.
Reports indicate that high fuel and shipping costs have begun to affect other sectors of the economy. After excluding fluctuations in energy and food prices, the U.S. core inflation rate saw its largest increase since April last month. Service prices are also rising, and once service prices rise, it is usually difficult to bring them down again.
Due to the ongoing escalation of conflicts in the Middle East, coupled with continued attacks by Ukraine against Russian refineries, the price of diesel in the United States has doubled since March. Even if the war in Iran ends, Russia's ban on diesel exports will not be lifted, and the super El Niño phenomenon and other extreme weather events will not cease as a result.
Meanwhile, the Houthi forces in Yemen have become active again, and Somali pirates are making a comeback in the Gulf of Aden.
"I have been in the logistics industry for 25 years, and I have never seen such a terrible situation," said Ryan Petersen, CEO of logistics and supply chain software platform Flexport. Due to shipping companies having to detour around the African continent to avoid the Houthi rebels and Somali pirates, global shipping capacity has decreased by 15% this year.
In the ISM survey, one respondent described the current supply chain situation as a “more severe and complex crisis than during and after the COVID-19 pandemic”, which is particularly noteworthy.
In 2020, container ships often had to wait outside the ports for several weeks before they could enter the harbor. At that time, the global supply chain came close to freezing up, and it took some time for it to recover. Today, the problem faced by American companies is that the supply chain is not just simply “stopping down”, but is subject to frequent fluctuations; prices also vary, sometimes rising, sometimes falling, and then soaring again.
"The supply chain is still operational now, but it's more expensive, harder to navigate, and there’s greater uncertainty compared to the COVID-19 period," said Sean Brownlee, CEO of Ravenox Company.
“COVID-19 pandemic was naturally terrifying at the time, but now the pressure is even greater.” Walter said. “This situation we have never encountered before. How long will diesel prices above $6 per gallon continue? How should these costs be transferred to consumers? It's difficult because our customers are facing the same problems we are."
