US businesses say supply chain chaos is now worse than during Covid

American business owners across multiple industries say disruptions to supply chains and pricing are now harder to manage than during the pandemic, as a Brazilian coffee crop failure, US tariffs, the Iran war and a “Super El Niño” combine to squeeze margins, David Goldman reports for CNN.

Jeff Vojta, chief executive of North Carolina coffee distributor Dilworth Coffee, said shipping disruptions, container shortages, Red Sea-related costs and higher fertiliser prices had created a period of disruption unlike anything he had seen in three decades in the business.

A closely watched Institute for Supply Management survey found several business leaders describing current conditions as worse than the pandemic – with one respondent calling it a bigger crisis than Covid and its aftermath.

Jack Buffington, who directs the supply chain programme at the University of Denver, said the current problem was fundamentally an energy crisis, and entirely different in character to 2020's shortages.

The Trump administration has framed the Iran war as a temporary shock that will reverse once resolved; Trump said on Labor Day that oil prices would fall “precipitously” and “quickly” once the war was won, pointing to a brief reopening of the Strait of Hormuz in June, when petrol prices dropped below $4 a gallon.

House Speaker Mike Johnson made a similar case this week, linking a resolution in the Strait to lower fuel and grocery costs. But analysts note the picture has since worsened: core inflation, which excludes food and energy, rose last month by the most since April, diesel prices have doubled since March amid the wider Middle East war and Ukrainian strikes on Russian refineries, and back-to-back typhoons shut the port of Shanghai – the world's largest container port – for two weeks, causing delays that persist.

Russia's diesel export ban has also cut 12% of global seaborne diesel supply, while renewed Houthi and Somali piracy activity has forced shipping companies to reroute around Africa, reducing global shipping capacity by an estimated 15% this year, according to Flexport chief executive Ryan Petersen, who said in 25 years in logistics he had never seen conditions this bad.

Sean Brownlee, chief executive of rope and leash manufacturer Ravenox, said small businesses had absorbed costs for as long as they could and were now under acute pressure; having built his US manufacturing business after a 25-year career in the Marine Corps, he said what the industry needed most was simply predictability.

Vojta said his team now sources coffee just three to six months ahead, against 12 to 24 months previously, while thinner cash reserves mean the company can no longer stock as much inventory as before.

Where his monthly sales volumes once fluctuated by around 5%, they now swing by as much as 20%, a volatility he said was more stressful to manage than the pandemic itself, even as customers – dealing with their own cost pressures – have little appetite for further price increases.