‘Crisis even bigger than Covid’: American business owners are barely getting by - CNN

Jeff Vojta can’t catch a break.

The CEO of Dilworth Coffee in Raleigh, North Carolina, contended with a miserable Brazilian coffee crop in 2024 that vaulted coffee futures to record highs. The next year, President Donald Trump’s global tariffs raised coffee prices even higher.

Then, this year, the Iran war started. And a Super El Niño.

“Between shipping disruptions, the lack of containers, high costs because of what’s going on in the Red Sea and higher fertilizer costs, we have this period of disruption that we’ve never encountered before,” said Vojta, who founded the national coffee distributor more than three decades ago. “There’s just so much uncertainty.”

Around the country, American business owners across myriad industries say they’re in a similar boat. A closely watched monthly survey from the Institute for Supply Management raised eyebrows earlier this month after several business leaders compared the current business climate to the pandemic.

They said Covid was better.

Massive disruptions and price instability are forcing businesses to make impossible decisions. They have no idea how to plan, and their inflation-wary customers are in no mood for more price hikes.

“This is a bigger problem than Covid, for sure,” said Jack Buffington, director of the supply chain program at the University of Denver. “This is completely different. This is an energy problem.”

The Trump administration has tried to frame the Iran war as a temporary economic blip — and once resolved, rebounding inflation will quickly reverse itself. But the historic supply chain struggles that America’s business owners face show why resurgent inflation will not be easily resolved – even if the war miraculously ended tomorrow.

“Oil prices will drop precipitously” when the war with Iran is won, Trump said in a Truth Social post on Labor Day. “It will all happen quickly.”

There’s precedent for that. In mid-June, when the Strait of Hormuz briefly reopened after the United States and Iran signed a memorandum of understanding, gas prices fell below $4 a gallon and oil sank below pre-war levels.

“Of course, gas prices are too high,” Speaker Mike Johnson said in a press briefing on Wednesday. “When we get that thing resolved in the Strait of Hormuz, that will have a direct effect on that, and it will help to bring down grocery costs.”

But much has changed since June. High fuel and shipping prices have started to bleed out into other parts of the economy. Core inflation, which strips out volatile energy and food prices, rose last month by the highest amount since April. And it’s showing up in higher prices of services — costs that typically don’t come down after they go up.

Diesel prices have doubled since March because of the intensifying war in the Middle East and Ukraine’s continued bombardment of Russian refineries.

But shipping costs have also risen because of an increasing number of weather disruptions — including back-to-back typhoons that effectively closed the port of Shanghai, the world’s largest container port, for two weeks and continue to cause significant delays.

Ending the war in Iran — itself an enormously tall task — will do nothing to end Russia’s diesel export ban, which blocked off 12% of the world’s seaborne diesel supply. It can’t improve the weather.

And it won’t reverse the resurgence of the Iran-allied Houthi rebels in the Red Sea and Somali pirates in the Gulf of Aden. Both impediments have forced shipping companies to reroute their ships around the entire African continent to avoid attacks — reducing the amount of global shipping capacity by 15% this year, said Ryan Petersen, CEO of Flexport, a logistics and supply chain software platform.

“I’ve been in logistics for 25 years, and I’ve never seen anything as bad as this,” he said.

Meanwhile, businesses are at the breaking point, said Sean Brownlee, CEO of rope, cord and leash manufacturer Ravenox.

“Small businesses will absorb as much cost as they can until the very last minute,” Brownlee said. “Now we’re feeling acute pressure.”

Brownlee got into the business after a 25-year career in the US Marine Corps to create a US manufacturing company that supports American jobs. Now, the unpredictable environment is threatening his dream.

“This issue really hits home,” Brownlee said of expensive supply chain disruptions. “We just want predictability.”