US businesses are once again dealing with serious disruptions across the supply chain, but the latest problems look different from the shortages seen during the Covid pandemic. Rising diesel prices, shipping delays, trade disruptions and unpredictable demand are combining to create a difficult operating environment for companies of all sizes.
Diesel Prices Add to Rising Costs
One of the biggest concerns for businesses is the sharp increase in diesel prices. Prices have doubled since March as the war in the Middle East and attacks on Russian refineries have affected energy markets.
The increase matters well beyond the transportation industry. Companies that move products by truck, ship or other forms of freight are paying more to transport goods, and those higher expenses can eventually reach consumers.
Core inflation has also recently recorded its biggest monthly increase since April, adding to concerns about the broader impact of higher business costs.
Global Shipping Routes Remain Under Pressure
Transportation companies are also facing major challenges on international shipping routes. Attacks in the Red Sea and Gulf of Aden have pushed many vessels to avoid those waterways and take longer journeys around Africa.
Ryan Petersen, CEO of logistics company Flexport, said these diversions have reduced global shipping capacity by 15% this year.
Weather has contributed to the disruption as well. Back-to-back typhoons affected operations at Shanghai’s port, which is the world’s largest container port. Delays at such a major shipping hub can have consequences for companies waiting for raw materials, components and finished products.
Russia’s Diesel Restrictions Create Another Problem
Energy supply is adding another layer of uncertainty. Russia’s restrictions on diesel exports have removed roughly 12% of the world’s seaborne diesel supply.
That means even if tensions surrounding the Iran conflict ease, businesses may not immediately see transportation and fuel markets return to normal. Several separate disruptions are affecting the system at the same time, making it harder for companies to predict future costs.
Small Businesses Are Feeling the Squeeze
Smaller companies are particularly vulnerable because they often have less financial flexibility to absorb sudden increases in operating expenses.
Sean Brownlee, CEO of Ravenox, said small businesses have been absorbing higher costs but are now facing growing pressure.
Companies are also changing the way they manage inventory. Instead of making purchasing decisions far in advance, some businesses are shortening their planning windows because prices, transportation conditions and customer demand have become harder to predict.
Coffee Business Highlights the Uncertainty
Jeff Vojta, CEO of Dilworth Coffee, said his company has also had to change its approach. The business previously planned coffee purchases 12 to 24 months ahead. It is now working with a much shorter three-to-six-month planning period.
Coffee production in Brazil and Vietnam has raised additional concerns, while more expensive shipping and tighter cash flow are limiting how much inventory the company can keep.
Vojta said monthly sales that once typically changed by about 5% can now fluctuate by as much as 20%. With diesel prices above $6, both businesses and consumers are being forced to adjust.
A Different Kind of Supply Chain Disruption
The current situation is not identical to the supply problems experienced during Covid. During the pandemic, major bottlenecks left ships waiting outside ports and made it difficult for retailers to obtain everyday products.
Today’s challenge is more unpredictable. Energy shortages, shipping diversions, weather events and changing demand are occurring together, creating an environment where companies can struggle to plan even when goods remain available.
Jack Buffington, director of the supply chain program at the University of Denver, said the current situation is fundamentally an energy problem rather than a repeat of the pandemic-era disruptions.
For businesses, the biggest challenge may therefore be uncertainty itself. Even if one disruption improves, higher fuel costs, limited shipping capacity and changing customer demand could continue creating pressure across the supply chain.
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