Small Businesses Face Rising Costs and Disruptions as Iran War Strains Supply Chains

The Iran war is making life more difficult for small business owners across the country, who are grappling with shipping complications, higher costs and consumers tightening their grip on their wallets. From agriculture to retail, businesses say the combined impact of rising fuel prices and disrupted trade routes is beginning to affect day-to-day operations.

Industry groups warn that the situation is creating mounting pressure. “The costs are rising, the routes are changing, and capacity is tightening. It’s all happening at the same time, and that’s a perfect storm for small businesses,” said Brandon Fried, executive director of the Airforwarders Association.

Exporters are among the hardest hit. At Nichols Farms in California, a pistachio grower and processor, millions of dollars worth of produce has been stranded due to disruptions in the Strait of Hormuz. Chief operating officer Jared Lorraine said about $5 million worth of shipments were caught at sea when the conflict escalated. While some cargo has been rerouted through alternative ports, around $3.5 million remains undelivered.

“A lot of it has just been in limbo,” Lorraine said, adding that the Middle East relies heavily on imported food, making such disruptions significant beyond oil markets.

Manufacturers and retailers are also facing rising logistics costs. Matthew Tran, founder of footwear brand Birchbury, said shipping a container from Vietnam now costs about $7,000, up from roughly $3,500 before the conflict. Delivery times have increased by several weeks due to congestion and rerouting.

“It’s kind of like a traffic jam,” Tran said, noting that even routes not directly linked to the Middle East are affected by wider global disruptions. He also expressed concern that higher fuel prices could reduce consumer spending on non-essential goods such as footwear.

In the services sector, businesses are taking precautionary measures. Jake Wilson, who runs a lawn care company in Kansas City, has begun stockpiling fertilizer after suppliers warned of price increases. The Middle East accounts for a significant share of global fertilizer exports, and supply concerns have pushed prices higher. Wilson said he is placing larger orders than usual to avoid future shortages and cost spikes.

Retailers are also feeling the impact of higher fuel costs. At Abt Electronics in Chicago, co-president Jon Abt said rising fuel expenses for delivery vehicles could force the company to reconsider its free shipping policy. For now, the company is absorbing the additional costs while monitoring market conditions.

Business owners say the current disruptions are not yet as severe as those experienced during the COVID-19 pandemic, but concerns are growing about the long-term effects if the conflict continues. Many fear that prolonged instability could further strain supply chains, increase costs, and weaken consumer demand, creating a challenging environment for small enterprises across the country.