US Supply Chain Crisis Deepens as Diesel Prices Surge

American businesses are dealing with a difficult mix of rising fuel costs, shipping delays and unpredictable demand, creating a supply chain environment that some executives say is even harder to manage than the disruptions seen during Covid. The current supply chain crisis is being driven by several problems at once, leaving companies with higher expenses and less certainty about what comes next.

Fuel Costs Add to Business Pressure

Diesel prices have doubled since March as the war in the Middle East and attacks on Russian refineries continue to disrupt energy markets. For companies that depend on transportation, the increase has added another major expense to an already strained supply chain crisis.

The effects are moving beyond fuel itself. Higher transportation and shipping expenses are contributing to broader price increases, while core inflation recently recorded its largest monthly increase since April. Some of those higher costs are reaching services, where prices often remain elevated even after the original pressure fades.

Shipping Routes Face More Disruptions

Fuel is only one part of the problem. Shipping companies are also dealing with attacks in the Red Sea and Gulf of Aden, forcing vessels to take longer routes around Africa. According to Ryan Petersen, CEO of logistics company Flexport, those diversions have reduced global shipping capacity by 15% this year.

Weather has created another obstacle. Back-to-back typhoons disrupted operations at Shanghai’s port, the world’s largest container port, causing additional delays for companies waiting for goods and materials.

Russia’s diesel export restrictions are another factor. The ban has removed about 12% of the world’s seaborne diesel supply, meaning that even an improvement in the Iran conflict would not immediately resolve every part of the supply chain crisis.

Businesses Struggle to Plan Ahead

The uncertainty is forcing companies to rethink how far ahead they can plan. Sean Brownlee, CEO of Ravenox, said small businesses have been absorbing higher costs but are now facing increasing pressure.

For many companies, the biggest challenge is not simply the higher price of a product or shipment. It is the difficulty of knowing what those costs will look like weeks or months from now.

That uncertainty has also changed purchasing decisions. Businesses are trying to avoid carrying excessive inventory while still protecting themselves from further shortages and price increases.

Why This Feels Different From Covid

The current supply chain crisis differs from the disruptions experienced during the pandemic. In 2020, major bottlenecks caused ships to sit outside ports and left retailers struggling to keep basic products available.

Today’s system is still functioning, but it is far less predictable. Prices and shipping conditions can improve temporarily before deteriorating again. Jack Buffington, director of the supply chain program at the University of Denver, described the current situation as an energy problem that differs fundamentally from Covid.

Coffee Distributor Faces New Challenges

Jeff Vojta, CEO of Dilworth Coffee, illustrates how the uncertainty is affecting smaller companies. His business once planned coffee purchases 12 to 24 months ahead. Now, it is working within a much shorter three-to-six-month window.

Weather concerns surrounding coffee crops in Brazil and Vietnam have added to the company’s uncertainty, while higher shipping expenses and tighter cash flow have limited how much inventory it can hold.

Vojta said monthly sales that previously moved by around 5% can now fluctuate by as much as 20%. With diesel prices above $6, businesses and customers are both facing difficult choices.

The broader supply chain crisis shows how several unrelated disruptions can combine to create lasting pressure. Even if one major source of uncertainty improves, companies may continue dealing with higher costs, limited capacity and unpredictable demand.