Iran war makes big dent on small businesses in US

NEW YORK — The Iran war is making life more difficult for small business owners across the United States, who are grappling with shipping complications, higher costs and consumers tightening their grip on their wallets.

A shoe designer struggles to import shoes from Vietnam; a pistachio grower has millions of dollars worth of pistachio exports sitting in the water; and a home landscaper in Kansas City stockpiles fertilizer as prices skyrocket.

Small business owners say the severe supply chain disruptions during the pandemic were worse — but they fear if the Iran war stretches on for months, it might start to come close.

"The costs are rising, the routes are changing, and capacity is tightening," said Brandon Fried, executive director of the Airforwarders Association, a trade group for US companies that move cargo through the supply chain on all modes of transport.

"It's all happening at the same time, and that's a perfect storm for small businesses," he said.

The US is the world's largest exporter of pistachios, followed by Iran, according to the US Department of Agriculture.

At Nichols Farms in Hanford, California, chief operating officer Jared Lorraine said exports make up about 50 percent of the pistachio business, with shipments bound for Europe, China and, increasingly, the Middle East.

The effective closure of the Strait of Hormuz has made deliveries to several clients impossible. When the war started, he estimates about $5 million worth of pistachios got stranded in the water.

"While much of the public attention has been focused on oil, which is significant, really, the destruction of the food system is equally as serious," he said.

Matthew Tran, founder of Los Angeles-based footwear brand Birchbury, said the conflict has driven up shipping costs. The company makes minimalist shoes in Vietnam and ships to customers across the US, the United Kingdom and Australia.

Tran typically pays about $3,500 to ship a container from Vietnam, but costs have doubled to about $7,000 since the war began, as shippers reroute and face higher insurance costs. Delivery times have also increased by three to four weeks.

"Even though it doesn't seem like it would directly affect me because I'm going from Vietnam to America, it does affect me when there's more congestion," he said.

Supply chain disruption was worse during the pandemic, but he is worried about how long the war will last.

Jake Wilson, owner of Top Class Lawn Care in Kansas City, Missouri, maintains nearly 400 lawns across the city. The closure of the Strait of Hormuz has upended fertilizer supplies, as the Middle East accounts for almost 30 percent of global exports of major fertilizers.

Within days of the war's outbreak, two suppliers told him to expect price increases and advised placing orders early. Rising prices are a concern because about 70 percent of his clients lock in annual lawn care rates and prepay at the beginning of the year.

Wilson said he wants to avoid returning to customers midyear to request higher payments because of rising fertilizer costs. "It's on me to try to get out ahead of it, the best I can, so I could still try to be profitable while keeping prices where I quoted at the beginning of the year."

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