US SMBs Squeezed By Supply Chain Delays, Higher Rates

Small- to medium-sized businesses (SMBs) in the U.S. are trying to recover from the pandemic, but long waits and high costs for merchandise deliveries might stand in the way, The Wall Street Journal (WSJ) reported.

SMBs end up fighting over space in the lessening amounts of cargo available on ships from Asia, with companies having to pay around three times the going freight cost, brokers and cargo owners told WSJ.

This comes after big names like Walmart and Amazon underwent a mad dash to restock to combat the rising demand from a U.S. populace largely vaccinated and out in public again, according to WSJ.

American companies have also faced other challenges, such as rising costs for products, as well as a shortage of workers, WSJ reported.

That has come down particularly hard on SMBs, which often don’t have the same resources to absorb the changes in the global economy and lack the leverage to negotiate lower prices. Container ship operators said they don’t think the situation will improve in the short term either, as retailers have begun booking cargo space for the holidays at the year’s end as early as June — three months earlier than they usually do, according to WSJ.

This has made it more difficult to get ships, SMB owners told WSJ. Eram Siddiqui, the owner of New York-based travel bag and accessory retailer Hudson + Bleecker, said it is increasingly costly to do so, with containers that used to go for $3,500 to $4,500 now going for $17,000.

PYMNTS has reported on the issue before, writing that the number of factors affecting SMBs included a global container imbalance, port disruptions from the pandemic and a supply-demand curve still affected by the past year’s events.

The Global Trade Review (GTR) pointed to the Drewry World Container Index, which hit a record high of $6,957 in June. This has led to some companies saying they’ll simply avoid long distance trade and pursue other options like sourcing domestically.