The shipping crisis small firms can’t afford

Six months after the military escalation surrounding the U.S.-Israel-Iran war brought traffic through the Strait of Hormuz close to a standstill, a new fault line is emerging in global trade between companies large enough to withstand disruption and those at risk of being pushed out. 

The scale of the shock has made that divide harder to ignore. Transit through a waterway that normally carries roughly a quarter of global seaborne oil trade fell by about 95%, while tanker freight rates, marine fuel costs and war-risk insurance premiums surged, according to UN Trade and Development (UNCTAD).

For smaller businesses, the consequences can be particularly severe. In its September 2026 report Smaller Firms, Greater Risks, UNCTAD identifies an “exclusion effect” in which rising transport, energy, insurance and financing costs can ultimately push small and medium-sized enterprises out of international value chains. SMEs account for around 90% of businesses worldwide, 70% of employment and half of global GDP, but often have fewer financial reserves, suppliers and alternative markets to fall back on when disruption persists.

The danger, in other words, is not simply less trade. It is trade conducted by fewer firms.

The price of avoiding a chokepoint

Hormuz is the latest pressure point in a shipping system already strained by more than two years of disruption. Houthi attacks on commercial vessels in the Red Sea, launched in late 2023 amid the war in Gaza, led shipping companies to divert vessels away from the Suez Canal and around the Cape of Good Hope, adding thousands of miles to voyages between Asia and Europe.

The prolonged diversions showed how disruption at one chokepoint can consume shipping capacity worldwide. UNCTAD’s Review of Maritime Transport 2025 found that rerouting lengthened voyages, increased fuel consumption and raised operating costs, while container ship demand rose 7.1% in 2024 as vessels spent longer at sea.

For businesses, longer journeys also leave goods unavailable for sale, require larger inventories and tie up capital for longer.

The advantages money can buy

Businesses can protect against unreliable supply chains with larger inventories, backup suppliers and alternative production, but resilience requires capital.

The Organization for Economic Co-operation and Development’s (OECD) Supply Chain Resilience Review 2025 identifies redundancy, flexibility and responsiveness as central to firm-level resilience. Safety stocks, backup suppliers and excess capacity all require investment in resources that may sit unused, while severe disruptions can require companies to quickly alter procurement, production and distribution.

Diversification is expensive as well. The OECD finds that dual sourcing requires higher fixed costs, while globally connected firms proved more resilient during the pandemic partly because they could shift production between locations. Those options are far less available to a business operating with one principal supplier, a small cash reserve, and limited access to credit. UNCTAD’s September 2026 analysis finds that SMEs generally have fewer suppliers, markets and financing sources over which to distribute a shock. 

A chokepoint crisis can consequently turn scale into something more consequential than an advantage in efficiency. A large company can pay to hold extra stock, negotiate with multiple suppliers or absorb months of expensive transport while waiting for conditions to improve. A smaller competitor facing the same disruption may instead have to reduce production, postpone investment or stop serving an overseas market altogether.

When a shipping delay becomes a cash problem

The longer a maritime disruption persists, the more a logistics problem becomes a financing problem. Importers may pay for merchandise weeks before it arrives, while exporters wait longer for payment. Extra days at sea therefore leave businesses financing goods for longer, making access to liquidity, and working capital particularly important.

Hormuz has made that pressure immediate. More than 100 days of disruption had accumulated by late June, according to UNCTAD, with consequences for transport, food and public finances expected to persist even as vessel traffic resumed.

The shock also travels well beyond businesses whose cargo passes directly through the strait. A 2026 World Bank analysis modeled a Hormuz disruption across 80 countries and found that more than 90% of workers would experience declining real incomes in 61 of them. Textiles, agriculture, and plastics were among the sectors particularly exposed as higher transport and energy costs spread through production networks.

For a smaller exporter, the danger comes from accumulation. One expensive shipment may reduce a margin, but repeated delays can require larger inventories and more borrowing until an overseas customer becomes uneconomical to serve.

The concentration risk

Reopening Hormuz would not necessarily reverse the competitive consequences of its disruption.

UNCTAD warns that SMEs pushed out of international value chains may remain excluded even after aggregate trade volumes recover. A business that loses a foreign customer or supplier during months of disruption may not regain it when freight rates decline, while larger competitors may retain the business they captured.

There are already signs that international supply networks are becoming more concentrated in other ways. The OECD’s 2025 review found that around 30% of exported products were highly concentrated among a small number of trading partners. Cases in which countries source products from fewer suppliers than are globally available were 50% more common in the 2020s than in the late 1990s.

Hormuz now provides a test of what happens to that trajectory when a major trade artery remains disrupted for months. Freight rates may eventually fall, ships return to familiar routes and aggregate trade recover. But if repeated chokepoint crises leave fewer firms able to compete internationally, resilience in the shipping system may come alongside greater concentration in the trade it carries.