COE Distributing CEO: Soaring Shipping Costs Hit Small Businesses Hard

In his testimony last month before the House Small Business Committee, COE Distributing Chairman and CEO J.D. Ewing highlighted the issue of soaring shipping costs impacting small businesses.

Ewing, who has led COE — a family-owned office furnishings wholesaler based in Fayette County, Pennsylvania — from its modest beginnings to the largest office furniture distributor in the United States, described the severe economic strain caused by skyrocketing shipping expenses.

Ewing detailed how supply chain disruptions have led to an increase in shipping costs. The cost of transporting a container from Asia to the U.S. West Coast has surged from $2,500 in April to more than $8,000, with projections suggesting it could exceed $10,000 as peak shipping season approaches. These skyrocketing costs are intensified by renewed congestion at major ports and disruptions in key maritime routes, such as the Red Sea and the Suez Canal.

In an interview with PYMNTS, Ewing explained how re-emerging supply chain issues have negatively impacted his business in three ways.

“Increased transit times, which wreak havoc on our inventory availability and forecasting,” he said. “Capacity constraints, which further increase lead times on products, put more pressure on our inventory availability and forecasting. Increased costs for ocean freight, which decreases gross margin and bottom-line performance.”

For small businesses like COE Distributing, these rising shipping costs are particularly challenging. Unlike larger firms with greater liquidity and economies of scale, small businesses struggle to absorb or pass on these expenses, which can erode margins and impact competitiveness. Ewing warned that this shipping crisis could soon ripple through the entire economy, driving up prices for manufacturers, distributors and consumers alike.

COE Distributing has operated since 1947, when Ewing’s grandmother started the business in the basement of a tavern. Ewing is a third-generation owner of COE Distributing after taking over the business in 1989 when he was 19. At that time, he was COE’s sole employee and managed multiple roles, including sales, driving trucks, loading products, collecting money, paying bills and learning each position inside and out.

“Most major home furnishings retailers have already instituted surcharges on goods sourced in Asia, which has a direct and immediate impact on the American consumer,” Ewing said. “If the current environment continues, surcharges and/or price increases will be seen on any/all products imported across Asia,” including electronics, clothing, some food products and building materials.

Combatting Supply Chain Challenges

Ewing also touched on additional pressures, including potential tax hikes for pass-through entities and regulatory compliance. He stressed that the immediate and severe impact of increased shipping costs threatens small business viability and calls for urgent policy attention to address these supply chain challenges.

So, what needs to be done to reduce costs and what can the U.S. government do to help small businesses like COE Distributing?

“First, this issue is an ‘all business size’ problem, but small businesses feel greater impact,” Ewing explained. “I believe removing the terror threat in the Red Sea, eliminate the Houthis’ (or any terror group) ability to strike any maritime carrier will allow the Suez Canal to be used for passage, thus reducing transit time, capacity constraints and ocean freight costs.”

The next steps for Ewing include talking more about his testimony and following up with the House Small Business Committee.

“Best case scenario is to eliminate/neutralize the terror threat in the Red Sea region, thus allowing the Suez Canal to be fully utilized by ocean carriers,” Ewing said. “Worst case scenario is to do nothing. Without the Suez Canal reopening, ocean freight will continue to be volatile in availability, timing and pricing.”