FXT Financial Focus (Asia-Pacific 09/10)Hormuz Shipping Pressure Raises SME Risks

The decline in shipping efficiency through the Strait of Hormuz is spreading from energy and logistics to business operations. A recent UN Trade and Development report warned that persistently high energy, transport and financing costs could force SMEs to cut production, delay investment or even leave existing supply chains. Even if global trade later recovers, some firms may struggle to re-enter the market.

SMEs are more sensitive to rising costs, as higher energy bills, freight rates and insurance expenses directly squeeze margins. Large companies usually have broader supplier networks, sales channels and financing options, allowing them to adjust procurement and inventories. Smaller firms have less bargaining power and thinner cash reserves, making them more vulnerable when delivery times lengthen.

This gap existed even before the latest shipping pressure. World Bank enterprise surveys from 2023 to 2025 show that import compliance costs in developing economies accounted for about 19.4% of directly imported goods for small firms, 17.5% for medium-sized firms and 14.7% for large companies. In developed economies, the figures were only 8.3%, 7.8% and 7.6%, respectively, highlighting the heavier burden already faced by SMEs in developing markets.

In developing economies, 48% of small firms view access to finance as at least a moderate business obstacle, compared with 38% of large companies. OECD data show that across seven developing economies with complete time series, average SME lending rates reached 15.8% in 2024, versus 10.3% for large firms. Longer shipping and payment cycles increase working-capital needs, putting greater pressure on smaller companies cash flow.

UN Trade and Development also warned that a recovery in trade volumes does not mean all businesses will recover equally. Historical surveys show that small firms typically suffer larger sales declines during major external shocks and have weaker recovery capacity. If some businesses exit for an extended period, orders, customers and supply-chain resources may increasingly shift toward larger companies, leading to higher market concentration even as trade rebounds.

The impact could gradually spread to investment and employment. Micro, small and medium-sized enterprises account for around 70% of global employment and 50% of GDP. If logistics and financing costs remain elevated, businesses may continue limiting inventories, cutting capital spending and slowing hiring. Policy support therefore needs to improve trade facilitation while expanding trade finance and working-capital assistance to help SMEs maintain supplier and customer relationships.

From FXTs perspective, pressure on shipping through the Strait of Hormuz now extends beyond short-term logistics costs. The key issue is whether SMEs can remain integrated into global supply chains. Even if shipping efficiency and trade volumes gradually recover, continued weakness in investment, employment and financing would suggest that business pressure has not fully eased. The longer these conditions persist, the more resources may shift toward larger companies, making it harder for SMEs to re-enter global value chains.

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