Political Risk Management pt. 3

This is part three in a series of Political Risk Management and Trade Development blogs illustrating how current events impact your business and its future.
We’ll discuss:

• Doing more with Less – Maybe not the time to implement new automation, but you can still streamline the supply-chain process.
• Historically – what’s worked in the past?
• Opportunity - to come out on top
• Disaster Recovery

Doing more with less –
A couple years ago I published a short blog about Lean Logistics - seeing things in a different light - and suggested companies focus on their logistics/supply chain functions and map out their value process. In case LEAN is new for you, check out this 10-Step process available on Amazon it’s a really great read focused on LEAN in the Supply Chain.
You’ve no doubt been looking at your budget and shrinking checkbook for any available funds to keep the lights on rather than implementing that automated process you’ve been saving years for. Reviewing your logistics/supply chain functions to find extra sources of income or create extra sources of income may be exactly the remedy your business needs.
Small and mid-sized businesses may not garner the huge freight discounts larger companies do, however the other side of this pandemic will have carriers, forwarders and 3pl’s blowing up your phone offering what they can to get you, or keep you in their book of business. 
So here are some key points for negotiation to keep in mind when leaning up your supply chain:

• Packaging Supplies

Many companies will offer free of charge boxes and cushioning materials for your products. UPS and Fed Ex will provide thermal labels and a printer for your shipping needs.

• Free analytic software

Many forwarders and 3pl’s have developed robust software that not only tells you where your freight is and when it will get there, but also includes specialized information on target countries you are interested in exporting to. I have seen some analytic software also include denied party screening and hazardous materials regulations.

• Fixed rates

I have a few small clients who import roughly 100 containers a year and have been highly successful negotiating carriage rates that are fixed for the entire year without a contract.  Fixed costs are an excellent tool especially when you consider market fluctuations, peak season surcharges and the like.
Historically? –
My favorite topic! Like really? We have been through a pandemic before in the modern time?
Bottom line, there is nothing in our recent history that we can rely on to get out of the situation we are in now, probably why many in the media refer this period as “challenging”.
One thing we all know for sure is that a recession will immediately follow this pandemic and we are well versed and arguably well-positioned as a country to emerge right where we left off. 
There have been more than 40 recorded recessions in the United States, and each is unique. Some last for months; others last years. The Great Depression was the worst in U.S. history. The financial crisis of 2007-2009 was the worst of many of our lifetimes. Each happened for different reasons, and are typically difficult to predict, except for this one... you know it’s coming, so perhaps its time to move from risk management to disaster recovery.
Disaster Recovery –
When disaster hits, your first concern is likely how to keep your business running as normal as possible. You’re likely doing that now. 
Recessions, the key to surviving them is by reducing your expenses, working hard and above all… stay calm. History has taught us that preparation was the key to survive a recession, for many there simply is no contingency plan. My last two installments in this Risk Management series allude to analyzing alternative scenarios encompassing the crystal ball’s  view into players like President Trump, the Democratic alternative (it is an election year), and China who arguably is set to profit from this global pandemic.
The underlying message here is that you are about to enter into a high-pressure exercise in change management.  You’ll need to be flexible and ready to adjust to come out on top. Many financial advisors will tell you to get rid of personal guarantees, accumulate cash, make sure to pay your taxes and downsize everything… now! Other economists will tell you that with or without the pandemic, a financial recession was coming anyway… Covid-19 just brought it here faster.  Personally, I do not believe we were heading to a recession, but that’s for another conversation.
Factors to consider:

• Donald Trump’s economy
• Democratic nominee (remember it’s an election year)
• China

President Trump’s administration has arguably created a robust economy, can he do it again? It’s an election year and the Democratic leadership longs for a continuation of the Obama-era policies. China… the 300lb elephant in the room. China has for decades worked to position themselves as an economic leader and by all measures is eating our lunch. Is your business poised to compete head to head with a Chinese competitor?
These are all factors to discuss. My company employs this very same forensic approach for its clients in order to anticipate issues before they become issues. How can we help you?