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Developing a Post-Pandemic Strategy: The Great Export USA Reset

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Developing a Post-Pandemic Strategy: The Great Export USA Reset

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The pandemic disrupted global supply chains and shattered supply-demand norms, spurring a new appetite for US exports.

USA-based companies in many verticals have a unique opportunity to sell abroad in general and more specifically “post-Covid” where a window of opportunity has opened.

The opportunity has developed as many typical developing nations and even some stalwart supplier nations have had difficulty in manufacturing, distribution, and supply chain management.

The demand for consumer items has shown unprecedented growth all over the world, including Europe, Middle East, larger African nations, and certain countries in Asia.

The typical supplier markets of the world have fallen short in delivering timely, competitively priced, and high-quality products, as they had pre-Covid.

That void has been filled by a few American manufacturers and distributors, but the opportunities can easily be expanded to a much larger group of USA-based companies.

The opportunities are out there … but one needs to know where they are, how best to access and how best to export.

The balance of this article and the additional three parts to this series will explore the challenges and even more importantly … create the blueprint for successful export sales business development.

This first article will outline all the major issues to consider when building a successful export program. These concepts will apply to a company new to export or even a more seasoned exporter.

Exports can create significant opportunity for companies seeking expansion of their overseas markets. Keep in mind that 95% of the consumer market lies external to the United States.

Having said that, exports can create certain risks. It is critical to understanding these risks and managing these exposures so that success can be gained. Tied into the successful exporter are creating “Best Practices” which reduce risk and create the best path forward.

Best Practices Summary:

Make sure you are committed to exporting.
Exporting requires funding, resource development and time. Make sure you have budgeted correctly for export business development and are aligned with external resources to provide support.

Depending upon your internal expertise, utilizing third party consultants who excel in this area, would be a prudent decision.

Assess your product’s export readiness.

You need to determine how ready your product is for the export market. This could include formulizations, packing, marking, labeling, ingredient structure, etc.

Keep in mind, that different countries have different rules, that are critical to know, acknowledge and comply with.

Export Data is essential.

Collecting data on exports provides an initial overview of potential markets and insight on where you should focus. Partnering with consultants accessing information, data and statistics on exports is very important. In the USA, the Department of Commerce can be an invaluable resource.

Short-term focus.

Identify 2-4 initial markets to reach out to. “Experiment”. Test the opportunities and determine the viability of your export opportunities. Begin the learning curve and adapt.

Selling directly or through distributors/agents.

Part of your assessment will be to determine whether to sell direct to end-users or go through importers/agents/distributors.
Generally, we recommend selling through third parties, especially in the beginning.

Advantages:

– Immediate local expertise
– Immediate access to potential clients and sales
– Assumes some of the “risks”
– Can provide assistance in the supply chain: logistics, warehousing and distribution

Disadvantages:

– Intellectual Property Rights
– Loose control over local markets
– Another entity that may require serious management oversight

Your exports become imports.

Recognize that your export will become an import for your customer overseas thus requiring an understanding of the basic import regulations of the countries you sell to. Maintain compliance with all the buyer’s country import regulations.

Documentation, packing, marking, labeling, formularizations are but some of the concerns.

Utilize the correct INCO Terms.

Learning the basics of INCO Terms is important, then applying that knowledge to ensure that you are utilizing the term best suited to meet the needs of your specific export transaction.

The seven Incoterms® 2020 rules for any mode(s) of transport are:

EXW Ex Works (insert place of delivery)
FCA Free Carrier (Insert named place of delivery)
CPT Carriage Paid to (insert place of destination)
CIP Carriage and Insurance Paid To (insert place of destination)
DAP Delivered at Place (insert named place of destination)
DPU Delivered at Place Unloaded (insert of place of destination)
DDP Delivered Duty Paid (Insert place of destination).

Note: the DPU Incoterm replaces the old DAT, with additional requirements for the seller to unload the goods from the arriving means of transport.

The four Incoterms® 2020 rules for Sea and Inland Waterway Transport are:

FAS Free Alongside Ship (insert name of port of loading)
FOB Free on Board (insert named port of loading)
CFR Cost and Freight (insert named port of destination)
CIF Cost Insurance and Freight (insert named proof of destination)

As a point of reference, if your intent is to sell where the customer picks the goods up at your place of origin, utilize FCA and not FOB or Ex Works, as you are likely to load the arriving conveyance.

Also keep in mind that trade compliance – rather than convenience – is often a more important driver of the choice of INCO Term.

Make sure you understand the 7 Basic Requirements to Reduce Risk in the Export Transaction.

1. Terms of Sale (INCO Term)
2. Terms of Payment
3. Insurance Requirements
4. Freight Handling
5. Compliance Responsibilities
6. Accounting for the Transaction (GAAP/IRS)
7. When “ownership” transfers

Utilize the correct Schedule B Number (HTSUS).

It is important to make sure you choose the correct Schedule B number, also referred to “HTS Number”. Your freight forwarder or consultant can guide you in this determination.

Understand the “Documentational Requirements”.

You are creating an export, which requires conformance with U.S. based export regulations. Simultaneously, you are facilitating an import overseas and thus must also comply with the import regulation of the country you are selling to.

Your freight forwarder or consultant can guide you in these documentary requirements.

Basic Export Documentation Requirements.

  • Ocean/Air Waybill
  • Domestic Bill of Lading/Drayage
  • Certificate of Conformity
  • Certificate of Origin
  • Commercial Invoice
  • Dock/Warehouse Receipt

Develop an Export Trade Compliance Mind-set.

You need to make sure you are complying with all export regulatory
requirements. Areas that need to be addressed include, but are not limited to, are as follows:

– Denied Parties Checking
– Destination Control Statements
– Ultimate Consignees
– Product Utilizations
– Destination Country Allowance
– Export License Requirements

Contracts of Sale/Agent/Distributor.

Utilize a professional consultant or attorney to guide you into these documents of agreement that will bind you to certain obligations.

1. The parties
2. The description of the products
3. Quality
4. Price per unit
5. Total value
6. Currency
7. Tax and Charges

8. Packing
9. Marking and Labelling
10. Mode of Transport
11.Delivery: Place and Schedule (INCO Term)
12. Insurance
13. Inspection
14. Documentation
15. Mode of Payment
16. Credit period, if any
17. Warranties
18. Passing of Risk
19. Passing of property
20. Export-Import Licenses
21. Force Majeure
22. Settlement of Disputes
23. Proper Law of the Contract
24. Jurisdiction

Protect your IPR.

Intellectual property (IP) refers to creations of the mind: inventions; literary and artistic works; and symbols, images, names, and logos used in commerce.

Businesses are often unaware that their business assets include IP rights.

Your intellectual property is a valuable intangible asset that should be protected to enhance your competitive advantage in the marketplace.

Stopfakes.gov is a one-stop shop for U.S. government tools and resources on intellectual property rights (IPR). You will find business guides, country toolkits, upcoming training events, and more on the site. See also export.gov.

How to Protect your IP

IP includes copyrights, which cover works of authorship, such as books, logos, and software. It also includes patents, which protect
inventions. Other types of IP include trademarks, designs, and trade secrets.

The first thing you need to do to safeguard your intellectual property is to file for protection in the United States. Your state’s
bar association can recommend experienced lawyers who can help you with that.

Then you must be the first inventor to file for protection in the countries in which you currently do business or are certain to do business in the future. You should also consider filing for protection in countries that are well-known for counterfeit markets.

If you do business in nations that have free trade agreements with the U.S., IP protections are built into those agreements, but you’ll still need to file in each country to get those protections.

Conversely, if you do business in any country in the European Union, you only need to file for protection with the EU – not every individual nation.

If you have a registered IP right in the United States, these protections are territorial and do not extend to foreign countries. Additionally, most countries are a “first to file” country for trademark registration and “first inventor to file” for patent registration and therefore grant registration to the first filer regardless of first use in the market.

Utilizing professional consultants and IPR counsel is also an excellent resource and likely go-to solution.

Utilize Quality Freight Forwarders.

Finding quality freight forwarders is necessary to develop a strong export capability.

Evaluation criteria:

Utilize a FF where you are a “bigger
fish in a smaller pond”

Strong Technology Capability

In Good Financial Shape

Global Reach

Experienced Personnel and Ease of Communication

Understand your “Landed Costs”.

Being competitive in export trade is important and knowing what all the costs are to get your goods from origin to destination will assist in that need.
Let us suppose the shipment of 100 units of a particular product arrives

  • Supplier cost: $20 per unit
  • Duty applicable at 4%
  • Freight cost for the entire shipment was $200 – and the specific product represents one-quarter of the shipment (1/4th of the total shipment)

Total Landed Cost = $20 + (4% x 20) + ((200 x 25%)/100) = 20+ 0.8 + .5 = $21.3 per unit

Landed cost formula:

Net Landed Cost = Supplier Cost + (Duty charges) + (Shipment charges specific to this product/total units)

Landed costs will help determine margins and profits and create the competitive leverage that may be required in competitive export sales.

Make sure the shipment is insured.

The risk of loss and damage is great in export trade. Depending upon the INCO Term and how payments are made will determine who need s to insure the transaction.

Cargo insurance should be “All Risk”, “Warehouse to Warehouse” through a reputable broker and underwriter who specialize in international insurance exposures and risk management.

Make sure you get paid

You need to be very diligent about getting paid. Having an unpaid export receivable can be very discouraging and problematic.

Options:

1. Consignment
2. Open Account (O/A)
3. Collections
4. Letter of Credit (L/C)
5. Cash in Advance

Working with your bank and your customer will help determine the best option. Accommodating clients’ needs balanced with potential risks is a good concept.

Export Credit Insurance.

Protect your export sales against nonpayment, offer open account credit terms to your buyers, and increase cash flow with EXIM’s export credit insurance.

There are also private insurance options such as with COFACE. We have specific contacts at COFACE we can refer you to.

The costs are low, the coverage is broad and is a great way to protect concern from foreign receivables.

Foreign Exchange Risk.

Reduce the risk associated with the uncertainty of future exchange rates. A good way is to quote prices and require payment in U.S. dollars.

Payment Problems.

Problems involving bad debts with your international buyer can set you back.
Avoid potential payment issues and tap key resources to limit risk and resolve problems.

Concluding Remarks.

This document is to be utilized only as a reference guide and starting point in understanding all the requirements of exporting. Accessing additional resources and expertise will be central to developing a successful export business capability.

The Author

Thomas A. Cook Is a 30-year seasoned veteran of global trade and Managing Director of Blue Tiger International, based in New York, LA and West Palm Beach, Florida. The author of 19 books on international business, two best business sellers.

Graduate of NYS Maritime Academy with an undergraduate and graduate degree in marine transportation and business management.

Tom has a worldwide presence through over 300 agents in every major city along with an array of transportation providers and solutions. Tom works with a number of Associations providing “value add” to their membership services and enhancing their overall reach into global sourcing and in export sales management.

inflation "made in Ukrainian" product imported into Israel, is that the product is manufactured in the territory of Ukraine.
Archives, Global Trade Daily, International Trade, War

The Pandemic, Ukraine, And Inflation: How We Got To The New Normal Economy 

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Will we ever get back to normal?

Or, are we stuck in the new normal for an extended period?

Economically speaking in the U.S., the answer to the first question is “hopefully,” and to the second question, “probably.”  In the wake of the two-year COVID-19 pandemic’s massive effect on the global economy, Russia’s recent invasion of Ukraine has added another seismic shock to the system. So here’s what the new normal looks like now:

  • Steep gasoline prices; higher prices for food and just about everything else.
  • For months, record numbers of workers have been leaving their jobs, and as a result many have gained leverage. There’s a huge demand for workers and wages are climbing rapidly.
  • The markets are sometimes whacky and investors are nervous.
  • U.S. consumer demand has been steadily impressive through these two once-in-a-lifetime geopolitical events, and when you combine that with log-jammed or fractured supply chains, inflation has soared to a 40-year high.

The Fed goes on the offensive

In an all-out effort to try to tame inflation, the Federal Reserve could make 12 to 15 rate hikes in the coming months, according to a Reuters article. That kind of aggressiveness would mean increasing rates between 300 and 375 basis points (3% to 3.75%), which is a sizable jump from the seven total increases (1.75% to 2%) analysts have been saying we should expect this year.

But the Fed’s sharp moves increase the chances of a recession happening in 2022 — and could speed up the timeline, ushering in a recession well before the end of the year. Note to investors: If you haven’t met with your financial advisor lately to review your plan and go over your portfolio for unnecessary risk, it’s probably a good idea to get on their schedule soon. We could be in for a rocky road ahead.

In truth, the Ukraine drama has only been an accelerating factor to push us into the problems the market is experiencing right now. For months we’ve expected a slowdown in the economy, inflation was on the march long before the Russians were, oil and gas prices have moved steadily upward through the past year, and consumers have been battered for over a year.

Looking at inflation now and the surrounding factors compared with two and three decades ago is like night and day. For many years leading up to the pandemic, the economy grew slowly but steadily, with low inflation and interest rates. The Federal Reserve chairman, Jerome H. Powell, recently said, “For the last quarter century, we’ve had a perfect storm of disinflationary forces. As we come out the other side of that, the question is: What will be the nature of that economy?”

A big difference between now and then – the normal days – is demand; it was consistently weak pre-pandemic, but now it’s on steroids. When the coronavirus hit, governments around the globe spent massively to navigate businesses and workers through lockdowns. The U.S. spent close to $5 trillion. That money sparked more buying, but the supply chains were overwhelmed and couldn’t keep pace. And the costs went up and up.

As the economy reopened, companies rehired to meet the surge in demand, workers left for higher pay, and some businesses passed along those costs to customers. And now you have an economy that no longer believes in moderation as it did back in the day – modest wage increases, lower prices and slow growth.

When will it all get back to normal? 

Those who pine for a return to economic certainty and normalcy base their hope  primarily on supply chains catching up and higher interest rates slowing spending. Fed estimates indicate that rates won’t have to rise over 3 percent to restore moderation to inflation and growth.

Current trends such as the U.S. labor shortage, however, could stick around and continue to help drive inflation. While people aren’t flocking back to work, those who are changing jobs are often getting higher wages, and consumer demand could stay high enough to influence companies to increase prices. The fact is that largely as a result of COVID, many people are earning more and spending more.

Even solving supply chain issues could keep prices high. More companies could choose to manufacture domestically, thus reducing globalization, which had kept prices and wages down for many years.

Referencing Fed chairman Jerome Powell’s “perfect storm” comment concerning “disinflationary forces” over the last 25 years, you can apply his description to the two enormous geopolitical events challenging the global economy, and ours, now. On the heels of the pandemic – though there’s no guarantee it will stop kicking, by the way – the mess in Ukraine will continue to roil energy markets and contribute mightily to the levels of volatility we are experiencing.

History is marked by major milestones that changed America’s economy. We are now living in one of those rare times. What “normal” will look like in a few years is about as hard to predict as what’s happened in our world the past two years. But you can expect that this new normal – volatile and nerve-wracking as it is – will stick around a while.

About Tom Siomades, CFA

Tom Siomades (www.aewealthmanagement.com) is chief investment officer for AE Wealth Management, LLC, where he works with his team to provide independent financial advisors solutions to help their clients meet their financial goals. A graduate of the United States Military Academy at West Point, Siomades served as an infantry officer for four years. He earned a master’s degree from Webster University and has more than 30 years of financial industry experience.

Vast Majority of Accounting Firms Plan to Tap into Cloud Technology Due to Pandemic: Global Survey CaseWare International Unveils First-of-its-Kind State of Accounting Firms Trends Report 2022
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Vast Majority of Accounting Firms Plan to Tap into Cloud Technology Due to Pandemic: Global Survey CaseWare International Unveils First-of-its-Kind State of Accounting Firms Trends Report 2022

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With the rise in remote working spurred by the pandemic, almost two-thirds of accounting firms plan to adopt some form of cloud technology in the next two years to improve virtual collaboration, visibility, and efficiency. Of those, one-third are accelerating implementation within the next 12 months.

That’s the finding of a recent study conducted by leading software provider CaseWare International, which surveyed 3,095 accounting professionals globally about current industry challenges – from practice management and client/colleague interaction to attracting top talent in an increasingly virtual world. The results are compiled in a first-of-its kind 2022 State of Accounting Firms Trends Report which is accessible free of charge.

“We are driven by the needs of the industry and what we hear from this report is that remote work has accelerated the move to the cloud and those who are embracing new technologies have the competitive edge,” said Dave Osborne, CEO at CaseWare. “This is a clear indication that firms of all sizes need tools that go beyond securely sharing files, and the cloud is where the adventurous forward thinkers are headed to equip themselves for effective collaborative work.”

Why cloud technology? For half of those surveyed, the benefits include easier collaboration and reducing errors through standardization of processes and tasks. Forty-five percent of respondents think cloud technology improves client relationships, while 41 percent believe it saves time and costs. Others cite as advantages real-time access from any portable device, increased security, mitigating risk, and adding flexibility and scalability to help grow their business.

“An increasing number of firms recognize that cloud technology can be more efficient by enabling instantaneous, interactive reviews of continuously-updated engagement files, keeping track of deliverables so managers can quickly reallocate tasks among staff to ensure workloads are equally distributed, and answering team member questions in real-time, even at different locations,” said Scott Epstein, Chief Product Officer at CaseWare.

According to the study, the cloud is not the only advanced technology accountants are bringing into their practices. Ninety percent of respondents are using some form of data analytics to glean more insight from their data, while more than half of participants (51 percent) are using software automation to reduce the time they spend on repetitive tasks.

Other report highlights include:

  • When it comes to the biggest practice management challenges faced this past year, nearly half (47 percent) of those surveyed point to new tax laws, regulations and deadlines brought on by the pandemic, while 43 percent cite using new technologies. Others see a lack of direct interfacing with clients, adjusting to working remotely, cybersecurity/fraud threats, and finding the right talent as key concerns.
  • More than half of respondents say they would like to have more visibility into their staff members’ workloads, such as on which engagements staff are spending the most time, with what tasks they are most consumed, and how effectively they are meeting deadlines. They would also like more visibility into their firm’s operations and engagement workflows, such as the current status of the many tasks that go into an engagement (whether they are open, unassigned, or overdue, for example), whether deadlines are overlapping, or where work can be reallocated.
  • Most respondents (77 percent) indicate they use a collaboration software solution to communicate and share files with clients. However, the majority (57 percent) feel their overall client engagement process is not as efficient as they would like. For some, the barrier is related to finding time to exploit the technology or internal resistance to new tools.
  • Finding and hiring the right talent is a top issue for accounting firms, with 94 percent of those surveyed describing it as challenging and 42 percent calling it extremely challenging. Nearly nine in 10 find hanging on to staff to be either extremely challenging or somewhat challenging.

“As long as COVID-19 persists, technology, virtual collaboration, and visibility will continue to be top priorities for accounting professionals,” Epstein said. “Given the efficiencies the cloud brings and the headaches it eliminates, accounting firms that stay rooted in pure on-premises technology approaches are almost certain to fall behind their cloud-enabled competitors.”

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Archives, Commentary, Global Logistics, Global Trade Daily

HOW I LEARNED TO STOP WORRYING AND LOVE THE NEW NORMAL

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With so much having already been written on supply chain disruption over the past 18 months—beginning with the initial shut-down of production in China, to fascinating tales of toilet paper hoarding, and now to the current inability to get backlogged demand through our ports of entry—I was initially reluctant to add yet another article to the stack. So what changed my mind? There are actually two reasons, which I’ll explain.

First, the problems and lessons learned from the COVID-19 pandemic are now forcing companies to become more agile, reassessing every element of their existing supply chains in preparation for the “new/next normal.” It’s now blank sheet of paper time as previous playbooks regarding sourcing, inventory levels, placement and risk mitigation plans (if they even had one) —together with any supporting infrastructure of people, processes and enabling technology—are being tossed out the window.

And while COVID-19 can be credited as the catalyst for forcing companies to perform these assessments, it doesn’t take a pandemic to bring a supply chain to its knees. In addition to the exposure contributed by single-sourcing key goods or from maintaining lean inventory levels (i.e., “Just-in-Time” versus “Just-in-Case”), designing a more resilient, risk-averse global supply-chain will require the inclusion of a broader list of potential risks to consider particularly when selecting foreign suppliers. These should include geopolitical conflicts, socio-economic factors including labor, crime and corruption, limited port capacity/infrastructure, weather-related disruptions and even natural disasters (recall the 2011 earthquake and tsunami in Japan).

Take geopolitical risk, for example. The United States’ over-dependency on China for products ranging from personal protective equipment to rare-earth minerals has made it a growing concern from both a business and a national security perspective. A sobering report by the Hinrich Foundation (“Strategic U.S.-China Decoupling in the Tech Sector”), states that “the China-U.S. geopolitical competition has reached a competitive tipping point and morphed into a new ‘cold war,’” citing an increase in China’s bold hegemonic policies. The report further highlights China’s years of intellectual property theft, growing labor costs, and the more recent special tariffs levied by the Trump administration, as key reasons for an increase in U.S. supply chains decoupling from China and either moving into more risk-averse areas in Southeast China, near-shoring to Mexico or even re-shoring stateside.

In an actual side-by-side near-shoring exercise that compared China with Mexico, the advantages quickly fell to Mexico, citing a shorter supply chain with fewer physical touchpoints (damage/theft/service fees), lower freight costs and eligibility for duty-free entry under the USMCA Free Trade Agreement, as well as side benefits that included ease of communication with vendors and the convenience of traveling to vendor sites.

RISK MANAGEMENT MEETS INDUSTRY 4.0

The second reason for my writing is that there’s another movement afoot that aligns with supply-chain risk initiatives from the position of enabling technology capable of producing even greater resiliency. Labeled as “Industry 4.0,” this next industrial revolution is the result of the substantial transformation that is occurring through the digitization of manufacturing. For context, the first industrial revolution was through the introduction of water and steam power. Steam would give way to electrical power as the second industrial revolution, with the third being born out of the introduction of computers and their ability to automate previously manual tasks. Fast forward to today when the fourth revolution is now further optimizing that automation by connecting computers with smart machines and “disruptive technologies”—such as artificial intelligence (AI), machine learning, advanced business intelligence, predictive analytics and data lakes—capable of removing humans from decision-making processes, including applications capable of identifying and even predicting risk.

Where Industry 4.0 supports supply chain risk initiatives is that the 4.0 movement includes the digitization of global supply chains. This will translate into unprecedented transparency and connectivity across the entire end-to-end order and shipment process, where supporting business functions such as product engineering, procurement, sales & marketing, transportation, trade & customs and accounts payable traditionally operate in respective silos.

For example, take trade & customs operations. Their typical placement near the end of the supply chain process, together with a lack of early visibility to international order, has served for years as a recipe for reactive firefighting as shipments become “stuck in customs” upon arrival until data/documentation issues are resolved. Under a digitized model, silos are replaced with connected supply-chain visibility that would allow trade & customs’ participation to move upstream to the earliest stages of new product build/buy decisions. As a result, they’re now in a position to proactively contribute critical advice on regulatory issues, import admissibility requirements, duty/tax minimization strategies such as tariff engineering, foreign trade zones, free trade agreements or changes in source countries (e.g., avoiding a 25% special tariff on Chinese goods by switching the sourcing to Mexico)—all key factors capable of removing cost, risk and time from their supply-chain.

If you’re currently building a business case to launch your own risk initiative, “Resetting Supply Chains for the Next Normal,” an interesting report from McKinsey & Co., might give you some additional support. For instance, in their survey of 60 senior supply-chain executives across industries and geographies, 85% responded that they struggled with insufficient digital technologies, 93% plan to increase resilience across the supply chain, and 90% plan to increase digital supply-chain talent in-house needed to support that new technology. In short, you’re not alone.

Whether your current project is to address the exposure from disruptions to your supply chain or to digitize the entire enterprise as a result of the increasing disruption caused by technology-driven innovation, what’s becoming clear is that companies will be forced to become agile and adaptive—able to change business models at unprecedented rates of speed in order to survive and thrive in the “new/next normal.”

_____________________________________________________________________

Jerry Peck has more than 30 years of experience in global-trade management. His career has uniquely encompassed nearly every facet of GTM, including third-party logistics, trade operations within Fortune 300 multinationals and professional services consulting firms. Learn more about QAD Precision at precisionsoftware.com.

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LOGISTICS HEROES RECOGNIZED FOR COVID-19 AND WILDFIRE RELIEF EFFORTS

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Whether it is hunger, wildfires, or a global pandemic, the logistics industry is there for us. On Sept. 21, the American Logistics Aid Network (ALAN) singled out some of these supply chain heroes with 2021 Humanitarian Logistics Awards. “Today we have a chance to recognize a group of outstanding companies and individuals who exemplify what selfless logistics is all about,” said ALAN Executive Director Kathy Futon. “This year’s recipients have truly inspired us, because when the chips have been down, they’ve repeatedly stepped up to help–all without asking what’s in it for them.” This year’s recipients include:

-CEVA Logistics, which received ALAN’s Outstanding Contribution to Disaster Relief Award for moving multiple shipments of supplies to support Native American tribes and various non-profits throughout the COVID-19 crisis and after the Oregon fires.


-Palmer Logistics, which received ALAN’s Outstanding Contribution to Disaster Relief Award for providing essential short-term storage of hospital beds on behalf of a medical non-profit and for its ongoing support of USAID.

-Core-Mark International, which received ALAN’s Outstanding Contribution to Disaster Relief Award for the long-term loan of two freezer tractor-trailers and driver resources that enabled the Arkansas Food Bank to distribute two million extra pounds of donated food during COVID-19.

-J.B. Hunt Transport Services, which received ALAN’s Outstanding Contribution to Disaster Relief Award for its assistance with multiple compassionate moves during 2020 and 2021, including helping ALAN and the Salvation Army distribute meal kits.

-American Trucking Associations, which received ALAN’s Outstanding Contribution to Disaster Relief Award deploying two of its image show trucks and drivers to deliver numerous compassionate shipments of food, cleaning supplies, PPE and medical supplies throughout the COVID-19 pandemic.

-Tucker Company Worldwide, which received ALAN’s Director’s Partnership Award for supporting ALAN’s analytical efforts during the pandemic.

-Truckstop.com, which received ALAN’s Director’s Partnership Award for consistently sharing information about freight marketing activities with members of ALAN’s partner network during various crises.

“Each of these recipients is living proof that humanitarianism isn’t just a one-time event–and that true service extends well beyond a single disaster,” Fulton said. “It truly is part of their DNA and personal passion. The world truly is a better place because of all of them.”

OKR
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OKRs Help Companies Navigate the New Normal

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The onset of COVID-19 presented an unprecedented challenging situation – for the first time, perhaps in history, there was a universal experience shared by workers around the world. A near-collective shift took place, uprooting offices and transplanting employees to their homes. Remote work is no longer a perk that companies offer their teams, but rather a necessity.

This created and still creates, a unique challenge for many companies. Offices were considered vital to the basic operations of a company—a place where workers could convene and coordinate projects on a daily basis, retrieving answers to questions with a simple walk to a colleague’s desk. With this possibility wiped away, companies needed to adjust, and fast.

Fortunately, many have been able to transition to a digital office space with increasing utilization of online team platforms and video conferencing making it possible for companies to continue working in most industries. It’s now called the “new normal” and, globally, employees have adjusted.

Now comes a time when companies can’t simply tread water and grow complacent with this new sense of normalcy. They have to forge ahead, and progress now involves many business leaders declaring that their post-COVID-19 organizations will be completely redesigned to take advantage of all work-from-home possibilities – a trend confirmed in a recent Gartner survey of over 317 CFOs.

Historically, we know that businesses find ways to live on. Moments of economic uncertainty generate opportunities for companies to dream bigger, to set stretch goals and direct their teams toward the future with exact focus. To achieve this, it’s important that corporate objectives and the bigger picture aren’t lost in the day-to-day activities of a company.

OKRs, a goal-setting methodology that was developed by Intel’s Andy Grove, are widely used by industry-leading companies such as Google, LinkedIn, Uber, Twitter and many more. OKRs are becoming the golden standard of goal management. The structure is simple and unbelievably effective.

OKRs are comprised of objectives – meaning qualitative, inspirational, time-bound goals that direct a team, and key results – or quantitative deliverables that are used to measure the success of the objective.

To give an example, a solid objective would be “Increase User Base.” The corresponding key results that could be used to measure this objective are:

“Increase number of paid users from 4k to 10K”

“Increase outbound leads/month from 20 to 40”

Companies that choose to utilize the OKR methodology see a myriad of benefits. Five key benefits are outlined by John Doerr, another Intel alum who popularized the OKR framework. These benefits include focus, alignment, commitment, tracking and stretching.

In the context of the COVID-19 world and the new normal, these benefits become even more apparent. The OKR methodology doesn’t just organize companies, it forces them to adopt a pattern of goal prioritization and evaluation that becomes ingrained in company culture, turning abstract aspirations into concrete results.

On a corporate level, OKRs help leaders focus their hopes for the company and direct their collective efforts in the direction they want to grow. Furthermore, they provide transparency within a company, communicating the big picture that might otherwise have been a mystery to individual employees on the lowest rung of the ladder.

At an individual level, OKRs present even more benefits. No man is an island, and yet, when working from home, every employee is physically isolated and virtual communication might not be enough to make individuals feel connected to the purpose of the company. With OKRs, individuals can gain a sense of purpose and contribution, even while remote.

OKRs ask employees to take ownership of their goals, empowering employees with autonomy. Moreover, they can be aligned between company levels, either through top-down alignment, where corporate-level key results inform departmental objectives in a cascading manner, or bottom-up alignment, where team-level objectives inform departmental key results. This alignment is an integral part of the structure of OKRs and keeps a company on track.

OKR alignment doesn’t require in-person meetings or an office space to occur. It simply needs communication and foresight on the part of individuals within an organization. Employees, then, aren’t isolated and completing day-to-day tasks with no sense of purpose or larger overarching goals. When tracking OKRs, they can see how their work contributes to the organization, creating connectivity and engagement.

Another reason that OKRs are helping companies navigate business in the new normal is because the mindset of employee productivity is shifting to measuring results rather than activities. This is going to be a fundamental change post-COVID-19, as it will bring in a culture of transparency with a scoreboard being available for everyone.

Today, instead of measuring an employee’s workday by eight hours in the office, it’s measured by results and impact, rather than individual activities. This adjusted perspective on employee productivity lends itself well to the OKR methodology. In addition to looking at their results, employees are also going to look at their contribution to team, departmental and corporate goals, and will be able to see how they helped move the needle with trackable OKRs.

Navigating the new normal has presented companies with an unprecedented challenge, and in response, the OKR methodology offers up a solution that provides teams—no matter how physically distant they may be—with focus, alignment and engagement.

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Bastin Gerald is the CEO and founder of Profit.co, an intuitive cloud-based SaaS platform, integrating OKRs and task management plus 300 other data-driven metrics to help companies successfully implement the model and reach new heights. Profit.co helps companies focus, align and engage teams for optimal productivity and company success. To learn more, visit https://www.profit.co/.

animal feed
Archives, Global Trade Daily, News

The European Animal Feed Market Shows Persistence Against the Pandemic

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IndexBox has just published a new report: ‘EU – Animal And Pet Feed – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The European EU Animal Feed Market to Continue Growing Despite the Coronavirus Pandemic

For the tenth year in a row, the European Union has recorded an increase in the consumption of animal feed (this hereinafter means compound feed, premixes, etc. feed for farm animals, excluding feed for dogs and cats), which increased by 1.5% in 2019 and amounted to 154 million tons. The consumption grew at an average annual rate of +1.6% from 2007 to 2019, and growth dynamics remained broadly stable with minor fluctuations over the period under review.

In 2019, the EU animal feed market increased by 0.5% to $50.2B (IndexBox estimates), rising for the third year in a row after three years of decline. This figure reflects the total revenues of manufacturers and importers (excluding logistics costs, retail marketing costs and retailers’ margins, which will be included in the final consumer price).

The level of consumption peaked at $59.6B in 2013; however, from 2014 to 2019, consumption failed to regain the momentum. In 2015, the market value decreased significantly, which was caused by a drop in raw materials and energy costs against the background of falling world oil prices. Over the past three years, the market value has been growing only slightly, despite a more pronounced growth in physical terms.

The COVID-19 pandemic is having a powerful impact on many markets and the economy as a whole, incl. and on the economy of the European Union. Against the background of the introduction of quarantine restrictions, production in entire sectors of the economy has decreased and international transport activity has practically stopped, as a result of which consumer incomes have sharply decreased and consumer behavior patterns have changed.

However, the livestock sector is less affected by these short-term shocks, as quarantine measures have not led to a sharp reduction in the number of farm animals. Thus, in March-July 2020 in the EU there is no sharp drop in the production of feed for farm animals compared to last year. No pronounced growth has been observed either, but frankly speaking, it was not expected due to the rather stable performance of the livestock sector and the absence of prerequisites for a sharp increase in demand for livestock products, whether it be an increase in the population or their incomes.

Despite the fact that the decline in household income should most likely hamper the growth of demand for meat and dairy products, these products remain staple in the diet of Europeans. The decline in demand from the HoReCa sector, closed for several months, can be partially offset by an increase in home consumption. As people began to eat and cook mainly at home during the pandemic, the demand for long-storage products and ready-to-eat meat and dairy products increased. Accordingly, some of the livestock products that were previously supplied to restaurants and cafes could be sent for processing, which is to support agricultural producers.

Since the market for feed for farm animals is predominantly a b2b market, no dramatic changes in sales channels are expected against the backdrop of the pandemic. However, with the use of distance communication and electronic document management, online communication is becoming more and more important even in the b2b sector.

On the other hand, market growth is hindered by a decline in capital investment amid a downturn in the economy and financial uncertainty, which may delay plans to expand and re-equip livestock farms and, consequently, curb the growth in demand for animal feed. At the same time, government support measures should mitigate these negative effects both for the economy as a whole and for the agricultural sector.

The main risk to the supply chain is the possible disruption of established international supply chains, including suppliers of ingredients and packaging materials, as well as the distribution chain. Supply chains can be disrupted by asynchronous quarantine measures in different countries, as well as restrictions on international transport. However, the possible influence of these factors is now mitigated by the gradual opening of the economy in Europe, which should support both market supply and demand.

Amid the pandemic, the market is likely to face pressure on prices as the sharp drop in oil prices will reduce the cost of raw materials and supplies. Moreover, a temporary increase in unemployment against the background of the closure of entire sectors of the economy will entail a decrease in the cost of labor, which will also reduce the cost of production. On the demand side, lower consumer budgets are likely to force producers to curb price increases.

Given the above-mentioned assumptions, the EU farm animal feed market is expected to remain roughly at the level of the previous year in 2020. In the medium term, as the economy recovers from the effects of the pandemic, the market is expected to grow gradually at about 1% per annum between 2019 and 2030, leading to an increase in market size to 173 million tonnes by the end of 2030.

Spain, Germany and France Constitute the Largest Animal Feed Markets in Europe

The countries with the highest volumes of animal feed consumption in 2019 were Spain (25M tonnes), Germany (23M tonnes) and France (19M tonnes), with a combined 44% share of total consumption. These countries were followed by Italy, the UK, the Netherlands, Poland and Belgium, which together accounted for a further 40%.

From 2007 to 2019, the highest average annual growth rates of animal feed consumption among the leading consumer countries were achieved in Poland and Italy (4.5% and 3.5%, respectively), while the consumption in the other countries grew at a more modest pace.

In value terms, the largest animal feed markets in the European Union were Germany ($7.1B), Spain ($7.1B) and France ($6.4B), together accounting for 41% of the total market. The Netherlands, the UK, Italy, Poland and Belgium lagged somewhat behind, together comprising a further 40%.

The countries with the highest levels of animal feed per capita consumption in 2019 were the Netherlands (751 kg per person), Belgium (631 kg per person) and Spain (539 kg per person).

Source: IndexBox AI Platform

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Archives, Global Logistics, Global Trade Daily, International Trade

A WORLD OF TRADE UNCERTAINTY

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The U.S.-China trade war and Brexit have generated quantifiable uncertainty in the marketplace, but the impact of those events is being eclipsed by the uncertainty generated by the global pandemic.

Taking an Economic Pulse

If you search the Internet for the term “economic uncertainty” or close variations, you’d find what you already know just living through the current times. It’s the default word to describe the uptick in political and trade tensions and in the precarious health of the national economy as well as our personal economic lives.

Even prior to COVID-19, the U.S.-China trade war and Brexit — to tick off current major stressors — Stanford economist Nicholas Bloom, along with his colleagues Scott Baker from Northwestern University and Steven Davis of the Booth School of Business at the University of Chicago, sought to quantify the impact of uncertainty and its impact on business, consumer and policy decisions and vice versa.

Rising levels of political and policy uncertainty are perceived to have a dampening effect on commercial investments, hiring, and economic growth, and appear to be reflected in stock market volatility. Policy uncertainty – including uncertainty in trade policies – doesn’t only manifest as risk aversion by companies, it may effectively raise the cost of capital for investing. Companies may freeze hiring and begin to rely on attrition to thin their employment ranks or begin layoffs in anticipation of slower growth. This behavior in turn may diminish the returns from government stimulus spending, itself designed to induce firm investments by offsetting some of their risk. Stimulus works better if policy and economic uncertainties are reduced.

“Uncertainty” is often described as the intangible or “X factor” in economic forecasts. Bloom and his colleagues wanted to find out whether uncertainty is more tangible and evident than we think.

Stress Testing

Bloom, Baker and Davis constructed an index to measure policy-related economic uncertainty. They used data from search results from newspaper coverage by 10 large publications including the Miami Herald, Chicago Tribune and Dallas Morning News, looking for mentions of economic uncertainty within certain parameters. Their work included a measure of fiscal uncertainty as represented by the number of federal tax code provisions set to expire in future years and drew on disagreements among economic forecasters as a proxy for uncertainty.

From the Headlines

An “Echo” Report

First, some caveats:

Newspaper coverage is of course dependent upon the reporting choices made by editors at these papers and weighed against what else is driving the news of the day that may eclipse trade policy. The media mirrors uncertainty it observes and may also generate uncertainty through its own reporting.

And while the stock market has shown patterns associated with political elections, the market doesn’t make significant swings in close proximity to political elections. Politicians like to suggest that party majorities across government is good for the markets. But it would appear that political gridlock offers more stability and is considered more “market friendly” than when one political party has both houses of Congress and the White House.

That said, the Economic Policy Uncertainty index (EPU) created by Bloom and his colleagues maps the impact of “uncertainty” such that we can see clear stock market volatility associated with other types of major political events and policy developments – most recently, flare-ups in the U.S.-China trade dispute and the unfolding of Brexit.

EPU Index Based on the News

The impacts of uncertainty generated by the global pandemic are clearly much higher than the trade uncertainty associated with the U.S.-China trade war and Brexit.

Furthermore, when comparing key words associated with the four different categories of health, fiscal, monetary and trade policy, trade policy uncertainty had been the highest among the four with a spike in 2019, but it is now low and the lowest among these four – again, due to overriding concerns driven by the pandemic.

Bloom has cautioned that trade uncertainty as a driver may have receded in comparison with other concerns. However, the open-ended nature of the current U.S.-China trade conflict and the looming Brexit deadlines mean that trade uncertainty may be more of a sleeping than a slayed giant.

Trade Policy Component of Uncertainty

In general, Bloom, Baker and Davis find that, as measured by the EPU index, current levels of economic policy uncertainty are at “extremely elevated levels.” Since 2008, economic policy uncertainty averaged about twice the level of the previous 23 years.

Pile on the Social Anxiety

Bloom, Baker and Davis have also extracted Twitter data on economic uncertainty and compared their findings with the results reflected in the EPU index. Twitter chatter does reflect much of the same heightened sense of anxiety over the uncertainty of Brexit and U.S.-China trade tensions, but the levels of anxiety generally track lower. This could be largely attributed to the sheer breadth and inconsistency of posts by the millions of people tweeting. It’s hard to find the signal in all that considerable and often frivolous noise.

From 9/11 to SARS to El Niño: An Entire World of Uncertainty

In a broadening of this approach to tracking events and impacts associated with economic uncertainty, Nick Bloom has worked with economists Hites Ahir and Davide Furceri of the IMF to develop the World Uncertainty Index (WUI). They used a series of regular country reports produced by the Economic Intelligence Unit as basis for quantifying references to economic uncertainty across 143 countries.

World Uncertainty Index Global Average

On a global basis over the last two decades, the WUI shows spikes around the 9/11 attacks, the SARS outbreak, the second Gulf War, the Lehman Brothers failure, the Euro debt crisis, El Niño, the Europe border-control crisis, the UK’s referendum vote in favor of Brexit, the 2016 U.S. presidential election and recent U.S.-China trade tensions. The WUI tends to rise closer to political elections – like the consequential one in two weeks. The authors point out that the index captures uncertainty created by specific near-term events but also long-term concerns such as tensions between North and South Korea.

The authors say global uncertainty has “increased significantly” since 2012. Notably, that uncertainty has not, however, translated into stock market volatility, perhaps because the political news has increasingly become difficult for investors to interpret.

Uncertainty tends to be synchronized among advanced economies, especially among the euro area countries. And, as countries move from regimes of autocracy towards democracy, uncertainty increases but declines as the degree of democracy increases and as the quality of institutions improves. The WUI offers an interesting window into what drives uncertainty in individual economies, as well. For example, China experiences higher levels of uncertainty in association with key leadership transitions. The UK experienced a spike in uncertainty at the time of the Scottish referendum.

When Flat-Lining is Good

Trade as a component of the World Uncertainty Index has been low and nearly flat for most of the last twenty years, but has experienced a major spike in uncertainty over the last four years, in particular due to the U.S.-China trade dispute and the setbacks in negotiating a smooth UK exit from the European Community. As Nicholas Bloom has put it, the United States, UK and China have been “exporting uncertainty”.

Trade Component of World Uncertainty Actual

Trade Versus COVID-19

For close to an entire year now, COVID-19 has been dominant and pervasive in our lives and the global economy. COVID-19 is novel by definition. The unknowns and uncertainty it wreaks show up everywhere – in stock markets, on Twitter and in the news. It should not be surprising, then, that the spike in uncertainty caused by COVID-19 far outstrips that caused by the U.S.-China trade war.

But global trade tensions are not receding and the aftershocks of COVID-19 will continue to be felt in supply chain restructuring. That restructuring will take place in an environment of increasing restrictions on foreign investments, export controls, sanctions, and blacklisting of entities and individuals that multinational corporations can do business with. Long-established supply chain relationships may be less disrupted, but new relationships may not be initiated at the same rate or in the same way in times of high economic policy uncertainty.

While measuring the real impacts of economic uncertainty in still a relatively new concept, central banks and government agencies are beginning to pay attention, and to that end, it will be interesting to continue to take our collective pulse using indices like the EPU and WUI.

Hear Nicholas Bloom explain in his own words in this webinar presented by the Clayton Yeutter Institute of Trade and Finance at the University of Nebraska. Images are drawn from the slides used by Nicholas Bloom and accessible here.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

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Archives, Commentary, Executive Education, Global Trade Daily

In this COVID-19 World, Be realistic, But Optimistic.

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As business leaders, our goal is always to lead our teams to success. During these challenging COVID-19 times, it’s critical to strike the right adaptive mindset and not over- or under-react. We need to find a way not to be pessimistic, but also balance realism with optimism. As William Arthur Warn said: The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. The balance of optimism with realism during these challenging times is the way business leaders can win.

James Stockdale, the United States Navy Vice Admiral and aviator was awarded the Medal of Honor in the Vietnam War, during which he was a prisoner of war for over seven years and survived when so many others did not. Stockdale explained his significant insight as the following: “You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.”

This is indeed a paradox. Although we’re not prisoners of war, we relate to Admiral Stockdale in not knowing how long we’ll be wrestling with the challenges brought on by the COVID-19 Pandemic.  As business leaders, if we ignore the challenges on our teams, the leader will be naïve and out of touch. If the leader mires in the challenges, they risk creating a culture of pessimism that will demoralize and demotivate the team and undermine its effectiveness.

To promote Stockdale’s prevailing mindset as leaders of a team there are two helpful strategies.

The disruptive nature of working remotely 100% of the time while balancing personal and family challenges during COVID-19 requires a team to learn how to ruthlessly prioritize with more structure and pace without slowing the team down.

Rally team members around short-term goals to ensure “quick wins” and build morale.

Realistic business leaders will excel by keeping emotion out of the equation in business decision making. Adding optimism to realism allows leaders to see the brighter side of things demonstrating to team members that things will get better day by day. As Edwin Bliss stated: “Success doesn’t mean the absence of failures; it means the attainment of ultimate objectives. It means winning the war, not every battle”.  

Winning leaders and teams make things happen, plan, and prepare instead of hunkering down and waiting. Winning leaders see potential were the less successful dwell on the past. Winning business leaders might not know “how” they will excel and achieve their goals, but they always believe that they will figure it out. They know that effort is the great equalizer. If they do not already know what to do, they will learn it and perfect it. Successful leaders during this COVID-19 pandemic understand that worry, fear, action, and gratitude are all choices you get to make and that apathy is the enemy of achieving something great. Use the difficult times to realize as a leader of a business, this is the second chance your team has always been asking for. It’s critical to make decisions quickly during this difficult time. However, a business decision that is easy or guaranteed is bound not to be highly successful in the long run.

Overly optimistic business leaders believe in their soul that nothing — absolutely nothing — is impossible. However, unrealistic optimism and accepting that you are more likely to experience pleasant events, and less likely than others to experience negative ones can lead to disengagement of a team and hamper trust. A team that is blinded by optimism will not be able to change course when trouble is encountered. Therefore, it’s critical to ensure realism keeps optimism in check.

Pessimist business leaders tend to believe that bad situations are the fault of others or the internal team, and that good business outcomes are not caused by anything they or others have done, and most likely cannot be repeated.

So, when it comes to optimism or pessimism, “hope for the best, prepare for the worst” is an ideal motto. To achieve that, you must be honest with yourself about your approach and outlook.

Whether you believe the world is conspiring against us, or if you believe that the world is conspiring in our favor, it doesn’t make it any more or less realistic.

A business leader can be optimistic or pessimistic, but there is a also third state of mind called, Being A Realistic Optimist. This means that in general and for most business situations, a leader is an optimistic thinker. However, in particularly challenging conditions (e.g., before and during very complicated negotiations with many unknown and unfavorable variables) a leader might apply a more conservative style.

Optimism balanced by realism shines when faced with extreme challenge. Optimists choose to look for positivity in the situation, and most importantly, they always take action towards a better outcome, regardless of the problem.

Let’s take a moment to define optimism:

A tendency to look on the more favorable side of events or conditions and expect the most favorable outcome.” -Courtesy of Dictionary.com

What’s so unrealistic (or unhealthy) about that? Optimistic leaders believe that things will work out because in their minds believing in the alternative makes absolutely no sense. No matter what a leader’s goal, they have no control over the future. There is no one reading these words which can predict the future. And because of that, we have a genuine choice that we need to make about our expectations.

Since none of us know what will happen next, wouldn’t it make sense to always focus our expectations on what we want to happen in our lives instead of what we do not want to happen?

The word “Optimism “is originally derived from the Latin optimum, meaning “best.” Being optimistic, in the typical sense of the word, ultimately means one expects the best possible outcome from any given situation.

There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle (Albert Einstein).

Research has found that positive, i.e., optimistic thinking can aid in coping with stress, in becoming more resilient, in being more courageous, and plays a significant role in improving one’s health and well-being.

According to Martin Seligmann, people with a so-called optimistic explanatory style tend to give themselves credit when good things happen and typically blame outside forces for bad outcomes. They also look at adverse events as temporary and atypical.

Albert Bandura, one of the founding fathers of modern psychology, argued decades ago that optimism is the basis for creating and maintaining motivation to reach goals. And that an individual’s success is mostly based on the fact of whether they believe they will succeed. The results of his findings have yet to be proven wrong.

Unrealistic optimists (I also refer to them as naive realists), on the one hand, are convinced that success will happen to them almost automatically and that they will succeed effortlessly. Some of them even think (and hope) that only by sending out positive thoughts, the universe might reward them by transforming all of their wishes and aspirations into reality.

Realistic optimists are vigorously optimistic, too. They firmly believe that they make things happen and that they will succeed. They do not doubt it. Saying that, on the other hand, they perfectly know that in order of being successful, they have to plan well, to access all necessary resources, to stay focused and persistent, to evaluate different options, and to execute in excellence.

Being both optimistic and realistic, i.e., combining the two into one behavioral style of realistic optimism, creates a special breed of very successful people. Natural optimists stay positive and upbeat about the future, even – and especially – if and when they recognize the challenges ahead. As such, realism and optimism are not diametrically opposed. The contrary is true: They compellingly complement each other!

In case of doubt – and mostly if you want to achieve something very unique and impactful – the optimist in you should outwit your realist. Why? The realist might be too prone to anxiety. The optimist, however, if stimulated and guided well, will activate your fantasy, imagination, and boldness.

But there is an important caveat: to be successful, you need to understand the vital difference between believing you will succeed and believing you will succeed easily. Put another way, it’s the difference between being a realistic optimist and an unrealistic optimist.

Realistic optimists believe they will succeed, but also believe they have to make success happen — through things like effort, careful planning, persistence, and choosing the right strategies. They recognize the need for giving serious thought to how they will deal with obstacles. This preparation only increases their confidence in their ability to get things done.

Unrealistic optimists, on the other hand, believe that success will happen to them — that the universe will reward them for all their positive thinking, or that somehow they will be transformed overnight into the kind of person for whom obstacles cease to exist. (Forgetting that even Superman had Kryptonite. And a secret identity that took a lot of trouble to maintain and relationship issues.)

Believing that the road to success will be rocky leads to tremendous success because it forces you to take action. People who are confident that they will succeed, and equally confident that success won’t come easily, put in more effort, plan how they’ll deal with problems before they arise, and persist longer in the face of difficulty like the COVID-19 Pandemic.

Unrealistic optimists are only too happy to tell you that you are “being negative” when you dare to express concerns, harbor reservations, or dwell too long on obstacles that stand in the way of your goal. In truth, this kind of thinking is a necessary step in any successful endeavor, and it’s not at all antithetical to confident optimism. Focusing only on what we want, to the exclusion of everything else, is just the naïve and reckless thinking that has landed industry leaders (and at times, entire industries) in hot water during this difficult period.

Cultivate your realistic optimism by combining a positive attitude with an honest assessment of the challenges that await you. Don’t visualize success — visualize the steps you will take to make success happen.

_________________________________________________________________

If you have any questions or would like help in the area of Compliance and Controls please do not hesitate to contact Frank at frank@ationadvisory.com or visit my website at www.ationadvisory.com. Ation Advisory Group has expert financial and operational experience in development, manufacturing, distribution, and sales spanning 55 countries and, six continents, delivering individualized, proven methods to build out and implement highly successful and sustainable country-specific goals.  All executed with 100% FCPA (Foreign Corrupt Practices Act) compliance.

Archives, Banking, Global Logistics, Global Trade Daily, Stories

An Economic Recovery From COVID-19 in 2021 Is Possible – But Massive Uncertainty Remains

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COVID-19 has had a devastating effect on human life. But it has also caused widespread economic upheaval for both advanced and emerging market economies as countries shut down to try to stop the spread of the virus. The U.S. for instance is set to see the most severe economic downturn since GDP was first tracked in the 1940s.

This means deep hardship for many businesses of all sizes and across all industries. Shutdowns caused many firms to entirely cease operations for a time. Now, they are grappling with plummeting demand as a result of rising unemployment and uncertainty, on top of supply chain difficulties and uncertainty as to financing resources.

Bad Timing for a Global Crisis

Although there is no “good” time for a pandemic to strike, business conditions in 2020 were already a little shaky prior to the outbreak. At the beginning of the year, the global economy had just finished its weakest year since the Great Recession, global trade was turning sour, trade finance had become more restricted and continued uncertainty from the U.S.-China trade war weighed on businesses everywhere.

If the outlook was stormy at the beginning of the year, it’s now outright bleak. Atradius economists are now forecasting that global trade will decrease approximately 15 percent in 2020, while global GDP will decline about 5 percent. The U.S. will perform below average, with a 6.1 percent decrease in GDP – largely due to its lag in controlling the virus and subsequent record high in number of COVID-19 cases, in addition to soaring unemployment as well as pressure on incomes, leading to a drop in consumption.

Will Government Intervention Be Enough?

Governments and central banks the world over have enacted measures to counteract the pandemic’s economic devastation. Early in the crisis, for instance, the European Central Bank put in place a Long Term Refinancing Operations III program, while the U.S. Federal Reserve increased quantitative easing.

Countries have also put together aid packages, such as the U.S. CARES Act and a number of packages from individual EU economies and the UK. Similarly, China is providing tax relief, state-backed credit guaranteed, and delayed loan and interest payments. Altogether, global government stimulus measures amount to approximately 9 percent of global GDP, or around $7.8 trillion.

But will this be enough? Atradius economists suggest not – not unless countries also enact vigorous policies to revitalize the economy at every level. The EU Pandemic Fund provides a good example: the $750 billion initiative will bestow loans and grants to the areas and sectors hardest hit by the pandemic, allowing for a more even recovery rate across the entire EU.

Although stimulus measures are necessary, soaring government debt levels are also cause for concern – even before the outbreak, many countries had worryingly high debt levels. The most recent baseline scenario from Atradius economists has the U.S. federal budget deficit, as a proportion of GDP, increasing by more than 10 percentage points this year. The UK will fare even worse, seeing a 13 percentage point increase in deficit growth rate. China and India are the only major economies likely to maintain moderate debt ratios through the pandemic.

All that said, low interest rates will likely stick around through the end of 2021 at least – this should help offset some of the concerns over high government debt levels. Moreover, central banks like the Fed and ECB will continue purchasing government bonds, suppressing any financial market stress.

What’s Next?

While the global economy is under undue strain at the moment, Atradius economists predict a recovery could begin as early as this year, continuing into 2021. Our baseline scenario has global GDP rebounding by 5.7 percent in 2021, with the U.S. coming in just under that, with GDP growth of 4.2 percent.

This scenario, however, is shrouded in uncertainty and hinges on a few key assumptions:

-That researchers are able to develop a successful vaccine in the near-term

-That lockdowns will be limited throughout the remainder of the outbreak

-That oil prices will remain low

-That the U.S.-China trade war will remain at a standstill

-That the rise in financing cost for firms, if any, remains limited

Should these assumptions not play out, the global economic recession could be much worse than anticipated – contraction rates could be twice as damaging as those currently predicted, with global GDP contracting 12.2 percent in 2020 and U.S. GDP seeing a 7.9 percent drop. Recovering from a contraction of this size would be a slow, painful process, although we would expect 2021 to see similar growth rates.

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John Lorié is chief economist with Atradius Economic Research. He is also affiliated with the University of Amsterdam as a researcher. Previously, he was Senior Vice President at ABN AMRO, where he worked for more than 20 years in a variety of roles in commercial and investment banking. He started his career at the Dutch Ministry of Foreign Affairs. John holds a PHD in international economics, master’s degrees in economics and tax economics as well as a bachelor’s degree in marketing. 

Theo Smid is an economist with Atradius Economic Research. His work focuses on business cycle analysis, insolvency predictions, thematic research and country risk analysis for the Commonwealth of Independent States. Before joining Atradius, he worked for five years in the macro-economic research team of Rabobank, focusing on business cycle analysis of the Dutch economy. He holds a master’s degree in economics from Tilburg University.