How Will the Situation in Ukraine Affect the Supply Chain & Logistics Industry?

By Aaron Block on Mar 10, 2014

Aaron Block, CEO of BayRu LLC describes how the political situation in Ukraine/Russia creates concerns

Much has been written about the current situation in Ukraine.  But, how will this affect companies doing business in Russia/Ukraine?  As of March 7th, there are as many questions as answers.  As the situation continues to unfold, North American supply chain executives and companies that do business in Russia might find the following topics helpful.
 

1. Question: Why is Crimea so important to Russia and Ukraine?  

Crimea was Russia and many of its citizens speak and identify as Russian.  See more here: http://nytimes.com/2014/03/07/world/europe/crimea-russia.html

 

2. Question: What are the biggest concerns North American companies face in Russia/Ukraine due to today’s unrest in Crimea?  

Ukraine’s economy has been weak for many years and that is unlikely to change in the short-run.  Oh the other hand, Russia has been an engine for global ecommerce growth.  Prepare for more volatility.  As a Russia-focused business, our major concerns today include: limited consumer spending due to a potential economic crisis in Russia, fewer purchases of international goods and services due to additional weakening of the Russian ruble (follow the ruble/USD changes here: http://www.exchangerates.org.uk/RUB-USD-exchange-rate-history.html).

 

 

 
3. Question: What can we do to prepare for the future of business in Ukraine and Russia?
Stay nimble, be opportunistic and pick the right partners.  In our experience, most experts believe in the long-term power of the Russian consumer.  Accordingly, today’s Crimea turmoil presents many opportunities.  We see cross-border ecommerce and distance selling as the most popular way for North American sellers and shippers to expose sales opportunities while minimizing investment risk.  As most know, doing business in this part of the world requires deep local expertise.  Make sure that you surround yourself with Russia/Ukraine experts (find examples of experts in the white paper available here: http://www.rusify.com/) 
 
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