Impact of the Russia-Ukraine war on Canadian business

We urge everyone to do what they can to assist the Ukrainian people, and pressure Russia to stop this horrible war.

If you run a Canadian business, you might be asking yourself what the impact will be. The short answer is twofold: higher costs and business restrictions.

Higher input costs

It isn’t just gasoline prices that are going up. Bunker oil, used by ships, has gone up too. That means the cost of intercontinental shipping of goods will increase. FedEx has reportedly increased its surcharges on international parcel and freight. Combined with higher costs for trucking, and your supply chain and distribution transportation costs have — and will likely continue to — rise.

If your inputs that are shipped internationally now cost more to obtain, your COGS will increase.

Any last-mile deliveries to customers done by your own fleet or a delivery service will have gone up too.

You might pass higher delivery costs on to your customer, but will you have to raise your prices?

You can read a short article and watch an interview with analyst Kona Haque, ED&F Man’s head of research, here:
https://ca.finance.yahoo.com/news/russia-ukraine-war-supply-chain-impact-analyst-140648027.html

Business restrictions

The second part of the answer is various business restrictions. Sanctions, including banking and trade restrictions, are in place.

You won’t be doing any new business with anybody in Russia. Hopefully you don’t have any outstanding receivables that you can’t collect.

About one-quarter of Russia’s GDP is generated by exports. According to the CIA’s World Factbook, the country’s top exports in 2019 were crude petroleum, refined petroleum, natural gas, coal, wheat, and iron. You can learn more about the Russian economy here:
https://www.cia.gov/the-world-factbook/countries/russia/#introduction

But you might unknowingly depend on something else imported from Russia — gemstones or machine parts, for example — which will now be limited to existing inventories outside Russia, and so will become increasingly difficult to obtain and more expensive. It’s possible that failure to do this might be considered negligence by your investors.

CMC-Canada’s board governance guru Dr. Richard Leblanc recommends that all boards convene a special meeting to discuss the current state of company involvement in Russia. He says “there can be risks to reputation, brand, employee morale and safety.”

You can see Dr. Leblanc’s interview with Bloomberg here:
https://www.bnnbloomberg.ca/video/if-a-company-has-any-exposure-in-russia-a-board-meeting-should-be-held-governance-expert~2396743

What can you do to help?

We’re very impressed by how people are coming up with creative methods to help, from donations, to protests and expressions of support, to taking refugees into their homes, to Canadians posting job openings for Ukrainians, — even YouTube videos from special forces vets with advice for Ukrainians fleeing the country (they call it “escape and evasion”).

Please do whatever you can to help pressure Russia to stop this horrible war.

About Market Metrics

Market Metrics Inc. helps knowledge-based businesses with strategy, planning and innovation. We offer our clients a unique combination of top-shelf professional skills, competitive pricing, and real-world industry experience in business planning, marketing, and technology.

The consultancy was founded in 2003 by Greg Graham, a seasoned strategic marketing professional. Greg is a Certified Management Consultant (CMC), a Fellow of the Ontario Institute of Management Consultants (FCMC), and an Accredited Small Business Consultant (ASMEC) in the United States. He holds MBA/BEE degrees plus a Certificate in Strategic Management.

Prior to founding Market Metrics, Greg's 21 years of corporate experience encompassed tech start-ups through Fortune 500 companies. He is an expert in subscription-based business models (including SaaS). Greg frequently performs consulting engagements on behalf of the National Research Council's Industrial Research Assistance Program (NRC-IRAP).