Podcast

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Juan Perez, director of trading at monex usa

Trade and international business are complex landscapes filled with obstacles, but that’s exactly why companies like Monex exist—to help you navigate through them. Let’s dive into some key concepts and strategies that are critical for success in today’s global economy.

The Importance of Net Landed Cost

One of the most crucial factors moving forward is net landed cost. In the world of inventory management, you need to be smarter than ever. AI can serve as a powerful tool to help you navigate the myriad of changes and policy measures that are now unique to each country. These policies often depend on a country’s relationship with the world’s largest economy—the United States.

When considering net landed cost, you must evaluate several factors, including:

• Agreements with vendors and factories
• Balance sheet hedging to mitigate international exposure and risk

Balance Sheet Hedging
This is a sophisticated yet essential strategy to protect your business from international financial risks. It’s a complex area, but one that is more critical than ever. If you have questions about this, don’t hesitate to reach out to us. Ensuring your financial stability in a volatile global market is paramount.

Lessons from the Pandemic: Supply Chain Complexity

The pandemic taught us a hard lesson: our supply chain systems are incredibly intricate. Managing them requires education, expertise, and often, external consulting.

Key Post-Pandemic Concepts

• Nearshoring
  • This involves evaluating the physical proximity of your inventory, partners, manufacturing facilities, and financial institutions. Being closer to these elements can reduce risks and improve efficiency.
• Pressuring
  • This refers to the influence of government policies and the potential shifts in the US dollar-centered, rules-based system. For example, maintaining strong trade relationships—like those between the United States and Mexico—can significantly impact tariffs and overall trade conditions.

The Role of Foreign Exchange (FX)

Foreign exchange is another critical area for businesses, and it can be broken down into two key priorities:

• Protection
  • Protecting your business from market volatility and high-risk scenarios is essential. This is where our expertise comes in, offering solutions to safeguard your financial interests.
• Participation
  • Beyond protection, there’s an opportunity to participate in the gains of currency market movements. If your business has the cash management capabilities and risk tolerance, tools like options can help you capitalize on these opportunities.

Conclusion

In today’s global economy, success requires a deep understanding of concepts like net landed cost, supply chain management, and foreign exchange strategies. Whether it’s protecting your business from risks or seizing opportunities for growth, we’re here to guide you every step of the way. If you have any questions or need support, don’t hesitate to contact us.

Full Transcript:

“I’ll mention a few vocabulary words here–one thing that’s going to matter tremendously moving forward is net landed cost.

So in the world of inventory, now more than ever, you’re going to have to be smarter than ever. And, and AI as a tool can help in this because you’re going to have to navigate a plethora of changes and policy measures that are now unique to each country and unique to each country’s situation, depending on their relationship to the number one world economy, which is us.

So remember that when it comes to the landing cost, you’re going to have to think about, you know, what type of agreement you have with your vendors, your factory and all of these things. And even like I’ll throw in their balance sheet hedging. So a lot of that on, sure, you could even expand on that a ton more.

But balance sheet hedging is a way to really protect all of your international exposure and risk, which gets complicated and now more than ever it is. So I encourage you that if you ever have any questions about that, please do contact us because it is a major part of just making sure that you are protecting yourself as best as possible.

Now that leads me to, you know, net lender cost is going to be affected by a few things that are just concepts that have come up post pandemic. So one lesson from the pandemic is, holy crap, we have a supply chain system that’s really highly complicated. It takes a lot of education, it takes a lot of know how, it takes a lot of knowledge, it takes a lot of consulting.

So it’s, you know, moving forward you’re going to have to think about the concept of near shoring, which really specifically talks about the physicality of, you know, how close are we to our, to our inventory, to our partners, to our manufacturing, to our banks and all of that. So that’s going to be the near term and the other part is going to be the pressuring.

That’s the part that can get a little bit complicated because that’s really going to involve also how much the government gets involved in the way of business, how much are we going to change the US dollar centered rules based system. So those things are going to matter tremendously because hey, can we work like for example, in our case, we are a bridge between the United States and Mexico and we want to maintain it that way because one person wants to keep a job.

So, so we are very concerned about those relationships and what they mean because French rent is going to matter whether you’re going to get a 50% tariff or you’re going to get something much more ideal.

And that’s going to matter tremendously across the Pacific Rim. The other thing that I want to leave you with is you got to think about foreign exchange in two ways. When you’re thinking about business. There’s two P’s to foreign exchange. So the one P which is our number one concern in yours as a business is protection.

You want to protect yourself from the high risk and, and the market volatility and all of that. And that’s why I have a job and we have a fantastic business for that. So it’s all about protection. But the other P is participation. So as you have seen, there are tremendous moves across currency market pairs.

One thing that you can do if you do have the cash management and the ability to handle the risk is options. And participation is one of the things that we have gotten into, particularly proposed to endemic. So, so it’s something to think about is not only do you want to protect yourself as best as possible, but what opportunity is there for you to participate in gains, potentially minimize losses for the foreign exchange markets.”