The rapidly evolving trade environment and tariffs have made it important for companies with overseas markets to be nimble and pragmatic, while seeking help from banking partners with financial tools such as letters of credit, structured payments, and tailored risk mitigation solutions.
Those were just some of the takeaways from conversation I had with Yasmine Elgammal, Director of Finance at GA Paper, for a recent episode of the BMO Markets Plus podcast. Our discussion explored strategies that GA Paper has taken to manage supply chain disruptions and the impact on working capital.
Check out the podcast:
Below is an abridged version of the conversation.
Mayu Saravan:
We're seeing unprecedented market volatility fueled by geopolitical tensions and trade wars. How is GA Paper with a business interest in so many countries globally navigating through this environment?
Yasmine Elgammal:
It's a turbulent time, especially from a Canadian perspective, but for us at GA Paper, this kind of volatility is nothing new. We've been in the pulp and paper trading business for decades, exporting from North and South America and the Nordic countries to non-forest producing regions across the globe. We operate in over 50 countries today, Europe, the Middle East, North Africa, Latin America, the Indian subcontinent, and both East and West Africa. Because we've always focused on emerging markets, we're no strangers to unpredictability.
You need to be ahead of the curve and not reacting to it. So at GA, we put a heavy focus on local presence. You can't fully grasp what's happening in a market unless you're there building relationships, staying close to the ground. Our operations are built around strong banking and supply chain partnerships, and we're assessing risk and adapting to new realities.
And here's the thing, volatility isn't just a threat, it's an opportunity. In the financial world, there's the phrase, "Buy the dip." That mindset applies to businesses too. If you understand the fundamentals and you're well positioned, volatility can actually drive your growth.
Mayu:
Could you talk a little bit more about the direct impact that the global tariffs, counter-tariffs that had specifically on GA Paper's business, and what are some of the tactics that you've been using to minimize the associated risks?
Yasmine:
For a trading company like ours, the biggest challenge isn't necessarily the tariffs themselves, it's the unpredictability that comes with them. We're moving goods across the oceans with transit times ranging anywhere from a few days to over a month. If a tariff gets imposed, once you've concluded a deal or after a shipment is already loaded on the water, it can completely flip the economics of the deal and commodity trading where margins are razor-thin, you can't just absorb these costs and pricing it and potential tariffs is nearly impossible when the rules are changing day by day.
So how do we manage that risk? It starts with open and honest conversations with our customers. If we're exporting US origin goods, for example, and a counter-tariff suddenly applies, we'll have discussions around whether that tariff applies to our specific product.
If it does, we may need to renegotiate the terms or invoke provisions in our contracts that deal with unforeseen changes. If the goods haven't shipped yet, we'll often pivot. We might switch to sourcing from Brazil, Finland, China, region where the tariff doesn't apply. That's why having a diverse supplier portfolio is so critical. The companies that thrive are the ones that are prepared before the disruption. We take a very pragmatic approach.
Mayu:
Do you mind if we zero in on the diversifying the supply chain concept? What are some of the opportunities that you're seeing when you think of the new markets and potentially even new suppliers?
Yasmine:
Diversifying the supply chain isn't just a trend, it's a necessity. At GA, we've seen firsthand how quickly conditions can change in international trade. That's why for us, supply chain diversification isn't just about finding new suppliers. It's about building resilience into the core of our business.
Years ago, we relied heavily on a single supplier. It worked until market conditions changed, and we realized how risky that was.
What helps us manage that risk is surrounding ourselves with the right partners. For example, when you're entering a new country, you need a local partner who understands the regulatory landscape and the cultural nuances. You also need a reliable shipping and logistics network to make sure goods are moving efficiently across borders, and of course, banking partners like BMO are essential when you're navigating currency controls, letters of credit or trade finance instruments.
For us, long-term relationships really matter. It's one thing to find a partner when everything's going well, but when the market turns, when there are strikes, sanctions or policy changes, you quickly see who's in it for the long haul. That's why we put such a high value on trust and consistency.
Our 30-year relationship with BMO, for example, has been instrumental in helping us grow while also protecting the business. We've built a strong trade finance relationship with them, which allows us to operate confidently in challenging environments, whether it's through letters of credit, structured payments or tailored risk mitigation tools. They've guided us through unfamiliar terrain and helped structure deals that would've otherwise been difficult without that foundation.