DHL Export Barometer shows exporters gaining confidence while learning to manage high dollar, international competition and rising raw material costs

  • 61% of exporters expect orders to increase in the next 12 months
  • 48% achieved an increase in orders over the past 12 months
  • Exporters confident about company profitability with 50% expecting an order increase
  • The Middle East the most promising future export market (54%), ahead of North America and China (51%)

The 2014 DHL Export Barometer has revealed that Australian exporters are continuing to gain confidence while learning to manage a high Australian dollar, international competition and rising raw material costs. Exporters are also diversifying their export markets beyond China into the rest of Asia and the Middle East; while the shift away from over-dependence on the mining sector has seen stronger results from the services and agriculture industries over the last twelve months.

Gary Edstein, Senior Vice President, DHL Express Oceania, is encouraged to see that exporter confidence continues to grow: “The DHL Export Barometer has shown that exporter confidence has steadily increased since the lows of 2012. 61% of exporters surveyed expect orders to increase in the coming year, up on last year’s 58%. Exporters are also more confident about company profitability, with 50% expecting an increase in shipments.

“However, only 37% of exporters intend to increase staff numbers in the coming 12 months and only 48% of exporters achieved an increase in orders over the past 12 months, which is slightly down on last year (51%). These results are representative of the cautious market that we have witnessed over the past twelve months. However, all indicators point to overall strength of the Australian economy and the contribution that the exporter community makes to Australia’s prosperity.”

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Export destinations

Tim Harcourt, J.W. Nevile Fellow in Economics at UNSW, provides context to the Barometer results on export destinations: “Whilst media reports imply we are putting all the export eggs in the China basket, the Barometer clearly shows an overall diversity in our export destinations.

“In 2014, the Middle East (54%) is considered the most promising market, ahead of North America and China (51%). Indeed, many Australian companies use Dubai increasingly as a hub for their Middle East operations and with all this commercial interest, there are naturally a large number of Australian expatriates living in the region.

“We already have 250 Australian Businesses in the UAE and 16,000 Australian expatriates. The Middle East and North Africa (MENA) region has a population of just under 400 million, and is a $7.1 billion market for Australia’s merchandise exports, advanced services, research collaboration and technology.”

Compared to last year, the UK and Taiwan have increased the fastest of all regions (up 10% and 11% on 2013 respectively) and overall the results show parity between export growth in both advanced and emerging economies.

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Industry breakdown

The Barometer found services exporters (70%) are the most confident they will increase their export orders over the next 12 months, followed by agricultural exporters (64%) then manufacturers (60%) and miners (39%).

The mining boom is certainly over, with this sector increasing orders over the past 12 months by just 25%, citing rising fuel costs as the biggest negative impact and increasing orders at almost half the pace of those in agriculture (48%), manufacturing (50%) and services (48%).

Harcourt continued: “There are now clear signs the exporter community represents a more diverse group of industry sectors. Some might say we’ve gone from the mining boom to the dining boom with the services exporters most confident they will increase their export orders in the next 12 months.”

Challenges

The high dollar is still considered to have had the greatest negative impact on sales but that has reduced 7% since 2013 (53%), as has the impact of international competition. The number of exporters challenged by international competition (34%, down 5%) and domestic economic conditions (20%, down 8%) has declined, however, the cost of raw materials (29%, up 3%) and regulatory constraints (18%, up 6%) have both become more prevalent.

Edstein commented: “The DHL Barometer revealed that for those companies new to exporting a major challenge is transport and logistics (37%). This highlights the importance of exporters working with suppliers who are interested in their business and see them not just as a customer, but a business partner. Exporters should find out about the support services a logistics company provides and understand how flexible they are prepared to be in their product or service offering.”

When looking at international threats, China was regarded as the biggest competitive threat (55%) followed by USA (31%), India (15%), New Zealand (11%) and Indonesia (11%).

 Online and social

For the first time, the Barometer asked how exporters used social media to generate export orders or enquiries. Overall, 37% of exporters used social media, with 24% using Facebook, 14% LinkedIn, 11% Google+ and 9% on Twitter.

While most exporters provide product and/or service information on their website, many do not provide pricing and shipping information and online booking and payment functionality. Edstein, commented: “Exporters have a great opportunity to enhance the online user experience and therefore increase orders and enquiries. Particularly when you consider that exporters who appear more effective at generating orders through online commerce and those who provide a better user experience tend to be the more nimble, very small businesses (1-4 employees) and businesses that have commenced exporting in the past five years. These same businesses are also expecting more export orders (65%) than those that don’t use online commerce (59%).”

 

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