The 2014 DHL Export Barometer indicates rising confidence among Australian exporters as they learn to manage a strong Australian dollar, international competition and rising raw material costs.
Exporters are also extending the borders of their export markets beyond China into the rest of Asia and the Middle East. There has also been a perceptible shift away from the mining sector to the services and agriculture industries over the last twelve months.
Commenting on the growth in exporter confidence, Gary Edstein, Senior Vice President, DHL Express Oceania said 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.
Representing the cautious market of the past twelve months, 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%). However, all indicators point to overall strength of the Australian economy and the contribution that the exporter community makes to Australia’s prosperity.
Providing context to the Barometer results on export destinations, Tim Harcourt, J.W. Nevile Fellow in Economics at UNSW explains that the Barometer clearly shows an overall diversity in Australia’s export destinations, especially in the Middle East and North Africa (MENA) region. The Middle East (54%) is considered the most promising market, ahead of North America and China (51%) with several Australian companies using Dubai as a hub for their Middle East operations
Compared to last year, the UK and Taiwan have increased the fastest of all regions (up 10% and 11% on 2013 respectively).
The Barometer found that services exporters (70%) are the most confident about increasing their export orders over the next 12 months, followed by agricultural exporters (64%), manufacturers (60%) and miners (39%).
Orders in the mining sector have risen by just 25% over the past 12 months, with rising fuel costs cited as the biggest negative impact.
Harcourt comments that the exporter community represents a more diverse group of industry sectors.
The strong 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 increased.
According to Edstein, a major challenge for those companies new to exporting is transport and logistics (37%), highlighting the importance for exporters to work with suppliers interested in their business as a partner.
Free Trade Agreements (FTA)
Of potential Free Trade Agreements, 61% of exporters thought a China – Australia FTA would benefit their business, 31% said it would have no effect and only 8% said it would be negative.
On an FTA with Japan, 35% of exporters felt it would have a positive impact. Of the exporters who viewed it favourably, 59% said it would assist them to increase their exports to Japan and 38% said they would start exporting to Japan.
Online and social
The Barometer entered the online space for the first time to find out how exporters used the web and social media channels to generate export orders or enquiries. Overall, 37% of exporters used social media, with 24% using Facebook, 14% LinkedIn, 11% Google+ and 9% Twitter.
While most exporters provide product and/or service information on their website, many do not provide pricing and shipping information or online booking and payment functionalities. Edstein believes the Internet offers exporters a great opportunity to increase orders and enquiries by enhancing the online user experience. Exporters who appear more effective at generating orders through online commerce and providing a better user experience tend to be the more agile, 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%).