DHL expects strong recovery in Australian exports

This year 69 per cent of Australian businesses believe their export revenue is likely to increase in the coming 12 months according to survey results published by logistics firm, DHL.

This proportion is reportedly on par with 2019 levels following a 19-year low of 47 per cent of exporters in 2020.

Businesses highlighted a range of reasons for expected growth next year, including increases in customer demand, sales and marketing activities, and the launch of new products or services.

This optimism extends to the number of businesses that plan to hire new staff (48 per cent) and increase wages (57 per cent) in 2022.

Covid-19 impacted export revenue but recovery is expected in 2022.

Reflecting on the previous 12 months, more businesses this year (45 per cent, up 17 per cent from 2020) reported growth in export orders. In terms of revenue, a third (33 per cent) recorded a slight or significant increase, with large businesses and businesses selling to consumers more likely to report growth.

Although close to half of the exporters (48 per cent) reported a slight or significant decline in revenue due to Covid-19 this year, the proportion was an improvement from 57 per cent in 2020. Exporters based in New South Wales, the Australian Capital Territory, Victoria, and Tasmania were more likely to report a decline in export revenue. For businesses that experienced declining revenue in the past year, 59 per cent expect export revenue to return to pre-pandemic levels by the end of 2022.

New export challenges for businesses was revealed, with the increased cost of freight most highlighted.

This year, more businesses encountered export challenges stemming from the pandemic. The increasing freight cost impacted 65 per cent of businesses, followed by supply chain issues such as a shortage of products or raw materials (43 per cent), and international travel restrictions (43 per cent).

“Pandemic-related challenges have impacted more businesses this year,” said DHL Express Australia CEO and Senior Vice President, Gary Edstein.

“International travel restrictions that created a shortage in airline cargo capacity in 2020 have created flow-on effects to the cost of freight and the ability of exporters to visit business contacts and manufacturing facilities overseas.

“Furthermore, as consumers have taken to e-commerce, export orders and demand for cross-border delivery services have grown exponentially.

“However, Australian businesses have remained steadfast, and it is positive to see more businesses in 2021 reporting growth and 69 per cent expecting further increases in 2022. The pandemic has proved how vital international connections are for sustaining global trade. Businesses with efficient growth strategies, considered target markets and the support of robust logistics networks such as DHL Express will continue to recover into 2022.”

Businesses are concentrating focus on export markets, according to DHL, with North America now the main target.

This year, the average number of export markets targeted by businesses dropped to 3.8, down from 4.4 in 2019-20. The most common export destinations included: New Zealand (targeted by 58 per cent of businesses), followed by North America (52 per cent), Europe (39 per cent), and the UK (38 per cent). Looking to 2022, the most popular destinations businesses plan to target in their export activities are New Zealand (21 per cent), North America (19 per cent), Europe (18 per cent), and the UK (18 per cent).

In terms of the main export destination for a business, North America took the top position this year, with 27 per cent electing it as the main export market, surpassing New Zealand which ranked first in past years. At 25 per cent, New Zealand was the second main export destination this year.

More exporters are also using e-commerce to generate orders.

In 2021, coinciding with the move to remote work and growth in online shopping, a record 82 per cent of export businesses used e-commerce to generate sales orders, up 8.0 per cent from 2020. Small office home office-sized businesses were more likely to use e-commerce, at 86 per cent.

Businesses that reported growth in revenue this year were more likely to employ strategies to drive online export orders. Looking to 2022, investing in online marketing (40 per cent) is most popular, followed by improvements to website design (34 per cent), fulfilment and delivery (29 per cent), and customer service (26 per cent).

Since 2003, the DHL Export Barometer has surveyed Australian businesses on their export experiences and growth strategies. The 19th edition was conducted by ACA Research, and surveyed 1,438 businesses from the databases of DHL Express Australia and the Export Council of Australia between 1 and 22 September 2021.

By location, businesses based in NSW/ACT accounted for 36 per cent of the sample profile, followed by VIC/TAS (32 per cent), QLD (18 per cent), WA (7.0 per cent), and SA/NT (6.0 per cent). Small office home office-sized businesses of between one and four employees made up 46 per cent, followed by small businesses of five to 19 employees (30 per cent), medium businesses of 20 to 99 employees (17 per cent), and large businesses of more than 100 employees (8.0 per cent). Businesses which have been exporting for five years or less accounted for 47 per cent, 6-20 years (34 per cent), and more than 20 years (19 per cent).