DHL EXPORT BAROMETER 2019
AUSTRALIAN EXPORTERS REMAIN CONFIDENT IN GLOBAL MARKET OWING TO E-COMMERCE OPPORTUNITIES AND IMPROVEMENTS TO TRADE BARRIERS
- DHL Export Barometer 2019 records a fifth consecutive year of above average Australian exporter confidence, with smaller-sized businesses and those with shorter exporting tenures feeling most positive
- Exporters are becoming more strategic when selecting export destinations, with the average number of markets targeted now at two per business
- E-commerce cited as a further growth opportunity, resulting in exporter plans to invest in job creation and wage increases
- More exporters are experiencing improvements in trade barriers, though tariffs and exchange rates still register concern
Australian exporters remain positive amid the current global trade climate, pivoting growth strategies to leverage e-commerce opportunities and focusing efforts on select overseas markets. Findings of the DHL Export Barometer 2019 reveal that 69% of Australian exporters are confident the coming 12 months will bring an increase in overseas orders for their business. Furthermore, 56% of exporters reported an increase in actual orders in the past 12 months, mirroring figures from 2017.
Commenting on exporters’ global market outlook, Gary Edstein, CEO and Senior Vice President for DHL Express Oceania, said, “Although this year’s level of exporter confidence marks a decline on last year’s record peak of 75% – the highest level recorded since the study began in 2003 – Australian exporter confidence retains its headway at 69% and marks a fifth consecutive year above the long- term average.”
Businesses exporting predominately consumer goods registered the highest confidence level at 75%, while agriculture (71%) and services (70%) followed close behind. Mining sector confidence experienced an upturn, with confidence growing to 65% from 50% in 2018. Meanwhile, the outlook for exporters in the manufacturing sector dropped 9% to sit at 63% this year.
Small Office/Home Office-sized Businesses were most confident (73%), along with Small Businesses (71%). Continuing the trend of previous years, larger and more experienced exporters were the least confident – 52% of Large Businesses and 57% of businesses exporting for more than 20 years recorded the lowest levels of assurance in global exports.
At a state and territory level, exporters based in New South Wales/the Australian Capital Territory (69%) and Victoria (65%) recorded a decline in confidence, while South Australia/the Northern Territory (75%), Western Australia (72%), and Queensland (71%) all showed increases this year.
New Zealand and North America remain top destinations as exporters narrow focus
New Zealand retains the top spot as the most popular destination for Australian businesses at 68% this year. Since 2013, the land across the ditch has been the preferred market for Australian exporters and the only to experience steady growth, rising 17% over this period.
The North America region comes in at second place, with 52% of Australian businesses receiving export orders from customers based there. In the past six years, the portion of exporters doing business in North America has fluctuated year-to-year, but rose 10% overall.
Growth in export orders from the UK have steadied since 2016, registering at 35% in 2019. Trade with markets in Asia has showed signs of softening, as China (32%), Indonesia (20%) and South Korea (13%) all dropped in favour for Australian exporters.
This year’s figures signal a change in tactics for export businesses, with the number of markets they plan to target going forward dropping from three in 2018 to two in 2019.
Tim Harcourt, JW Fellow in Economics at UNSW Sydney and Host of the Airport Economist, commented, “This year’s results show a greater number of small to medium-sized businesses entering the export market. For businesses new to exporting we typically see a trend where they concentrate their expansion in markets with familiar consumer buying preferences, cultures and languages. For Australian export businesses, these markets are likely to be other Western nations, such as New Zealand, the US or Canada.”
E-commerce continues to power growth as exporters project investments in workforce
Sustaining return on investment, online channels proved a fruitful avenue for generating orders or enquires for more than 3 in 4 (77%) Australian exporters this year.
Additionally, results pair with strategies engaged to drive online orders from overseas customers. This year, export businesses have decidedly turned their focus to improving website design (36%, up 9% on 2018) and introducing more competitive promotions and discounts (20%, up 6% on 2018). Offering free or discounted delivery (20%), improving payment functionality (17%), and creating mobile optimised (17%) and localised websites (15%) all recorded increased uptake across the board.
Among the business classifications, Small Office/Home Office Businesses with between one and four employees recorded the strongest participation in online marketing spend (42%), free or discounted delivery (30%) and more competitive promotions and discounts (28%). Whereas, Small Businesses (42%) topped those improving the design of their websites.
“Interestingly, this year we have observed declines in the number of exporters prioritising online marketing spend (down 3%) and improving fulfilment and delivery (down 7%). This could indicate a trend where exporters are strategically focussing on specific areas of their business and online presence at a time. Once measured improvements in these areas have been achieved, in the spirit of continuous improvement, exporters then move on to the next area of development in their business,” Edstein commented.
Furthermore, exporter investment in e-commerce echoes trends on the personnel front. In the next 12 months, close to two-thirds (65%) of Australian export businesses indicate plans to increase wages for current employees, and half (50%) are signalling moves to create new jobs to support further business growth. Among the most confident of exporters these figures register stronger, with 72% to increase wages and 63% to create new jobs in the coming year.
“Plans to provide employees with wage increases and the intention to create more jobs is a strong indicator of the long term outlook of the Australian exporting sector in the midst of a period of national slowdown in regards to wage growth,” Harcourt commented.
Improvements in ease of exporting despite tariffs and exchange rates
Additionally, overall declines in export markets targeted parallel exporter sentiment surrounding the US-China trade disputes – the number of exporters predicting the projected tariffs to impact business has more than doubled in the past 12 months to 45% (up from 21% in 2018).
On a region-to-region perspective, tariffs exist as the most common challenge faced by exporters in the Americas (30%), Europe, the Middle East and Africa (28%), and South East/South Asia and the Pacific (26%). Furthermore, Australian exporters cite exchange rates as a consistent challenge – 30% of exporters are experiencing impacts in the Americas and 27% in North East Asia.
Encouragingly, more Australian businesses are reporting no challenges this year when exporting to the regions of North East Asia (23%, up from 9% in 2018) and Europe, the Middle East and Africa (21%, up from 12% in 2018). Issues with transport and logistics have also improved across the globe for exporters – South East/South Asia and the Pacific has seen an improvement of 6% on the previous year, while Europe, the Middle East and Africa (5%), and North East Asia (4%) all displayed increasing levels of ease.