As global demand for sustainable fashion grows, there is an increased need for materials like Australian Merino wool. Our guide covers the essentials of wool export, including managing duties, taxes, shipping documents, and packaging. Enter major markets and ensure efficient deliveries for successful international expansion.
The wool industry has experienced significant growth in recent years, spurred by the rising popularity of sustainable fashion practices, outdoor and activewear, and ongoing innovation in wool blends. According to the Wool Global Market Report 2024, demand is projected to grow further, reaching $14.95 billion by 2028 at a compound annual growth rate (CAGR) of 8.5%.
The surge in demand for such exports is also observed in Australia, which is famous for its Merino wool. According to a report by the Rural Bank, China, the country’s largest wool buyer, bought over 277 thousand tonnes in 2023. This represents a 6.7% increase year-on-year (YoY) and surpasses the previous record set in 2007.
Similarly, figures from WoolProducers indicate a rise in wool exports to India from 11 million kgs to 14 million kgs between 2021 and 2023. Given the growing demand from Australia’s trade partners and its status as one of the world’s leading wool producers, Australian firms are well-positioned to leverage the country’s advantages to expand into the international market.
Logistics considerations when exporting wool
For Australian businesses looking to capitalise on the global demand for wool products, understanding the logistics requirements and process is vital to ensure a seamless international shipping experience.
1. Duties and taxes
Generally, Australian wool produced from shearing sheep or lambs that only undergo skirting, classing, and baling is subject to a levy or charge. This levy applies to all shorn wool produced in Australia that is sold or used in the production of other goods. It is payable by the producer, who owns the wool immediately after shearing.
The rate is calculated as a percentage of the sale value of the wool, excluding GST and costs incurred for handling, storing, and transporting the wool. Meanwhile, the wool charge is determined based on the free-on-board value of the wool just before export and does not need to be paid if the levy has already been applied.
For specific markets like China, Australian wool enjoys virtually duty-free access under a large WTO tariff rate quota of 287,000 tonnes, with tariffs set at just 1%. While China has the right to impose a 38% tariff outside this quota, it traditionally does not, given wool's importance to domestic manufacturing. Under the China-Australia Free Trade Agreement (ChAFTA), Australia also enjoys an exclusive duty-free Country Specific Quota of 33,075 tonnes of clean wool from January 1, 2018, which is further increased to 44,324 tonnes in 2024. Similarly, businesses exporting wool to India will benefit from the Australia-India Economic Cooperation and Trade Agreement (ECTA), which eliminates tariffs on Australian wool.
2. Shipping documentation
At this point in the export process, you will also need to collect specific documentation before shipment to complete the export paperwork. Examples of such documentation include:
- Commercial invoice
- Packing list
- Bill of Lading or Air Waybill
- Certificate of Origin
Most wool exports from Australia must comply with the International Wool Textile Organisation (IWTO) test. This test can be administered with the assistance of the Australian Wool Testing Authority (AWTA) or the Australian Wool Exchange (AWEX). Depending on where you are exporting to, you may also require other government-issued export documents and certificates. These may come in the form of:
- Letter of Free Sale: This proves that your goods are available for sale in Australia and may be required for registration of goods before export.
- Good Manufacturing Practice (GMP) certification: This certification confirms that your goods are produced according to GMP standards, and it may be required by some countries, such as China.
- Transfer certificates: These certificates prove that your goods were only sent between export-listed establishments and are required by some countries for traceability.
- Government certificates: If your export destination requires export permits or certificates, request them from the Department of Agriculture, Fisheries, and Forestry via the Export Documentation System (EXDOC). As part of the procedure, you must provide clear evidence that your goods meet all import conditions and official requirements. This includes any specific declarations or endorsements that must be included on the certificate, such as manufacturers’ declarations, laboratory reports, and treatment records.
When shipping wool to the European Union (EU), wool exporters must declare the packaging materials used for all wool packs as part of their customs documentation. Besides this, the AWEX Wool Pack Standard also requires Australian wool mills to stitch the manufacturer’s label into the side seam of wool packs, and the labels should contain the following details:
- Manufacturer identification;
- Brand name;
- Batch number/coded year of manufacture;
- Pack/labels/thread materials;
- RFID Tag.
Meanwhile, textile labels are mandatory for wool textiles intended for sale in Europe, and these labels must:
- Explain the composition of the cloth material in decreasing percentage order.
- Write clearly in legible text, using uniform lettering.
- Clearly separate information on textile composition from other information, such as product care.
If you plan to sell woollen consumer goods like clothing, blankets and quilts in multiple EU countries, you must translate the labels into all official national languages. However, do note that a product can only be described as "100%", "pure", or "all" if it is made entirely of one type of fibre.
Meanwhile, Australian businesses exporting to India must have their labels written in Hindi or English and specify the wool textiles’ country of origin, as per the Textiles Regulation 1988.
3. Packaging and labelling requirements
To ensure that each of your Merino wool products arrives at their export destination in their best condition, knowing how to prepare them for worldwide shipping is equally important. A standard industry practice in Australia is to sort the wool by quality and remove any impurities such as dirt, vegetation, or faeces thoroughly before packing the yarn in bales covered with jute or plastic.
When packing woollen products or clothing for shipment, do be mindful to keep them away from direct sunlight and avoid compressing them. In fact, it is also recommended to avoid ground contact as much as possible, as discolouration and decomposition can occur quickly in warm or moist conditions, and contact with soil can exacerbate this.
Ideally, the shipping temperature for wool should be between 5 and 25°C, with an optimum humidity level of around 65% and a moisture content of about 17%. This makes temperature control and monitoring during transit a vital segment of your export process, especially during warmer or wetter periods of the year.
