2023 EXPORTNZ DHL EXPORT BAROMETER: IS THE HIGH COST OF BUSINESS WORTH IT FOR KIWI EXPORTERS?

• A staggering 90% of respondents saw an increase in total costs   
  
• Over 40% listed the high cost of doing business in New Zealand as a major barrier to exporting
  
• On a positive note, 53% of Kiwi exporters expect international orders to increase over the next 12 months

The 2023 ExportNZ DHL Export Barometer, released today, comes at a pivotal time for New Zealand. With the upcoming election and rising inflation rates, the report gives unique insights into the ongoing volatile nature of the export industry.

For the fourth year running, the number one barrier to exporting is cost and availability of transport and logistics. The report highlights that 52% of respondents cited this as a main concern, although the number has decreased from 67% in 2022. The high cost of doing business in New Zealand (44%) and the value of the New Zealand Dollar (27%) are the next most significant concerns for exports. A remarkable 90% of respondents stated they had seen an increase in total costs, with the average increase at just over 20%.

Amidst escalating costs, exporters have responded by raising prices, actively seeking cost-effective strategies, and enhancing internal efficiencies. Encouragingly, 33% of respondents reported an increase in export orders in the past year, with an additional 8% being newcomers to exporting, marking an increase of 4% from 2022. The recent pandemic has profoundly affected the industry with many exporters still working to reclaim a full ‘return to norm’. The report finds many exporters are striving to reclaim authority over cost escalation. A significant majority (57%) are still grappling with shipping delays, while 19% are grappling with shipping space scarcity. Exporters are exploring methods to manage controllables and amplify business orders to counter these challenges.

Vice President, Operations DHL Express New Zealand, Chitra Shinde said, "The report has highlighted that Kiwi exporters are still working to find their footing in a post-pandemic era. Forecasting or predicting the future can be challenging due to multiple macroeconomic factors and local challenges. However, despite these obstacles, it is good to see that 33% experienced an increase in their international export orders. This is reflected in the 50% shipment growth  in our network this year, compared to pre-covid in 2019. Indicating continued strength, healthy cross-border trade is a key indicator of economic recovery and we are encouraged by the improving outlook.”

Australia remains the number one country where Kiwis export goods, with 75% trading across the ditch. This has dropped six percentage points from last year, hinting that Kiwi exporters are starting to look further afield. This was followed by the USA (44%), Europe (40%), the UK (30%) and the Pacific (28%).

This year's report provides a first glimpse into the post-pandemic export industry, revealing notable shifts in various aspects. Among respondents, 47% have increased stock and raw materials, 40% have switched logistics providers, and 14% have either relocated production or found new suppliers within New Zealand. Additionally, 35% have introduced new products/services, and 33% have enhanced business processes.

ExportNZ Executive Director, Joshua Tan said, “This year’s survey results reflect what ExportNZ has heard anecdotally around the country. Exporters are struggling with the increasing cost of doing business from New Zealand, added to this is the need to remain competitive pricewise in international markets, which is squeezing the margins for New Zealand businesses.”

In terms of sustained government support for Kiwi businesses in exporting, 31% of respondents continued to emphasize the significance of support via attending international trade shows. At the same time, with the U.K. and Europe free trade agreements announcements, 27% advocated for continued negotiations and signing of FTAs with new partners, underscoring the drive to maximize FTA benefits for New Zealand exporters. The need and urgency for an immigration system that streamlines international employee access remains a top concern, as 24% of respondents grapple with labor shortages and an additional 5% encounter staffing challenges in foreign markets.

“Although supply chain and logistics costs have eased for exporters, consumer demand in key markets is slowing down. With an election coming up, political parties should note what forms of government assistance exporters are calling for. These results reflect ongoing concerns and areas for growth which are well known to the sector at this point.” continued Tan.

In the aftermath of the pandemic and only a mere 12 months since New Zealand’s borders were fully opened, exporters seem to be reducing their priority on building an online presence. Exporters appear to favor intermediaries over direct online consumer engagement, with 36% of participants still exclusively operating offline and only 9% relying fully on online channels for order placement. Although individual business websites remain the primary source for orders and inquiries, a collective assessment of Facebook, Instagram, and LinkedIn indicates that 45% of respondents experience higher order volumes through social media, slightly surpassing the 37% derived from their websites.

Overall, the 2023 ExportNZ DHL Export Barometer indicates that exporters are still positive about the next 12 months, but will have one eye on their cash flow.