As trade resumes, Australian exports have seen strong recovery in 2021 and can expect further growth in 2022. Despite the promising outlook, export challenges are inevitable. What are the common pandemic-related and traditional exporting problems that businesses face, and what can exporters do to overcome these challenges? Gathering insights from the latest DHL Export Barometer, here’s what you need to know.
Despite the influence of the pandemic, Australian exports have recovered strongly in 2021, according to the latest DHL Export Barometer.
According to the report, 17% more businesses reported growth in export orders this year, while a third of companies recorded an increase in revenue from exporting goods. Businesses are also anticipating growth next year, highlighting reasons like increases in consumer demand, sales and marketing activities, and the launch of new products or services.
However, businesses are still experiencing exporting problems arising from the pandemic, despite the strong recovery in Australian exports. The two main challenges include issues along the supply chain and higher freight costs.
1. Supply chain shortages
As more customers shopped online in light of the pandemic, e-commerce and export orders grew exponentially, resulting in a sharp increase in the demand for cross-border delivery services. At the same time, lockdowns and border closures were implemented to curb the spread of the virus, restricting the movement of goods. This caused delays while importing and exporting goods and resulted in a shortage of raw materials (43%), which caused further delays in the manufacturing process.
Some businesses (43%) also reported that international travel restrictions have affected their supply chains greatly. With travel restrictions in place, exporters are finding it difficult to meet their business partners on the other side of the globe and visit overseas manufacturing facilities in-person. As a result, their ability to facilitate trade is hampered.
2. Increased freight costs
International travel restrictions have led to a sharp reduction in passenger flights that carry freight, resulting in a shortage in airline cargo capacity and increased freight costs. This is compounded by supply chain shortages, which saw many exporters turn to air freight for speed in delivering essential goods. However, existing capacity constraints make it difficult for airline cargo to absorb additional demand, driving up the cost of freight even further. Rising freight costs is the most commonly reported export challenge faced by exporters, and has reportedly impacted 65% of businesses across Australia.
Overcoming traditional export challenges
As export trade resumes, Australian exporters are increasingly faced with the usual exporting problems, on top of pandemic-related ones. According to the report, traditional challenges are now being encountered at 2019 pre-pandemic levels. Among the common export challenges, the top four across all global regions were transport and logistics (25%), tariffs (25%), exchange rates (23%), and strong competition (17%). Only 27% of exporters reported no challenges apart from those arising from the pandemic.
The way forward
Even though more pandemic-related problems are faced by Australian exporters this past year, Australian businesses have demonstrated unyielding resilience. As such, 69% of businesses that reported growth in 2021 can expect further increases in revenue the following year. Businesses that experienced a decline in export revenue (59%) can expect a return to pre-pandemic levels by the end of 2022.
While prevailing problems in the export trade are expected to linger in the aftermath of the pandemic, they are not insurmountable. Businesses like yourself can ensure robust recovery in 2022 by implementing effective growth strategies and focusing on key target markets. Partnering with a reliable and secure logistics network, such as DHL Express, will also minimise export risks and support recovery and growth in 2022.
