Kiwi exporters are seeing a positive recovery in international export order performance following disruptions due to the pandemic. According to the 2022 ExportNZ DHL Export Barometer, 52% of Kiwi exporters have experienced an increase in exports, while only 21% have reported a decrease. This is a significant improvement from 2021, where 31% reported a decrease in exports. Expecting incremental growth for the years after, the report also highlighted that 67% of exporters expect international orders to rise, 5% up from 2021 and a notable 17% increase from 2020. Only 7% foresee a decrease, a sentiment reported by twice as many exporters in 2021.
Alongside compelling numbers that paint a positive picture when shipping from New Zealand, we further glean significant findings from the barometer report that can inform the trends of 2023.
1. Four types of trade barriers to overcome in New Zealand
For three consecutive years, transport and logistics costs and availability have been ranked the top trade barrier for respondents; 67% of them cited this as a major hurdle. Seconding this is the high cost of doing business in New Zealand, 34% of exporters noted. Meanwhile, 24% of respondents cited the value of the New Zealand dollar as the third major barrier, indicating exporters' concerns with the currency's weakness as the cost of shipping materials from international markets has surged significantly.
Delayed transit times and corresponding rising costs when exporting from the country, as a result, have equally impacted them. 88% of exporters experienced delayed transit times and increased supply chain costs, while 48% were unable to secure shipping space. These issues, coupled with high business costs, logistics and transport expenses, volatile currency values and labour costs, can lead to squeezed profit margins. Exporters may find it challenging to pass these costs onto their customers too, as they risk making their exported products less competitive against domestic producers.
The struggle to find skilled workers emerged as the fourth trade barrier, cited by 22% of exporters. Although 63% are not experiencing difficulties filling job vacancies, 48% have advertised job vacancies for four or more months. This makes the lack of suitable candidates apparent. In particular, the top five areas candidates are lacking in are work readiness (48%), other (29%), literacy (19%), numeracy (16%) and IT (15%). The mismatch between competencies required and supply makes it tough for exporters to find the right talents; when the demand for highly skilled workers is high (40%), only 18% of applicants match the skills required. The converse occurs for low-skilled vacancies. It’s important to note here that the problem of labour shortages is also impacted greatly by the Great Resignation sweeping across the globe; exporters must therefore relook into employee engagement policies and find ways to retain talent better.
2. Diversifying without reducing product value is key
Noting that change was the only constant forward, New Zealand exporters have implemented new measures best suited to their needs. Among the exporters surveyed, 44% developed new products and services to accelerate exports and 40% improved business processes. Many are also holding more stock on site, with some relocating offices offshore to deal directly with the market as a way to cushion against challenges impacting orders. However, most Kiwi exporters maintained their value in the global market since only 9% reduced sales prices to increase exports. In addition, 29% of exporters found shipping to new markets an important focus: Australia is the favourite destination, followed by North America and Europe.
3. Increasing online marketing spend and maintaining omnichannel presence will offer a greater impact
The forced pivot to online selling during the pandemic is reflected in the figures, with 44% of exporters increasing their digital presence in 2020 and 2021, and only 37% in 2022. This indicates that plenty of businesses have sorted their online stores and already have them up and running. Only 23%, down from 22% in 2021, reported a full offline business, further supporting the narrative that the online realm is the biggest source for orders and enquiries today. Interestingly, the number of exporters with a 100% online business decreased to 10% in 2022. Considering the easing of pandemic restrictions, consumers have probably reverted to their traditional modes of shopping, such as through brick-and-mortar stores. Yet, since 23% of businesses enjoy online sales between 80-100% of their revenue, an omnichannel approach to selling now manifests itself as the next best strategy for sales. Despite this, a majority of exporters (65%) spend less than 10% on online marketing, an area businesses should consider looking to, especially in the two top driving platforms – social media (52%) and social media channels (36%).
