Exporters turn to importing to combat rise in local currency, DHL report reveals

More exporters have turned to importing over the past few years due to the surge in the value of the Australian dollar, statistics released today reveal, but only half of all exporters expect to increase profits in the next year.

The exporting market has been under intense pressure, with many forced to abandon their exporting efforts as the dollar hit parity.

However, the 2013 DHL Export Barometer reveals 74% of exporters have turned to importing – a huge increase from just 35% in 2011.

Senior vice president of DHL Express Oceania, Gary Edstein, told SmartCompany companies have been forced to diversify.

“As the dollar was rising, importers were obviously riding that particular wave and getting cheaper imports,” he says.

“But with the dollar coming down again, it’s going to help their export orders. They’ve just had to adapt and cover all their bases.”

Above all else, exporters crave stability. The exporting industry has continually stated it doesn’t necessarily loathe a higher dollar as much as it does instability – currency sitting above parity can be worked around, but a fluctuating dollar jeopardises long-term contracts.

But Edstein says the dropping value of the dollar will assist exporters, especially if they have added imports as another revenue stream.

The report shows exporters in the mining sector are less optimistic that profitability will increase, down from 67% to 42%, while China and the United States were considered the largest international competitive threats overall.

There is also a distinct lack of activity in the online space, with only one third of exporters currently selling online – even though it is the main source of international competition.

Edstein says the survey hasn’t changed much from last year, and overall confidence is still low. Only 48% of the 698 exporters surveyed expect profits to increase in the next year.

But he says this year’s survey comes as the dollar has begun to decline, which should give some companies hope. “There is still caution,” he says. “But it’s improving.”

The export market has been in the headlines over the past week, with the manufacturing sector shocked by the announcement Ford will close its plants by 2016. The news will affect nearly 200 companies in the component supply chain.

Edstein told SmartCompany businesses affected by that change need to start thinking about how they can break into the export market.

“They have to diversify, and the exchange rate is going to be an improvement for them – but it’s also going to be a lot more competitive.”

“We’ve seen customers become more focused on exporting than usual in the past few years.”

The report shows agricultural exporters are focusing on China, while manufacturing businesses are exporting to the Middle East and South and Central America. Mining businesses are shipping to Korea.

To combat the dollar, 34% of companies said they investigated new markets and 33% said they “refined their offering”.

 

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