february/march 2016
Which markets should you target in 2016? Page 4
Exporters’ wishlist for 2016 Page 6
Finding finance may be easier than you think Page 8-11
Wine exports booming Page 14
Exporters // most february make of / march 2016 Japan FTA Page 18
Travel Special Which // 1 are the world’s safest airlines? Pages 20-21
a smarter way to trade
From the editor Show me the money: Access to finance may be easier than you think
Our team Director and National Sales Manager
Julie Fletcher
julie@dynamicexport.com.au
A
ccess to finance is a consistent barrier to SMEs looking to expand their export operations. Around a third of companies surveyed in last year’s Australian International Business Survey (AIBS 2015), admitted they were unable to secure the necessary finance to expand their business internationally. And the figure rose to almost half for small exporters. This can hold SMEs back from maximising opportunities in foreign markets. The survey revealed the most common reasons for failed funding attempts were security issues and inadequate cashflow. For most exporters, the bank is the first port of call when borrowing additional funds. But when faced with a knock back from a bank or other source, many SMEs are unaware of where to turn for assistance. Organisations such as Efic, the Australian Government’s export credit agency and Scottish Pacific may be able to assist. Scottish Pacific, which was named Best Trade Finance Provider 2015, is the first non-bank to be approved by Efic. They can provide financial support to SME exporters, or SMEs involved in an export-related supply chain. In our special Finance feature in this edition, we explain how SME exporters can break down some of the financial barriers and realise their export ambitions. By unlocking the door to funding, Australian exporters can look forward to 2016 with much optimism. And with a steadily falling dollar and a raft of free trade agreements now in place the future certainly looks bright. We wish Australian exporters every success in the year ahead.
//
Editor
Tim Michael editor@dynamicexport.com.au
Production
Veronica Avant IT Manager
Rob Fearn Contributors
Anthony Fensom, Kim Mauch, Barry Thomas, Andrew Watson Nada Young Advertising enquiries:
advertising@dynamicexport. com.au
Editorial submissions: editor@dynamicexport.com.au
Tim Michael Editor editor@ dynamicexport. com.au
Published by: Think Positive Pty Ltd PO Box 221 Waverley NSW 2024 Australia www.dynamicexport.com.au
@dynamicexport
Think Positive Pty Ltd cannot be held liable for any person(s), company or business acting upon or using the information provided in this e-magazine in any way. Information and content in Dynamic Export e-Magazine is provided to the best of our knowledge. We advise that you should seek independent professional advice to verify that all information is accurate and correct.
february / march 2016
// 2
news
LATEST NEWS
news
3-5
Which export markets should you target in 2016?
What’s on 30-31
Local & international events
6-7
FEATURE
8-9
FINANCE
Exporter wishlist for 2016
How exporters can break down financial barriers
10-11
FINANCE
More industries now seeking export finance
12-17
FOOD & BEVERAGE Wine exports booming
18
JAPAN
Exporters make the most of Japan FTA
19
MIDDLE EAST
Australia to train Saudi health professionals
20-22
TRAVEL
Which are the world’s safest airlines?
24-27
FREIGHT
Top 10 tips for managing freight costs (Part II)
28-29
FEATURE
Aussie roof rack business racks up $50m a year in global sales
Why taming Four Tigers makes more sense than taking on a Dragon
T
nada young he Four Asian Tigers – South
And yet, these factors are trivial when
Korea, Singapore, Hong Kong
compared to doing business with
and Taiwan, are resilient, free
China, the Dragon of the East. Intricate
markets with a thriving middle
and changeable regulatory systems
class and a thirst for international goods.
mean that it can take many long
They sit apart from their Asian neighbours
months before compliance is gained
as role models for growth and prosperity.
and your goods can be legally sold in
Exporting to the Tigers is a breeze thanks to clear regulatory platforms and
China. The complex nature of the market
uncomplicated business processes. In
also makes it difficult to know your
the Food and Beverage (F&B) sector,
customers, respond to market changes
where I operate, compliance with local
and protect your investment.
authorities can be achieved in a matter of
Its common to hear cautionary tales
days. No time is wasted wading through
of exporters who have not been paid
layers of red tape.
or have lost their market share due to
Of course, exporting to the Four Tigers is not without its challenges. Strong competition from rival nations, expensive
copy cats manufacturing their product for a fraction of the price. With challenges like these, taming
trading terms and communication
the Four Tigers is a walk in the park
challenges are part of doing business in
compared to taking on the Dragon of
these markets.
the East •••
Nada Young is Asia Market Director, Incite, an export development agency for food and beverage companies trading with Asia. Contact: nadayoung@exportincite.com | www.exportincite.com
//
february / march 2016
// 3
news
‘Free trade agreements should help boost overseas sales in 2016’
Which export markets should you target in 2016? Australia’s top trading partner, China is noticeably slowing while the rest of the world struggles to pick up speed. Anthony Fensom
S
o which markets should Australian exporters target in
For the calendar year, GDP expanded by 6.9 percent, below Beijing’s 7 percent target and missing the official estimate for
2016? Two-way trade with China totalled more than $152
the second straight year. According to ANZ Research, China’s economy could slow
billion in 2014, and with the China Australia Free Trade Agreement (ChAFTA) coming into force in December 2015
further to a 6.4 percent expansion this year and as low as 6
exporters might hope for more gains in the world’s second-
per cent in 2017, as the economy continues its transition from
biggest economy.
investment-led to consumption-driven growth.
However, China’s latest gross domestic product (GDP) data
Yet the figures were not all bad, with retail sales rising by
showed its worst quarterly performance in 25 years, with
an annual rate of 11 per cent in December, while average per
the communist giant expanding by 6.8 per cent in the fourth
capita urban disposable income rose by 8 per cent last year
quarter of 2015, down from 6.9 per cent the previous quarter.
to reach US$4,740 (A$6,860).
//
february / march 2016
// 4
news
partner in 2014, with two-way trade of around $30 billion.
Services made up more than half of the economy last year, exceeding manufacturing, highlighting the potential for
ANZ Research expects the city-state to post a 2.3 per cent
further export growth for Australian services.
GDP expansion in 2016, up from an estimated 2.1 per cent
Australia’s second-largest trading partner, Japan, narrowly
last year, but the latest export data showing a drop in non-oil
avoided recession in 2015 after growth slowed in its major
domestic exports shows the challenges ahead for the trade-
export markets, including China.
dependent economy. According to the IMF, the world economy should pick up
In its latest World Economic Outlook report released on January 19, the International Monetary Fund (IMF) forecast
speed this year with estimated GDP growth of 3.4 per cent
the world’s third-largest economy would expand by 1 per
in 2016 and 3.6 per cent next year, however risks remain
cent this year, up from last year’s 0.6 per cent rise, but with a
tilted to the downside including China’s rebalancing, lower
slowdown predicted in 2017 to just 0.3 per cent following a
commodity prices and rising US interest rates. For exporters seeking the next big growth market, India
planned sales tax rise that year. However, exporters have been quick to capitalise on last
is set to outperform as the fastest growing major economy
year’s launch of the Japan-Australia Economic Partnership
with an estimated GDP gain of 7.5 per cent this year and next,
Agreement (JAEPA), which has boosted two-way trade worth
although ANZ Research has described its growth recovery
‘Two-way trade between Australia and South Korea offers the potential for further export growth’ as “patchy.”
around $70 billion in 2014
The “ASEAN 5” nations of Indonesia, Malaysia, the
Better prospects are seen for Australia’s third-largest trading partner, the United States, which according to the
Philippines, Thailand and Vietnam are also expected to
IMF should see GDP growth of 2.6 per cent this year and next
improve with GDP growth of 4.8 per cent this year and 5.1 per
on the back of strengthening housing and labour markets.
cent next year, helped by the implementation of the ASEAN
With two-way trade of around $60 billion in 2014, Australian exporters will be hoping that the Trans-Pacific Partnership (TPP) is ratified by the US Congress this year, reducing trade
Economic Community, although weaker prospects are seen for sectors exposed to the commodities slowdown. Growth expectations among Australia’s other top trading
barriers to the world’s largest economy, although US political
partners of New Zealand, United Kingdom, Malaysia,
circles will be focused on the presidential election campaign
Thailand and Germany also differ, with the UK expected to
ahead of November’s poll.
deliver a 2.2 per cent GDP gain this year and next compared
Elsewhere, Australia’s fourth-largest trading partner, South Korea, is expected by its central bank to post 3 per cent GDP
to Germany’s 1.7 per cent. ANZ Research expects the Kiwis to do even better though,
growth in 2016, below its previous projection of 3.2 per cent
with a forecast 2.5 per cent rise in 2016 and 2.8 per cent
due to a weaker external trade outlook.
next year, helped by improved financial conditions, a strong construction pipeline, record net migrant inflows and a
With China representing around a quarter of its total
tourism boom.
exports, the slowdown in its biggest trading partner is dragging down growth in South Korea, along with lower oil
For Australian exporters, an improved world economy and the benefits of Australia’s recent Asian trade deals should
prices and falling electronics demand. However, with two-way trade between Australia and South
help boost overseas sales in 2016, even while the nation’s
Korea reaching nearly $35 billion in 2014, the Korea-Australia
major trading partners show mixed performance in the Year
Free Trade Agreement (KAFTA) launched in December 2014
of the Monkey. •••
offers the potential for further export growth, from Australian automotive components to dairy and telecommunications. Also in Asia, Singapore was Australia’s fifth-largest trading
//
Anthony Fensom is an experienced business writer and communication consultant with more than a decade’s experience in the financial and media industries of Australia and Asia.
february / march 2016
// 5
FEATURE
Australian exporters’ wishlist for 2016 Barry Thomas
The New Year is a time when people look forward, but also look back. Now that 2015 is done and dusted, exporters also have high hopes for the new year. Here are a six key wishes we would like to see granted in 2016: nations
1. Support for manufacturing
2015 saw some big changes for exporters, including
Manufacturing in Australia has been struggling to survive for some time. As such an integral element of
increased openness to trade with a variety of nations. The
production generally, manufacturing should be a priority.
China-Australia free trade agreement and the Trans Pacific
The government’s innovation statement, released late
Partnership both demonstrated Australia’s willingness
last year, was a turning point for innovation as a stimulant
to engage in trade with a variety of nations. Support for
for the economy. However it lacked any significant
exporters through trade agreements ensures that we can
change for manufacturing. Exporters, many of which
have a seamless trading environment based on common
are also proud Australian manufacturers, would flourish
international trade and business standards. What’s important
under better policy for industry.
now is how these agreements translate into action. It’s up to policymakers to work with these markets to make sure the
The patent box-style AIM Incentive (developed by Cook and other industry leaders) will ensure protection
agreements make the difference they are intended to make.
and support for companies with Australian-based
4. Keeping the innovation cycle turning
manufacturing, as well as incentivise new manufacturers
Manufacturing and innovation need to work hand-in-hand with one another to establish a successful export system.
to commercialise within Australia. 2. Better policies for keeping IP in Australia
Any part of the system that goes missing has a domino
Attendees at Wyatt Roy’s policy hack earlier this year
effect on the rest.
developed a list of ideas to boost Australia’s economy.
The existing R&D Tax Incentive aims to support innovation
Keeping intellectual property in Australia was one of
by offering businesses financial assistance to offset the costs
them.
of R&D. However it is limited in its effect: any innovation
In order for Australia to maintain high levels of exporting
resulting from it can be vulnerable to being sold or manufactured overseas.
overseas, it is imperative to keep innovation in the country. Losing the manufacturing and commercialisation
If policy acknowledges R&D as the only important element
of products offshore not only damages the Australian
of the innovation cycle, it ignores the others – and risks
economy but also neglects local talent and weakens
losing valuable organisations internationally.
business relationships among local companies. We need
With other markets introducing tax incentives that require
a policy that rewards manufacturers who export their
R&D to be carried out in the country of origin, we also risk
products but retain intellectual property in Australia. The
losing R&D as businesses choose to relocate entirely for the
AIM Incentive is ideal. It will promote innovation within
better overall benefits overseas.
industry, as well as increase our competitive advantage, maintain jobs and increase sales throughout international
Policy must recognise that manufacturing and innovation as two sides of the same coin. 5. Implementation of renewable energy
markets. 3. Continued support for trade relationships between
//
Corporate social responsibility towards the environment
february / march 2016
// 6
FEATURE
TPP to deliver new opportunities for exporters The Trans-Pacific Partnership (TPP) is set to open new doors for Australian business with 40 percent of our global trading partners.
B is becoming increasingly important for organisations and business owners. Renewable energy will not only lessen the effects of climate change but will also encourage camaraderie in the workplace. Environmentally sustainable practices are beneficial to businesses as they encourage public and corporate support of company policies around sustainability – we saw this at Cook after implementing our own green initiatives. And given that the Australian government pledged to double its funding for research into clean energy by 2020 at the Paris Climate Conference, there’s no better time for businesses to get involved. 6. Support – for everyone Startups – which are growing rapidly thanks to 21st Century technology – contribute just as much to the innovation economy as large companies. These have been known to thrive on collaboration and community support. Opportunities for new entrepreneurs to develop their offerings and move towards exporting them should be available. We’ve seen some positive developments in 2015 – the new policy focus on innovation shows promise and the weakening Australian dollar has provided some relief. But we’re still a long way from where we’d like to be: a country set up for exporters to flourish. Here’s to innovation, jobs and a strong economy over the next 12 months. ••• Barry Thomas is Managing Director of Cook Medical Australia and Director Cook Medical Asia Pacific. Barry has more than two decades of international leadership and expertise in the pharmaceutical and medical device industries and he currently spearheads the world’s fastest growing region for Cook Medical. His current position sees him working to expand the opportunities for people in Asia to access Cook Medical’s advanced and minimally invasive medical devices.
//
usiness and industry groups have welcomed the recent signing of the trade agreement, which will “level the playing field for business, workers and farmers.” The Business Council of Australia says the TPP is “the first concrete step towards realising the long-term vision of a Free Trade Area of the Asia-Pacific.” “It brings close to half of global trade and around 70 per cent of Australia’s trade under one trade agreement,” said Business Council Chief Executive Jennifer Westacott. “The TPP levels the playing field for business, workers and farmers, which means more jobs, higher wages, stronger growth, a higher standard of living and new economic opportunities for Australia.” Ms Westacott said the TPP addresses a wide range of complex trade policy issues that go beyond the scope of bilateral free trade agreements. “The agreement will reduce tariffs and restrictiveness of non-tariff measures as well as harmonize a range of regulations to encourage the integration of supply chains and cross-border investment,” she said. Important milestone “Against the background of slowing trade growth, rising non-tariff impediments to trade, and insufficient progress in global negotiations, the ratification of the TPP represents an important milestone for Australia and the Asia-Pacific region. “Seen in the context of the cumulative impact of three ambitious bilateral free trade agreements these deals open the door for Australia to the geographical epicentre of global growth.” Australian Industry Group Chief Executive Innes Willox said the signing of the TPP is a welcome milestone in the implementation of the agreement. “The real benefits of this agreement lie in the impetus it gives our trading partners to undertake the sort of structural reforms that Australia has in the main already undergone,” Mr Willox said. Speedy ratification “The TPP will provide Australian companies with a guaranteed set of rules in which to operate throughout the region and protect Australian interests. “This demonstrates the true value of multilateral agreements over bilateral agreements.” Both key groups representing business and industry are looking forward to a “speedy ratification” to deliver commercial opportunities for Australia. •••
february / march 2016
// 7
FINANCE
How exporters can break down financial barriers
Andrew Watson
Export is an exciting way for any business to grow its operations, but while Australian exporters continue to win contracts against global competitors, many find it difficult to access the finance they need to deliver on these opportunities.
I
t’s a topic that often comes up in our conversations with
small and medium-sized enterprises (SMEs), and is a barrier that consistently holds them back from competing internationally. Even established exporters can face challenges in securing the finance they need to grow their business overseas. One such exporter is NSW-based Down
With a rapidly growing
Down Under exports its
Under Enterprises, which
full range of products to
export operation, Down
specialises in the export
the United States, where it
Under needed additional
and distribution of a wide
has distribution facilities in
working capital to fulfil
range of wholesale natural
Cleveland, Ohio. From here,
its ongoing supply
Australian essential oils,
the oils are distributed to
requirements and meet
carrier oils and other
wholesale customers, private
orders for its products.
ingredients for the global
label manufacturers, and
personal care market.
natural product and multi-
has been very supportive
national companies in the
of its export business, it
US, Canada and Brazil.
was unable to approve the
Founded in 2001 to export Australian tea tree oil, Down Under now exports and
Down Under began
While Down Under’s bank
finance Down Under needed
andrew watson Andrew Watson is Executive Director, Export Finance, Efic
distributes a wide range of
exporting to Asia in 2012,
and so it suggested Down
oils including eucalyptus,
with representation in
Under speak to Export
expand and fulfil its ongoing
sandalwood and lavender.
five countries and selling
Finance and Insurance
supply arrangements.
All are 100 per cent pure
directly into a further four.
Corporation (Efic). Efic provided Down Under
Down Under’s challenge with accessing finance is
oils and native to Australia,
The logistics for these
with the tea tree oil being
rapidly growing markets
with a $200,000 Export
something that we often
supplied primarily from the
is supported by a new
Contract Loan, which gave
encounter when speaking
company’s family-owned
warehouse operation in
the business the additional
with SME exporters about
plantations in Australia.
Brisbane.
working capital it needed to
the export challenges they
//
february / march 2016
// 8
FINANCE & BUSINESS
face. Much of this difficulty relates to the fact that SMEs’ funding requirements often
to overcome any financial barriers your business may face. There are also a number
don’t match the standard
of options that can help you
lending criteria of banks,
finance an export or export-
making it difficult for them to
related contract.
attain the credit they need.
As Australia’s export
This lack of access to
credit agency, Efic is able to
finance can often result
provide financial support for
in SMEs leaning on other
SME exporters to help them
sources to grow their
fulfil export contracts.
business, from drawing down
For more information on
on home loans to borrowing
how to overcome financial
from family and friends.
barriers to export, download
Working closely with your
the free eBook for SMEs,
accountant and banker
Export-related finance:
from the beginning of your
http://www.efic.gov.au/
export journey can help you
export-related-finance/ •••
//
february / march 2016
// 9
FEATURE
More industries now seeking export finance Leading trade finance provider Scottish Pacific is fielding funding enquiries from Australian SMEs in a broadening range of industries, as more small businesses look to secure finance to export.
overseas, and needed extra working capital to keep up with their sales growth. Scottish Pacific provided a fully-tailored suite of working capital facilities of up to $1 million via: • A debtor finance facility that provides funding secured against Australian receivables in AUD & USD; • An export finance facility secured against overseas receivables in AUD, USD & NZD; • An import finance facility. This supply business’ expansion to international markets is now full steam ahead because the Scottish Pacific Export Finance
T
facility is providing funding
he strongest trend
margin and little in the way
industry by guaranteeing
for sales to businesses in
for export enquiries
of competition,” Mr Michie
commercial finance facilities
20 different countries and
in late 2015 and
said.
taken out by Australian
across three currencies
companies exporting or
(AUD, NZD and USD).
early 2016 has been from
“For these and other
This exporter chose
wineries, beauty and
Australian SMEs looking to
operating in the export
healthcare businesses and
export, trade finance and
supply chains.
specialised manufacturing
debtor finance can offer fast
including meat products
and flexible solutions to
named Best Trade Finance
finance, import finance
and defence force
fund their export ventures.”
Provider 2015 in the annual
and export finance) were
Exporters typically utilise
Scottish Pacific was also
Scottish Pacific because multiple facilities (debtor
international Trade Finance
available from the one
Craig Michie, Head of
export factoring or bill
Global Excellence Awards,
provider and the total
International Finance at
facilities as the primary
for their contribution to the
facility limits of $1 million
Scottish Pacific, said there
means of financing
global trade finance sector.
were attractive compared
had also been increased
overseas trading, which
Why export finance?
with the $200,000 in total
demand for export funding
may be supported by a
A recent Scottish Pacific
facilities previously provided
from technology companies
letter of credit to secure the
client turned to export
specialising in systems and
transaction, Mr Michie said.
finance to help their
equipment.
servers.
Scottish Pacific is the first
by their bank. “This client, and many
catering equipment supply
others like them, now has
non-bank to be approved
business to grow. This
a one-stop working capital
manufacturing companies
by Efic, the Australian
business had just won
solution that simplifies
are growing quickly due
Federal Government’s
a large tranche of new
managing customers
to a niche market for their
export credit agency. Efic
contracts with hotels and
domestically and overseas,”
services and goods, a high
supports Australia’s export
airlines in Australia and
Mr Michie said. •••
“The specialised
//
february / march 2016
// 10
FINANCE
Scottish Pacific acquisition to give SMEs a boost
Langham said. “Scottish Pacific’s offering as a working capital lender for SMEs was already strong and is now even more a comprehensive funding alternative for small businesses looking to grow, whether domestically or overseas,” he said. Scottish Pacific is the only non-bank approved by the Federal Government’s Efic agency to help fund SME
S
cottish Pacific Business Finance has acquired the
exporters, and has a strong trade finance division as well as
Australian and New Zealand business of Bibby
a selective invoice finance offering. In recent years, Bibby’s expansion beyond debtor finance
Financial Services. Announcing the acquisition,
Scottish Pacific CEO Mr Peter Langham said small to
has been into credit insurance, asset finance, a collections
medium enterprises and startups looking to fund business
business as well as progress claim finance. “With the acquisition, Scottish Pacific clients will be
growth now have improved alternatives outside the Big
able to access a broader range of funding and business
Four banks and broader banking sector. “Business owners make it clear to us, via our SME Growth Index, that far too many SMEs still don’t know about funding options beyond the banks, and when the banks won’t fund them they look to their family and friends or
solutions, all without having to mortgage the family home,” Mr Langham said. “Our expanded team looks forward to working with the SME sector to support their growth.” •••
the credit card to maintain and grow their business,” Mr
//
february / march 2016
// 11
FOOD & BEVERAGE
China importing more wine, but is consuming less Despite an increase in exports last year China’s wine market is still slowing as a result of government austerity measures, a new study shows.
Ltd wine prices and retail values will continue to shrink in the coming year. Price cuts that kept China’s wine market low in recent years will continue this year, the report predicts. And the retail market value will shrink, only to rebound from next year, with the market growing at a healthy 5 percent or more until 2020. Up until 2012, volume growth was in double digits, but the government’s anti-extravagance campaign hit sales and imports of wines hard. Volume growth turned negative, necessitating industry restructuring and price cuts. Three years on, the market is showing signs of recovery, suggesting cuts helped prices to reach a sustainable level amid relatively strong demand from the mass market. The nature of demand is also changing. Although red wine has dominated the China wine market for long, other types like white wine and sparkling wine are eating into its share. And although imported bottles are seeing a high growth rate, many are taking the place of domestic wine, which Vinexpo says is seeing a “sliding” market share.
N
ew research by Vinexpo found the country’s anti-corruption
campaign and economic slowdown was impacting on wine sales. The wine market research firm
Experts believe the category with the French and Australian wines dominated the import market. French wine imports increased by 36.1 percent in volume and 34 percent in value to equal $623 million, while
most potential amidst these market conditions is mid-priced wine as opposed to high-end labels from the boom era. According to China customs data, the
reported that Chinese wine drinkers
Australian imports grew by 83.6
average price of China’s imported wine
consumed 131.9 million cases of red
percent in volume and 58.7 percent in
has been declining since 2013, with
wine in 2015 – 7 million cases less than
value.
many new distributors selling cheaper
2014 and 16.8 million less than 2013. This decline occurred even though
Despite their recent gains, import levels remain below those of the
wine in bulk through online shops. As China’s growing middle class
Chinese customs figures for the first
pre-austerity era and experts are not
gains more interest in wine and the
nine months of 2015 indicated that
expecting a full China wine market
anti-graft campaign continues, more
wine imports rose by 38.7 percent in
recovery this year.
people are switching their focus from
volume to 297.7 million liters and by 34.7 percent in value to $1.4 billion.
According to the latest issue of the China Wine Report by Mintel Group
//
top-tier wines toward mid-range options. •••
february / march 2016
// 12
FINANCE & BUSINESS
SA food and wine exports reach record heights South Australia is now exporting more food and wine than ever before, with total overseas exports reaching a record $5.2 billion.
T
The original target of $3.2 billion has already been
his represents 46 per cent of the State’s
exceeded – reaching $3.25 billion in 2014-15, with the new
merchandise exports.
target set for $3.6 billion by 2016-17.
The SA Government’s latest Food and Wine
ScoreCard shows a $1.1 billion increase in gross food and wine revenue for 2014-15, compared to the previous year. The value of the State’s food exports to the United States has more than doubled compared to last year while food
A $479 million rise in food production was boosted by the livestock industry, particularly in beef production, with higher export demand pushing up prices. Almonds were a strong performer in horticulture, while increases in price for Southern Rock Lobster and Southern
exports to Indonesia rose 15 per cent.
Bluefin Tuna contributed to a $15 million rise in the
In 2014-15 South Australia’s food and wine industry
production value of seafood.
employed about 144,000 people, or one in five working
Demand for premium South Australian wine is also
South Australians.
increasing overseas, with exports increasing to $1.2 billion.
The latest results show South Australia has reached its target of increasing differentiated and finished food (such as meat, fish fillets, dairy and bakery products) and wine
There was particular demand from China and Hong Kong for South Australian wine, with exports increasing by $65 million or 27 per cent. •••
exports.
//
february / march 2016
// 13
FOOD & BEVERAGE
Cheers: Aussie wine exports surge 14 percent
Tim Michael
The value of Australian wine exports jumped 14 per cent to $2.1 billion in 2015, according to the latest Wine Australia Export Report.
T
“This export growth should be warmly welcomed by the
his is the highest value in more than eight years.
Australian grape growing and winemaking community as it is
And for the first time the value of Australian wine
exports has grown in each of Australia’s top 15 export
largely a result of their hard work.” Assistant Minister for Agriculture Senator Anne Ruston says
markets in a calendar year. The strongest growth was in China, Japan and Korea.
much of the growth can be attributed to the Japan-Australia
China grew 66 per cent to $370 million, Japan increased by
Economic Partnership Agreement (JAEPA), the Korea-
12 per cent in value to $46 million and wine exports to Korea
Australia Free Trade Agreement (KAFTA) and more recently
leapt by 38 percent in value to $11.7 million.
the China-Australia Free Trade Agreement (ChAFTA).
“The value of Australian wine exports grew in each of the
“Internationally, we are now seeing large-scale retailers
top 15 export markets in the year ended December 31, 2015,”
put more focus on the Australian category, and a number of
said Wine Australia CEO Andreas Clark.
importers, including some of Japan’s largest, have started
//
february / march 2016
// 14
FOOD & BEVERAGE
importing new Australian wines, giving more energy to the market place,” Senator Ruston said. “The fact that Australia’s strongest export growth was recorded in to China, and the new ChAFTA effects are not yet reflective in Wine Australia’s figures really does indicate that we are in the midst of yet another boost in market optimism.” Under ChAFTA, the tariff on bulk wine has already reduced from 20 per cent to 12 per cent, and the tariff on bottled wine has reduced from 14 per cent to 8.4 per cent. “The JAEPA has been in force for 12 months now, and the industry is responding well to the agreement which immediately cut tariffs on bulk wine to zero and will reduce tariffs on bottled wine over a seven-year period.” And after a year of the KAFTA which saw the removal of the 15 per cent tariff on Australian wine, exports to South Korea have increased by 38 per cent, hitting their highest value since 2008. “Hopefully we soon see these great figures for wine exporters reflected at the farm gate with high grape prices,” Senator Ruston said. Guy Adams, Managing Director of Langhorne Creek wine company Brothers in Arms, attributes their export success in the important US market to “a significant investment in time and cash, patience and persistence” as well as “having access to a consistent supply of quality product at the right price.” He believes that companies interested in the US market
China demand drives Penfoldsmaker Treasury to record levels
T
reasury Wine Estates Ltd, owner of the Penfolds and Wolf Blass brands, surged 17 percent to a record in Sydney trading after demand from China helped deliver higherthan-expected earnings. Operating profit in the second half of 2015 was between $140 million and $150 million, above the average analyst estimate of about $120 million, the Melbourne-based company said. Wine Australia said the country’s shipments to China in 2015 rose faster than anywhere worldwide, surging 66 percent to $370 million. Treasury is betting on China’s thirst for luxury brands and unveiled last year’s range of Penfolds wines in Shanghai, the collection’s first launch outside Australia. “Our Asia business performance is particularly pleasing,” Chief Executive Officer Michael Clarke said in
the statement. “We benefited from increased shipments to the region ahead of Chinese New Year in February.” Last month the stock jumped to $9.28 at the local close, the highest level since Treasury listed in May 2011. The leap takes Treasury’s market value to $6.8 billion. Already the world’s biggest consumers of red wine, Chinese drinkers often turn to expensive, famous labels to avoid any embarrassment, Simon Marton, Treasury’s chief marketing officer, said in October. The 2015 Penfolds collection included the 2011 Grange for $785 a bottle. Treasury has said Asia will become its biggest profit driver as soon as this year. The company will report full results for the six months ended December 31, 2015 on February 18. Source: Bloomberg Business
need to invest in shoe leather, saying: “they must be prepared to invest in the travel the market requires for success.”
• $200 + grew 23 per cent.
According to the Wine Australia Export report, the value of Bottled wine has been the key driver of the export success.
exports increased at each price point.
Bottled exports increased by 17 per cent to $1.6 billion and
The largest increase was in wines with a free on board
the average value increased by 7 per cent to $5.20 per litre.
(FOB) value over $10 per litre.
This is the highest value since 2003 on a calendar year basis.
Sales of these wines grew by 35 per cent to a record $480 million. They now make up 23 per cent of the value of
There were 1,517 active exporters in 2015 (up from 1,395 in 2014) and Australian wine was exported to 122 destinations.
Australia’s wine exports. A detailed breakdown of this growth for exports of wines with a FOB over $10 per litre shows wines valued at FOB:
The top five markets by value are:
• $10–14.99 grew 24 per cent
1. The US, which increased by 4 percent to $443 million
• $15–19.99 grew 55 per cent
2. The UK (Australia’s number one market by volume), which
• $20–29.99 grew 22 per cent
increased 0.2 per cent to $376 million
• $30–49.99 grew 16 per cent
3. China, which increased 66 per cent to $370 million
• $50–99.99 grew 59 per cent
4. Canada, which increased 7 per cent to $193 million, and
• $100–199.99 grew 40 per cent
5. Hong Kong, which increased 22 per cent to $132 million. •••
//
february / march 2016
// 15
FOCUS ON EUROPE
Seafood exporters have 74 million reasons to smile
Tim Michael
The value of Australian wine exports jumped 14 per cent to $2.1 billion in 2015, according to the latest Wine Australia Export Report.
F
ishPac, an innovative system for the transportation of live seafood, has revolutionised live aquatic transport.
The Australian Made system has achieved
amazing results since its launch some 15 years ago. FishPac is the world’s only approved supplier of equipment for the transport of air freighted live aquatic animals sustained with oxygen. An estimated 230,000 bins of live seafood have been shipped since the product was first launched in 2000. With each bin holding about 320kg of live fish and marine life, this equates to a total of 74 million kilograms. The unique bins are now used in in Australia,
But Gavin Hodgins, General Manager of FloatPac Pty Ltd, the company that owns
USA, Canada, Indonesia, the Maldives,
FishPac, says a new industry benchmark has
Philippines, Taiwan, and Vietnam.
been achieved in keeping the premium, fragile
And new customers have recently come on board in Mauritius, Madagascar, South America, India, Sri Lanka, and Germany. FishPac estimates it has saved the use of six million polystyrene boxes – an impressive result for the environment. The system has also saved about 8 million
species alive. “This has been achieved with 500kg payloads with zero deaths – a feat that has never been seen before,” Mr Hodgins said. His company is constantly sourcing new species for export. Recent ‘boutique’ shipments have included
kilograms of live seafood from perishing in
Black Cod from Canada, Grouper and Sturgeon
transit.
from Germany.
According to FishPac management, its
Mr Hodgins says there is growing demand
average mortality is 1 percent, compared with 12
globally for live seafood – particularly from
percent with polystyrene boxes.
China and other Asian nations.
Shipments now include black lip & green lip
“As the population becomes more affluent
abalone, sea perch, barramundi, eel, king crab
and the middle class grows, there is a strong
and a variety of juvenile fish (fingerlings) as well
demand for better quality food,” he says.
as coral trout. Transporting live green lip abalone has previously been extremely difficult.
“There is also strong demand (for live seafood) from cities such as Los Angeles which has a large Asian population.” •••
//
february / march 2016
// 16
How it works FishPac equipment can be used in the transport of live fish and fingerlings via air, road and rail freight. The FishPac system operates by sustaining the fish/fingerlings with oxygen. The oxygen flows from an approved air/oxygen cylinder through the FishPac regulator (which has a worldwide patent) and is dispersed in StackPac via a ceramic diffuser. FishPac works with seafood exporting companies and airlines around the world. The FishPac bins are available for purchase, however due to IATA transport regulations the two-stage oxygen regulator is available for lease only. For more information visit: http://fishpac.com
FOOD & BEVERAGE
Infant formula squeezes Australian eggs crack the Taiwanese out fresh produce market exports to China A ustralian eggs will soon be on the plates of Taiwanese families, with
Australian fresh produce exporters to Asia are battling to find airfreight space due to the boom in infant milk formula shipments.
T
the first consignment of Australian fresh eggs cleared this week in Taiwan. Agriculture Minister Barnaby Joyce,
said the opening of the new market is an
able grapes, cherries, asparagus and stone fruit exporters face losing
important step forward in strengthening
key Asian markets as freight routes are swamped by infant formula
the Australian egg industry’s presence in
exports, the rural newspaper The Weekly Times reports.
the international market.
According to the report, Victorian exporters have been trucking grapes to
Australian Sunny Queen Pty Ltd exported the first shipment of more than
Sydney and Perth to get the fruit airfreighted into Asia. And some powder exporters are paying a 35 per cent premium to secure airfreight space due to the insatiable demand from Chinese consumers for
21,000 eggs to Taiwan. “My department has worked closely with Taiwan’s Bureau of Animal and Plant
Australia’s infant formula. This demand has seen supermarkets and pharmacy shelves cleared of formula stock and limits imposed on the number of tins each shopper can buy, with opportunistic sellers reportedly making huge margins selling infant
Health Inspection and Quarantine to make this possible,” Mr Joyce said. “We now have bilaterally agreed certification for Australian eggs and egg
formula online. Tins of Australian infant formula sell for about $20 in Australian supermarkets but are reportedly being sold for more than double that price
products exported to Taiwan. “I would also like to both thank and congratulate Sunny Queen Australia,
in China. Australian Horticulture Exporters Association chairman David Minnis said
who have also been working closely with
he was “struggling to get airfreight space out of Australia because of milk
Austrade and their Taiwanese importer to
powder and vitamins going into China”.
progress this trade.
He told the Weekly Times it was affecting all major routes into Asia, including Hong Kong, Singapore and Kuala Lumpur, Bangkok and Jakarta. Australian Tablegrapes Association chief executive Jeff Scott said exporters predicted about 40 per cent of grapes might not be shipped to Asia by air this
Mr Joyce said the shipment lays the foundation for new export opportunities for the egg industry. “Our egg industry is worth $700 million to the Australian economy,” he said.
season if the freight supply shortage continues. “This could mean 400,000 boxes (3600 tonnes of grapes) won’t be freighted
“I hope to see Taiwan become one of our key egg and egg product export
by air,” Mr Scott said. Horticulture exporters prefer to airfreight produce to Asian markets to
markets, alongside Singapore and Hong Kong.”
capture the maximum price for the freshest produce. Cherries, asparagus and grapes risk deteriorating during the alternate two
Sunny Queen Australia’s Managing Director John O’Hara said the shipment
to three-week sea journey to Asia. The number of routes and frequency airlines can fly to and from Australia is regulated, but it is up to airlines how much space they allocate to freight
is a promising start in a region rich in potential for export opportunity. “We believe that this first shipment to
versus passengers. The problem has been compounded by a falling Australian dollar, which has led to fewer imports into Australia, making it uneconomic for airlines to carry freight. •••
//
Taiwan is just the start of an exciting new direction for our business,” he said. •••
february / march 2016
// 17
JAPAN FTA
Exporters make the
most of Japan FTA
Export sales across a variety of commodities to Japan have jumped since the Japan-Australia Economic Partnership Agreement (JAEPA) came into effect 12 months ago. per cent, while asparagus sales have experienced a 41 per cent increase. Mr Robb said the growth in export numbers to Japan replicates the positive impact the Korea-Australia Free Trade Agreement (KAFTA) has had on exports to that part of Asia. “The latest data shows Australian businesses have been quick to capitalise on the agreement with Korea, and the historic FTA with China – which entered into force late last year – is expected to yield similar results,” he said. “What these figures show is that
T
rade Minister Andrew Robb says Australian businesses have been quick to capitalise on
opportunities created by the JAEPA. Wine, beef and grape-growers are
not only has tariff relief made our jumping from $400,000 to $4.1 million.” Beef export values for both fresh/
traditional exports stronger, it’s created opportunities over the past 12 months
chilled and frozen beef grew by 24 and
in emerging areas where we were
15 per cent respectively.
previously not competitive and had no
The export value of beef tongue
market share.” Mr Robb said there’s no doubt Asia’s
among those enjoying the competitive
– a popular dish in many Japanese
advantage JAEPA has delivered.
restaurants – increased by 75 per cent to growing middle class is developing
It has been just over one year since the reach more than $52 million. agreement with Japan came into force. Since then, agricultural enterprises in
“Australia is now supplying more wine to Japan, with export sales of bottled
a taste for Australia’s clean, green produce. “The outcomes we’re seeing
particular have made the most of the
wine experiencing growth of 11 per cent.
from these trade agreements
substantial tariff cuts secured under
Remarkably, sales of bulk wine have
further underline the importance
JAEPA, Mr Robb said.
almost tripled, to more than $5 million,”
of bilateral trade deals in improving
Mr Robb said.
our competitive position in the major
“There’s been a more than ten-fold increase in export sales of fresh table
Export sales of frozen shrimp and
markets of North Asia. “I encourage all businesses to take
grapes, climbing from $600,000 to $6.5
prawns increased 90 per cent, rolled
million. Shelled almond exporters have
oats sales to Japan are up 62 per
full advantage of the opportunities the
experienced similar results, with sales
cent, fresh Valencia oranges up 77
FTAs are creating.” •••
//
february / march 2016
// 18
MIDDLE EAST
Australia to train Saudi health professionals
Australia is set to sign a memorandum of understanding with Saudi Arabia to assist with the nation’s education and health needs.
T
he MOU was agreed to in
He said the MOU would outline the
Mr Morley said Australia remains the
principal following a two-day visit cadres of doctors who would be coming fourth largest destination for Saudi by the Minister for Education and
Minister Assisting the Minister for Trade, Senator Richard Colbeck.
to Australia for training on scholarships. They include general medical practitioners, radiographers, nurses,
students after the United States, the UK and Canada. Most of the Saudi students who stay
physiotherapists and other categories
with their families in Australia follow
details of the plan with Saudi Minister of
who can be trained in Australian in the
courses in engineering, agriculture,
Education Ahmed Al-Issa.
field of medicine.
mining, health care and oil and gas
Senator Colbeck will finalise the
A 20-member Australian delegation
Australia has 24 universities on the list
headed by Senator Colbeck met with
of top 200 universities in the world and
senior government officials last month
16 in the top 100.
in the Saudi capital Riyadh. Australia’s
Australia is committed to international
ambassador Ralph King also took part in engagement through the National
related fields. The delegates also held talks with officials of the Ministry of Health, the Technical Vocational Training Corporation (TVTC) and King Fahd Medical City
Innovation and Science Agenda, which
in Riyadh to develop various areas of
aims to further enhance Australia’s
cooperation in health and vocational
Mark Morley said the bilateral talks
global reputation as a leader in research
training and education.
between the officials will enhance
and education.
the discussions. Australian Senior Trade Commissioner
the existing areas of relationship in
There are some 10,000 Saudi students
education, health care, aviation, mining,
studying in various colleges and
agriculture and technical training.
universities in Australia.
//
Australia’s major exports to Saudi Arabia include meat and dairy products. Trade between the two countries is worth $2.9 billion. •••
february / march 2016
// 19
TRAVEL
Which are the world’s safest airlines? Australia’s flag carrier Qantas has again been named the world’s safest airline – its third year in a row.
T
he airline topped a list released
Qantas shares the list with
2. Flybe
this month by AirlineRatings.
19 other airlines as shown
3. HK Express
com, a global safety and
below, in alphabetical order:
4. Jetblue 5. Jetstar Australia
product rating website. 1. Qantas
6. Thomas Cook
website bases its examination of
2. American Airlines
7. TUI Fly
407 carriers on a rating system that
3. Alaska Airlines
8. Virgin America
considers a variety of factors, such as
4. All Nippon Airways
9. Volaris
fatality records, operational history,
5. Air New Zealand
10. Westjet
incident and inspection reports
6. Cathay Pacific Airways
from aviation governing bodies,
7. Emirates
independent organizations and the
8. Etihad Airways
unveiled a list of the world’s
government.
9. Eva Air
least safest airlines, which are
Published annually, the independent
AirlineRatings.com also
10. Finnair
both full-service and budget
continues to boast a fatality free
11. Hawaiian Airlines
carriers that have managed to
record in the jet era – “an extraordinary
12. Japan Airlines
earn not more than a one-star
record.”
13. KLM
rating in the survey.
AirlineRatings.com noted that Qantas
“Our top safest airlines are always
14. Lufthansa
at the forefront of safety innovation,
15. Scandinavian Airline System (SAS)
These were in alphabetical order:
operational excellence and the
16. Singapore Airlines
1. Batik Air
launching of new more advanced
17. Swiss
2. Bluewing Airlines
aircraft,” AirlineRatings.com editor
18. United Airlines
3. Citilink
Geoffrey Thomas said in a statement.
19. Virgin Atlantic
4. Kal-Star aviation
“These airlines are always at the
20. Virgin Australia
5. Lion Air 6. Sriwijaya Air
forefront for excellence in the safety space.”
The AirlineRatings.com
7. TransNusa
editors also identified their
8. Trigana Air Service
the survey, the website says 148 have
top ten safest low cost
9. Wings Air
managed to achieve the full seven-
airlines.
10. Xpress Air
Out of all 407 airlines included in
star safety ranking, although it notes that nearly 50 airlines earned three
They are in alphabetical order:
stars or less.
1. Aer Lingus
//
february / march 2016
// 20
TRAVEL
‘Our top safest airlines are always at the forefront of safety innovation’
monitor plane and later crew performance • Automatic landings using Global Navigation Satellite System as well
continuously operating airline has
as precision approaches around
carriers, these airlines have all
amassed an extraordinary record of
mountains in cloud using RNP.
passed the stringent International Air
firsts in operations and safety.
Unlike a number of low cost
Transport Association Operational Safety Audit (IOSA) and have excellent safety records. In selecting Qantas as the world’s safest airline AirlineRatings.com editors noted that over its 95year history the world’s oldest
It is now accepted as the industry’s most experienced carrier. The Australian airline has been a
Qantas was also the lead airline with real time monitoring of its engines across its fleet using satellite communications, which has enabled the airline to detect problems before
leader in: • The development of the Future Air
they become a major safety issue. •••
Navigation System • The Flight Data Recorder to
//
february / march 2016
// 21
TRAVEL
More than 200 world airports in the palm of your hand You’re a business traveller transiting at an airport for a few hours and you need a place to charge your laptop.
China set to launch 144-hour visa-free policy
S
hanghai, Hangzhou and Nanjing will become the first cities in China to
implement a 144-hour visa-free policy. The policy, which is expected to begin early this year, will allow foreign visitors to arrive and depart from any of these three cities via airports, cruise terminals and
O
r perhaps you need some entertainment to kill the time – or
train stations without a visa – providing
want to find the fastest route into the city – or the quickest way
their overall stay is within the six-day limit. China’s State Council has approved the
from the bathroom to the boarding gate.
FLIO has the answers.
144-hour visa-free program and it will be
Launched late last year, this is the first global airport App for Apple’s
implemented soon, said Bai Shaokang, deputy mayor of Shanghai, at a recent
iPhone and other iOS devices. FLIO offers comprehensive information on more than 200 airports around the world, including facilities such as power outlet locations, shower room amenities, smoking areas and entertainment. One of FLIO’s key features is its ability to give users instant, one-click
press conference. A definite start date has yet to be announced. The relaxation on travel restrictions is an upgrade of the current policy that allows
access to airport Wi-Fi. FLIO gets users online in seconds by removing the step of entering
passport holders from 51 countries to transit through several Chinese cities for
personal details. The app supports more than 30 free airport Wi-Fi
up to 72 hours without a visa. These cities are Beijing, Shanghai,
networks at launch with
Guangzhou, Chengdu, Chongqing, Harbin,
the plan to expand to 200
Shenyang, Dalian, Xian, Guilin, Kunming,
airports within the next three
Wuhan, Xiamen, Tianjin, Nanjing, Qingdao
months.
and Hangzhou.
It can also point you to
Introduced in 2013, the service has been
special offers and discounts
popular, with more than 100,000 foreigners
from airport shops.
taking advantage of it. •••
FLIO users get exclusive discounts on everything from food and drink to dutyfree shopping. FLIO will also add the ability to book many airport-related services within the App, including access to security fast track, lounges and transportation If you’re looking for things to do while waiting for your next flight, FLIO can provide recommended activities. It is available as a free download for iPhone and Android users. •••
//
february / march 2016
// 22
WORLD NEWs
2016: Another year of political uncertainties A cautious approach is needed for global traders in 2016, warns Coface, a world leader in trade credit insurance.
attributable to Iran’s return to the market. Heavily affected by the drop in oil sector investment, resulting from the decline in its income, Canada has fallen from the best risk category and is now assessed A2. The continued decline in oil prices has, however, had a beneficial effect on households and businesses in certain advanced countries. With the exception of Japan and Italy, the fall in energy bills has helped to revive corporate investment, particularly in Spain and the United Kingdom. Japan is also among the potential victims of the more-pronounced-thanexpected Chinese slowdown, given 18 percent of its exports are destined for China. Weak growth (estimated at 0.9% for 2016), the persistent risk of deflation and the indispensability of fiscal
C
oface predicts “soft” global economic growth of 2.7 percent (after 2.5 percent in 2015).
“The risks that emerged in 2015 are
expected to remain this year,” it says in a new report. Coface warns of political tensions
consolidation, explain the placing of its A1 assessment under negative watch.
stand out. This is due to their growing political
Not surprisingly, the decrease in
instability between 2007 and 2015,
demand and in tourism from mainland
following the significant deterioration of
China will continue affect activity in Hong
their economies.
Kong and Taiwan, also under negative
Brazil, whose political crisis and recession are expected to continue
watch. In the eurozone (with 1.7% growth
in both advanced and emerging
in 2016, saw its country risk rating
expected in 2016), the situation of
countries.
downgraded for the second time in
companies is gradually improving, the
less than a year, to C.
Coface report notes.
“The elections in the United States and, above all, the risk of a “Brexit” by the United Kingdom (two advanced countries that outperformed the
And recovery in some advanced countries is also under pressure Overall, advanced countries will see
This is evidenced by the insolvency statistics for France, Germany, Italy (a decrease of between -3.5% and -5% over
eurozone in 2015), are likely to weigh on
moderate growth in 2016, estimated at
the first nine months of 2015 compared
business confidence>”
2% by Coface.
with the same period in 2014) and
And in the emerging world,
The main concerns include their
especially Spain (-26%).
uncertainties remain high in the Middle
dependency on commodity prices,
Italian growth will be supported by
East.
the Chinese slowdown and financial
domestic demand, which will benefit
market volatility.
from the return of confidence and the
“The risk of terrorism could lead to stronger nationalist movements.” According to Coface’s political risk index, Turkey and Brazil particularly
The trend of low barrel prices
progress in structural reforms. This has
should continue in 2016, due to the
led Coface to place Italy’s B assessment
continued surplus of oil supply – in part
under positive watch. •••
//
february / march 2016
// 23
freight
Top 10 tips
for managing freight costs In the final part of this TWO-PART series, Kim Mauch, Co-Founder of CargoHound, Australia’s first online marketplace for international freight, gives valuable tips on how to manage freight costs when exporting and importing. Kim says understanding and managing freight and logistics costs are critical to enhancing competitiveness in global markets – yet are too often ignored, or put in the “too hard basket” by many Australian exporters and importers.
Here are her final five tips:
banking institutions. • Companies like CargoHound partner OzForex offer
1. How will you pay for your freight costs? • Consider your payment options and terms for goods and
services to book currency at competitive rates, and secure transfer of funds with minimal fees.
freight/clearance. • Consider currency of payment, security of payment method and exchange rate margins/fees charged by
//
2. Hidden Fees – What custom duties and taxes does
february / march 2016
// 24
freight
comes along.
your shipment attract? • Custom duties and taxes alone can represent as much
• No one international freight
as 30 percent of the total shipping fees, so it’s important to
provider can be a specialist
understand the terms and hidden fees involved.
on every trade route or freight
• Free Trade agreements are in place with many countries
category so shop around
and include the majority of products. There are online
to find a specialist with
databases where you can check if your product will enter a
competitive pricing. Remember
country duty free using the Harmonised Tariff Code.
the best “headline” price is not always the most cost effective option.
3. Using cross docking versus container delivery • It is often cheaper to use a load/destination port facility
• Service providers must
for packing and unpacking FCL containers rather than your
understand the trade lane
own facility or factory.
you are shipping and the appropriate solution to move
• That way you are freighting on the way instead of transporting containers to your facility empty, and then
your product safely, timely and
freighting full containers back to the port.
in line with relevant regulations.
• Trucks will charge additional lift fees and waiting time if a “load while they wait” option is chosen.
Questions you should
Kim Mauch
be asking of new service providers include:
4. Demurrage/storage and detention
• Do they have experience in
Kim Mauch is an import/export veteran with 25 years’ experience in the global freight industry.
shipping to/from your country/
www.cargohound.com
• Do they have experience
• Whilst we hope you never hear these words,
with your product/commodity
unfortunately many people hear them a lot. • Demurrage/storage are Port / Freight of all Kinds (FAK) storage fees for not collecting the container or loose cargo from the port/FAK station by the cut off day/time. • The key is to ensure your goods are cleared and ready
type?
region of interest? • Can they provide references
for release prior to the vessel/goods arrival. • Make sure port slots are booked for the “first available
from companies that have used their services?
day” by your transport provider. • Detention is time with the container, so (as per above) if
Of course, using CargoHound makes it quick and easy to
you take it to your facility for loading or unloading you have
identify a reliable service provider by comparing their price,
limited time FREE with that container, if it is not returned on
transit time and “peer rating” from companies that have
time. These times are often short and the provider will be
used their services. One of the recommendations arising from the
relentless in their pursuit of these charges.
META report was that “Government needs to put in place a directive for the freight industry to provide a
5. Choosing a service provider that fits your specific
comprehensive breakdown of costs passed onto exporters”.
requirements • Choosing the most appropriate service provider for your
With my importer/exporter hat on, I would not advocate further regulation of an already over-regulated industry,
freight and clearance is crucial.
but a better understanding of the costs would empower
• Not only will this provide increased efficiencies and potential cost savings but it will also give you piece of mind
exporters (and importers) to exercise a greater degree of
that your products will arrive to customers safely and on
control over freight costs. I hope my 10 tips have been able to help you in some
time. • The biggest mistake that you can make in choosing a
small way! •••
freight service provider is to hire the first company that
//
february / march 2016
// 25
travel
Stand by for new generation of megaships The arrival of the CMA CGM Benjamin Franklin in Los Angeles late last year heralds a new era of mega-ships in the US.
T
he Benjamin Franklin
and Yantian with Los
Benjamin Franklin, the Port
arrived at Port of Los
Angeles and Oakland.
of Los Angeles said.
Up until now, mega-
And despite its size, the
on December 26, before
container ships of this
gigantic vessel is a model
heading north to the port of
capacity have been
for high-energy production.
Oakland.
deployed exclusively on
Angeles from China
Her 78-foot-long engine
AT A GLANCE Ship Builder: Shanghai Waigaoqiao Shipbuilding (a CSSC’s subsidiary) Deadweight Tonnage: 185,000 tons Year of build: 2015 Building cost: $151 million Gross Weight Tonnage: 175,000 tons Net Weight Tonnage: 100,000 tons Container capacity: 18,000 TEU / 1,100 TEU refrigerated containers (reefers) Cargo tonnage: 240,000 tons Flag: UK Length: 398m / 1,305ft Breadth (Width): 54m / 177ft Draught (Draft): 16m / 53ft Engines: MAN B&W 11S90ME-C9.2 Fuel consumption: – 330 tons per day Cruising Speed: 25kn / 29mph / 47km/h Power output: 87,900hp / 65,500kW Crew capacity: 27
of 26 members including
room contains a latest
a chef, and it also has a
The vessel is longer
generation engine as
swimming pool.
than the Empire State
powerful as 900 Ford
Building and wider than an
Focus cars and her 21
with containers stacked
CMA-CGM launched the
American football field. It
knots thrust is equivalent
seven high, but at full
Benjamin Franklin on
is 1,300 feet (398m) long,
to that of 11 Boeing
capacity it is designed to
December 10.
177 feet (54m) wide and 197
747-400 engines (3,000
stack 10 containers high.
feet (60m) high.
KNewton). The vessel has
The terminal cranes are
the electric production of
expected to be ready
It is the largest container ship ever to call at a North American port. French shipping line
The 398m, 18,000 TEU vessel will operate a
the Asia to Europe trade.
It took about 1,500
It arrived in Los Angeles
regular service connecting
Longshoremen 56 hours
a city of 16,000 inhabitants
to take the vessel’s full
some of China’s main ports,
to move nearly 11,230
(14MWatts).
capacity by the end of 2016.
including Xiamen, Nansha
containers on and off the
//
The vessel has a crew
february / march 2016
Most North American
// 26
travel
ports are not deep enough
and fluid operations in as
to handle vessels of this
little time as possible.
size, and there have also
For several weeks, the
been concerns about
CMA CGM Group has been
whether container handling
working with all parties:
productivity was strong
the Port of Oakland and
enough in US terminals to
NWS Seaport Alliance,
unload these new giants
the San Francisco Bar
effectively.
Pilots, Ports America Outer
The Port of Los Angeles
Are global ports prepared for new container weight rule?
T
he new container weight verification rule comes into effect in less than six months, but will the global
shipping industry be ready?
Harbor, railroads, trucking
This is the question being asked by authorities in major ports across the globe.
handled a total of 709,968
companies and many
TEU in November 2015, an
others in the maritime
from July 1, container weights must be verified before
increase of seven percent
supply chain.
containers may be loaded aboard ships.
compared to the same period last year. The Port of Oakland
Under the new rule, which will become legally binding
As a part of this
In the event of a wrong declaration of weight, penalties
preparation, CMA CGM, the Port of Oakland and the
will be imposed on such containers. The safety committee of the International Maritime
‘The vessel has a crew of 26 members including a chef, and it also has a swimming pool’
Organization (IMO), a specialized agency of the United Nations responsible for regulating shipping, approved the new changes in May 2014. The Safety of Life at Sea (SOLAS) convention administered by the IMO has imposed the mandatory container weight verification requirement on shippers.
and ports of Seattle
San Francisco Bar Pilots
and Tacoma also have
(SFBP) executed vessel
of factories won’t make the significant investment to
terminals large enough to
simulations at the California
purchase their own container weighing scales.
accommodate megaships.
Maritime Academy: seven
The Prince Rupert port in
San Francisco Harbor
or scales and will continue to rely on terminal gate-in
British Columbia, Canada,
pilots ran two different
weighing.
is on track to handle such
simulations in presence
vessels by 2017, followed
of a CMA CGM Senior
not comply with the new rule will be prevented from
by the Port of Vancouver
Captain – one to perfectly
moving to its destination. But heavy penalties may
early next decade.
handle mooring with such a
apply.
However, the Panama Canal will remain a “no go zone” for the megaships,
However, some industry leaders believe the majority
They say shippers will not invest in weigh stations
Port officials say it is unlikely that containers that do
vessel, the second one was focused on sailing.
According to JOC.com, the leading global news service for the maritime and logistics sectors, most
These vessels, with
China-based manufacturers, freight forwarders and
despite the recent
capacities of 18,000 20-foot
expansion (expected to
container units or larger,
open later this year). The
will place unprecedented
passageway will only be
demands on ports to
able to handle ships in the
expand cargo-handling
13,000 TEU range.
capacity and improve
busiest, public container gateway, aim to comply with
marine terminal efficiency.
the new rules.
Receiving an 18,000-TEU capacity vessel for the first
shipping lines are unaware of the new changes. And ports in the US have shown “a strong disinclination toward storing or weighing containers, Joc.com reports. But not all countries have been slow to move. Authorities at Jawaharial Nehru Port Trust, India’s
Australian ports are not
time requires long and
expected to receive these
meticulous preparation to
gigantic vessels anytime
guarantee a flawless call
soon. •••
JNPT loads about 60 percent of the containers routed via India’s 12 major, state-owned ports. Last financial year it racked up its highest-ever annual throughput of 4.47 million 20-foot-equivalent units. •••
//
february / march 2016
// 27
FEATURE
Aussie roof rack business racks up $50m a year in global sales While driving on Australian roads you can’t help but notice the large number of vehicles fitted with roof racks. Tim Michael
A
nd a majority of those roof racks carry a Rhino-
He is constantly creating new designs of the renowned
Rack logo – now an iconic brand in vehicle roof
racks and still strives to grow the business in new markets. Mr Cropley holds the philosophy that “being an
accessories.
entrepreneur is a 7-day a week job.”
The first set of Rhino-Rack roof racks were
designed about 25 years ago by Richard Cropley, a former
Rhino-Racks is not only a unique Australian success story, but also a brand synonymous with quality, durability
tractor salesman.
and innovation.
From its humble beginnings Rhino-Rack products
Rhino-Rack is Australia’s leading manufacturer of roof
are now sold in more than 30 countries and Cropley’s
racks.
business employs 163 staff worldwide. The business, which started as Roof Rack City, turns over
Mr Cropley’s roof racks are stocked in hundreds of stores around Australia. They are also distributed internationally
about $50 million a year. And Mr Cropley is still very much the “hands-on” boss.
//
in the US, Europe NZ and throughout South America.
february / march 2016
// 28
FEATURE
Richard Cropley … ‘unique product’ and a loan from the bank. Within a year they quadrupled Rola’s turnover to $4 million a year. After just a year, Mr Cropley separated from Rola to open up the first specialty roof rack store in Sydney, Roof Rack City – a store he still owns. Seeing hundreds of models of these racks and installing them himself, he had the “We’ve set up distribution all around the world,” says Mr
thought that goes through every innovators head: “I can do better than this.”
Cropley. The business boasts more than 800 outlets worldwide and recently opened warehouses in Perth and took over
Designing his own leg mounts and bar, Rhino-Rack Roof Racks was born in 1992. Within 24 months the company had contracts with
from its previous distributor in New Zealand.
Toyota and Telstra to provide all their work vehicles with
“We have a presence in the Middle East, Germany,
Richard’s roof racks.
France and some Asian countries but we are currently
The biggest risk was the move into international markets,
concentrating on the Americas,” said Mr Cropley.
which was hindered by an unforeseen event.
This includes Peru, Chile and Argentina. With its simple, ergonomic and reliable design, Rhino-
The plan to open a hub in Denver was almost derailed by
Rack has become one of the world’s most reputable
the Global Financial Crisis, which saw retailers of all levels
brands.
cut back and avoid stocking new products.
‘Being an entrepreneur is a 7-day a week job’
But Richard found new opportunities online, right as the boom of online shopping began. Rhino is now stocked on many online stores and close to 100 physical outlets in North America. An insatiable drive to solve problems and be the best has made Richard take Rhino-Rack to where it is today.
Mr Cropley was born in Sydney and splits his time
“With any product, whether it be roof racks, computers or
between the city and the family farm at Goulburn,
coffee mugs, there is always going to be a better design
southwest NSW.
out there,” he said. “So always look for ways to innovate
He spent most of his early career in the agricultural sector, selling tractors, after a three-year stint farming in
and change your product. That’s how we’ve kept our doors
Papua New Guinea.
open while competitors have closed theirs.”
Never one to do anything in half-measures, he became
Rhino-Rack has made exceptional leaps since Richard
the Queensland marketing manager for Versatile Farm
first sold his home to develop and manufacture the
Equipment and within a year established himself as the
original tooling. When they first manufactured, Toyota and
world’s number one tractor salesman.
Telstra made up 65% of their business – it is now only 3%.
His journey to become the king of roof racks began in
“The best marketing we’ve ever done is to put a sticker
1987 when a visit to his brother in Perth put the brand Rola
on every Rhino roof rack, said Mr Cropley. “It’s a unique
in his sights. Rola was a roof rack brand that was one of
product and it advertises itself.” •••
the biggest sellers in his brother’s yacht chandlery store, so together they bought the brand with all their savings
//
february / march 2016
www.rhinorack.com.au
// 29
WHAT’S ON
LOCAL EVENTS 1 February 17 Trade and Cargo Fraud Seminar: Understanding risks and responses Where: Victoria University, Melbourne, VIC https://www.acci.asn. au/events/trade-andcargo-fraud-seminarunderstanding-risks-andresponses
March 2 Efic SME Briefing 2016, Melbourne Where: Crown Towers, River Room Southbank, VIC
March 3
March 10
April 10-12
Efic SME Briefing 2016, Perth
Efic SME Briefing 2016, Brisbane
Fine Food Queensland
Where: Duxton Hotel, Ballroom Perth, WA Time: 7.15am-9.30am
Where: Brisbane Convention Centre, South Bank, Brisbane Time: 7.15am-9.30am
http://www.efic.gov.au/ news-events/events/
http://www.efic.gov.au/ news-events/events/
March 9
March 11
Efic SME Briefing 2016, Adelaide
Efic SME Briefing 2016, Sydney
Where: Adelaide Convention Centre, North Terrace, Adelaide Time: 7.15am-9.30am
Where: Ivy, Ballroom George St, Sydney Time: 7.15am-9.30am
http://www.efic.gov.au/ news-events/events/
http://www.efic.gov.au/ news-events/events/
Time: 7.15am-9.30am http://www.efic.gov.au/ news-events/events/
Where: Brisbane Convention & Exhibition Centre, South Bank 03 9261 4500 http://www. finefoodqueensland.com.au/
April 27-28 Market Information Package (MIP) Australia-China ExpoMasterclass Perth Where: Melbourne Convention and Exhibition Centre, Southbank http://abf.events/ace
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february / march 2016
// 30
WHAT’S ON
international EVENTS 5 April 13-15
February 24-27
China Luxury Travel Showcase 2016
IME 2016 Kolkata - Major Mining Exhibition in India Where: Eco Park, New Town, Rajarhat, Kolkata, India www. internationalminingexhibition. com
Where: Shanghai, China http://www.eeaa.com.au/ article.php?id=2739
3 March 13-15
April 12-15
Aqua Middle East 2016
Where: Dubai World Trade Convention Centre Dubai, United Arab Emirates www.agramiddleeast.com/ en/Aqua
Food & HotelAsia (FHA) & ProWine Asia (PWA) 2016 Venue: Singapore www.nab.com.au/ business-asia/events/ food-hotel-asia-faprowine-asia-pw-2016
April 25-29 Expomin 2016 Santiago, Chile Mining & minerals exhibition Where: Huechuraba, Santiago, Chile http://www.expomin.cl/
2 March 9-13 The Internationale Tourismus Borse (ITB) 2016 Travel Trade Show http://www.itb-berlin.de/en/
4 April 11-15 Australia Week in China 2016
April 25-27
http://www.austrade.gov.au/ Events/austrade-australiaweek-in-china
Australian Agribusiness Research and Innovation Showcase 2016 Where: Hanoi, Vietnam www.austrade.gov.au/ EventViewBookingDetails. aspx?EventID=14483
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february / march 2016
// 31
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february / march 2016
// 32