Dynamic Export E-magazine Feb/Mar 2016

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

//

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

//

february / march 2016

// 31

//

february / march 2016

// 32