DHL/BCC Trade Confidence Index Q4

7/29/2019 DHL/BCC Trade Confidence Index Q4

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The DHL / British Chambers of Commerce

TRADE CONFIDENCE INDEX

4TH QUARTER 2012


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CONTENTS

THE BRITISH CHAMBERS OFCOMMERCE

The British Chambers o Commerce(BCC) is the national body or aninfuential network o AccreditedChambers across the UK.Representing 104,000 businesses,who together employ more than 5million employees, no other businessorganisation has the geographicspread or multi-size, multi-sectormembership that characterises the

Chamber Network. Every Chambersits at the heart o its local businesscommunity, providing representation,services, inormation and guidanceto member businesses and the widerlocal business community.

For more inormation visit:

www.britishchambers.org.uk

DHL THE LOGISTICS COMPANY FORTHE WORLD

DHL is the global market leader in thelogistics industry and The Logisticscompany or the world. DHL commits itsexpertise in international express, air andocean reight, road and rail transportation,contract logistics and internationalmail services to its customers. A globalnetwork composed o more than 220countries and territories and about275,000 employees worldwide oers

customers superior service quality andlocal knowledge to satisy their supplychain requirements. DHL accepts itssocial responsibility by supporting climateprotection, disaster management andeducation.

DHL is part o Deutsche Post DHL.The Group generated revenue omore than 51 billion euros in 2010.

For more inormation visit:

www.dp-dhl.com

44 Introduction/Methodology4................................................................................ 4 2

44 Executive4Summary4.............................................................................................. 4 3

44 4Volume4of4Trade4Documents4............................................................................. 4

44 Focus4on4Export4Sales4......................................................................................... 4 5

44 Focus4on4Export4Orders4...................................................................................... 4 6

44 Focus4on4Employment4......................................................................................... 4 7

44 Focus4on4Business4Condence4......................................................................... 4 8

44 Firm4Size4Breakdown4............................................................................................ 4 9

44 Country4Guide4-4Australia4................................................................................... 4 10


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FOREWORD

It is encouraging that the gures in this report show Britains export economymade clear progress in Q4 2012 despite continued challenges with access toworking capital and weak growth in the Eurozone. Almost all the key indicatorsor sales and orders improved on the quarter and condence in the uturecontinues its upward trend. Visiting businesses around the country, I see rst-handthe determination o the exporters we have in the UK, busting a gut to grow andbreaking into new markets.

But we must never be complacent about the health o the export sector. We haveseen beore trade condence rise and then be choked o through a lack o workingcapital to ull the orders and nd the growth. The latest ocial data show thatdespite a slightly improved trade decit in November, it was still more than 7bn in

the rst two months o the ourth quarter. The UK has been running trade decitsalmost uninterrupted or thirty years a situation which is unsustainable and especiallyat current levels. The trade decit is particularly acute in respect o the EuropeanSingle Market, whereas it is in positive territory with the rest o the world. As welook to build on the progress o 2012, the BCC will continue to argue or strongmeasures to support the UKs perormance on international trade. Working through

the EU to complete deeper trade agreements with the US and Japan, and in the EU, building a Single Market inservices, digital and energy would benet thousands o British businesses. And a publicly-backed Export Voucherscheme to help businesses on the cusp o exporting, would enhance their ability to tap into new markets abroad.

The much-needed re-balancing o exports towards the astest-growing markets is underway. But or internationaltrade to underpin a stronger economic recovery, it needs to happen more quickly and we need more companiesto take that crucial step o exporting or the rst time.

Weve had a sterling quarter or exporters. The latest issue o the TCI hasound that not only has the number o trade documents issued increased by1.4% compared with the previous quarter, but that exporters are eeling morecondent about their longer-term outlook than at any time over the past twoyears. This condence is demonstrative o the act that 2012 was a record yearor automotive exporters, with more than our-ths o cars made in Britainbeing shipped overseas.

This positive upturn in terms o exports and condence serves as encouragementnot only or those who are already navigating into international waters, but alsoor those smaller businesses who are getting ready to dip their toes in overseasexporting or the rst time. As a global business, we know that there are countlessopportunities on the horizon or British made goods, and indeed services.

Australia, my native country, is a land o opportunity or British exporters at themoment particularly or those within the ashion sector. The UK is one o the topsix exporters to Australia, and we can see this demand refected in online clothes

shopping, which is orecast to grow aster than any other sector in Australia. E-commerce giant ASOS enjoyed a46% rise in annual sales to Australia last year as a result o the demand or British goods and the strength o theAustralian dollar. For more inormation on how to start trading with Australia, see page 10 o this report.

In the meantime, we must put more support in place to assist businesses that arent already making their markinternationally. Whether youre an accidental exporter, a fedglingexporter, or even a ull-grown business thats looking atstreamlining its export programme, you can get helpor inormation by visiting www.dhlguide.co.uk

John Longworth

Director GeneralBritish Chambers o

Commerce

Phil Couchman

CEODHL Express UK & Ireland


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INTRODUCTION METHODOLOGY

The DHL/BCC Trade Confdence Index(TCI) is a measure o the UKs exportinghealth. By analysing trends in trading

activity and key actors o exportingfrms perormance, the TCI gives atruly comprehensive picture o the UKsinternationally trading business community.The index casts new light on exporterslevels o confdence and employmentintentions, and paints a picture o regionalexporting perormance.

Those wishing to obtain more inormationon the Indexs methodology and datasources are invited to contact the British

Chambers o Commerce.

The TCI generates its results rom two datasources:

Questionnaire responses submitted by over1,500 exporters, derived rom the BCCsQuarterly Economic Survey (QES). The QES isthe largest and most representative businesssurvey o its kind.

Data generated rom exporting activity thatrequires supporting documentation.

THE SURVEY

Fieldwork or the survey was conductedbetween 12 November and 5 December.Results are split into the ollowing rm

size categories:

0-9 employees (micro rms)

10-49 employees (small rms)

50-249 employees (medium rms)

250+ employees (large rms)

Unless otherwise stated, results reer to allexporters responding to the survey. Whereresults are split between the service andmanuacturing sectors, this is stated clearly inthe text. Results that are not split by rm sizeare weighted by the contribution o rm sizeto total exporting turnover.

Results are represented by either a balancegure or a pure percentage gure. Balancegures are determined by subtracting thepercentage o companies reporting decreasesin a actor rom the percentage o companiesreporting increases. Where a balance gureis positive it represents growth; where it isnegative, it represents contraction.

EXPORT DOCUMENTATION DATA

Many types o exports require supportingand commercial documentation to ensurethe timely delivery o goods and timelypayment. Chambers o Commerce administerthis documentation, and have amassed asignicant dataset around UK goods exportsas a result.

The TCI uses data collected rom this processto show both an index o documentation andregional comparisons o exporting activity.

Written4and4researched4by:

Tom Nolan, Policy Adviser

Mike Spicer, Senior Policy Adviser

Sukhdeep Dhillion, Economic Adviser

Acknowledgements:

Printed by The Javelin Partnership Ltd.Printed on 75% recycled paper rom amanaged sustainable source, using pulpthat is TCF and ECF and printed withvegetable soya based inks.www.thejavelinpartnership.comTel: 0118 907 3494

The4British4Chambers4of4Commerce

65 Petty FranceSt. Jamess ParkLondonSW1H 9EUTel: 020 7654 5800Fax: 020 7654 5819Email: [email protected]

www.britishchambers.org.uk


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EXECUTIVE4SUMMARY Q42012

44 Trade4Condence4Index4rises41.%4since4previous4quarter

44 4Almost4all4key4survey4indicators4improved4on4the4quarter

44 Exporters4condence4in4future4turnover4and4protability4continues4to4rise

The results or the Q4 2012 DHL/BCC Trade Condence Index (TCI) point to an improvement inexport activity or both manuacturing and services rms. The index number used to calculate thevolume o trade documents administered by Chambers o Commerce across the UK now standsat 113.75; this represents a 1.4% increase on the previous quarter and the index is now at its thirdhighest level since our records began.

The TCI is also compiled rom responses submitted by over 1,500 exporters, derived rom theBritish Chambers o Commerces Quarterly Economic Survey (QES). The results show thatexporting rms are more condent about their longer term outlook than at any time over the pasttwo years. Both manuacturing and service rms reported increased export orders and sales overthe three-month period rom October to December.

There was also a marked increase in both manuacturing and service rms who expect theirturnover and protability to improve over 2013. However, there was slight all in the number orms that are planning to take on new sta in the rst three months o the year.

This report has consistently argued that the government can do more to support Britainsexporting potential, and the below recommendations would help those rms that want to, or aretrading internationally to ull their potential:

National Export Strategy

Some welcome measures have been announced in recent months to help exportingcompanies break into new markets. But these must be reinorced and implementedeectively, and should be part o a national export strategy. More action in the areaso trade nance, promotion, and insurance is needed, i companies are to have the

right support to penetrate new and growing markets.

Free movement o services

Service rms in the UK still ace too many regulatory and administrative obstacles whenoperating in the EU single market. This must change. Most o the benets to exportersrom the single market to date has been through the ree movement o goods. But theneed to make a serious eort to improve the unctioning market in services has beenclear or some time. The government should take the lead and argue or the creation oa genuine single market or all services.

TRADE CONFIDENCE INDEX OVER THE PAST YEAR

Q4 11 Q1 12 Q2 12 Q3 12 Q4 12

108.24 116.59 114.74 112.16 113.75


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4

VOLUME4OF4TRADE4DOCUMENTS4

NATIONAL TRADE DOCUMENTS VOLUME

The volume o trade documents issued increased marginally on the quarter and remains athistorically high standards. The number is now the third highest since records began. There wasan increase o 1.42% on Q3 2012 and compared to the same quarter in 2011 there was an increaseo 5.20%.

44 4The4volume4of4trade4documents4issued4remain4high4by4historical4levels

-30

-25

-20

-15

-10

-5

0

5

10

15

20

Quarter on a year earlier

Qtr on Qtr

N IrelandWalesN EastS WestE MidsW MidsEastY&HScotlandN WestS EastLondon

Figure One: % change quarter-on-quarter (Q4 12 on Q3 12) and change on the same quarter a year previously (Q4 12 on Q4 11)

%

change

PERCENTAGE CHANGE

Index number 2007 = 100 Most recent quarter on a

year earlier

Most recent quarter on

previous quarter

Volume index o export

documentation 113.75 5.20% 1.42%

REGIONAL PICTURE

The regional picture broadly refects the national picture, with most regions experiencing aquarter-on-quarter increase. Only our regions experienced alls compared to Q3 2012, with onlyone region, the East Midlands, experiencing a steep all. As with comparisons with the previousquarter most regions recorded a year-on-year increase. The regions with the highest yearlyincrease were Yorkshire & the Humber, the South West and the North East.

Q42012


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FOCUS4ON4EXPORT4SALES4

The balance o rms reporting an increase in export sales increased by eight points to +32% in thenal quarter o 2012. Over the year the gure has an average above 20%. Figure two shows thatater a relatively strong upward trend ollowing the 2008 recession, in 2011 the balance managed toaveraged below 20%, however there was a modest upturn in 2012.

Further break down o the export sales balance reveals that 45% o exporters reported that theirexport sales increased in Q4 2012. 13% o respondents stated that they decreased, a all o twopercentage points rom the gure recorded in Q3 2012.

In the service sector the balance o exporters reporting that sales had increased was up to +35%,rom +31% in the previous quarter. In the manuacturing sector the export sales balance more thandoubled to +30%, rom +14% in Q3 2012.

44 4Export4sales4indicator4increased4in4the4nal4quarter4of42012

-30

-25

-20

-15

-10

-5

05

10

15

20

25

30

35

40

Export Sales

Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

-----Recession-----

%B

alance

-----Recession-----

Q42012


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6

FOCUS4ON4EXPORT4ORDERS4

The export order balance increased by nine points in the nal quarter o 2012 to reach +30%,shown in Figure Three. This is the joint highest gure since Q4 2010 and is considerably higherthan the balance gure during the 2008 / 09 recession. When the balance is broken down intoits component parts it shows that 45% o exporters reported that their export orders increasedin Q4 2012.

In the manuacturing sector there was a welcome increase in the percentage o rms thatrecorded an increase in export orders. The gure or the manuacturing sector was 41 per cent;up seven points rom the previous quarter. This balance is +20%.

Similarly there was an increase in the percentage o rms in the service sector category thatrecorded an increase in Q4 2012. The gure is now 49% and represents an increase o 9%on Q3 2012.

44 4All4rm4size4categories4posted4an4increase4in4their4export4order4balances

-40

-30

-20

-10

0

10

20

30

40

Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession---- ----Recession----

%b

alance

Q42012


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7

FOCUS4ON4EMPLOYMENT4

44 The4number4of4rms4expecting4to4take4on4new4staff4fell

The overall employment expectations balance ell three points to +13% in the nal quarter o lastyear. Although there is a all in the overall employment expectations one thing to note is thatrms which remained unchanged regarding employment expectations increased to 58%. Thisurther highlights the uncertainty aced by rms who are holding o hiring sta.

Splitting the balance gure into its component parts reveals that the percentage o rmsreporting that they expected to increase sta ell rom 31% to 27%. The percentage o rmsexpecting to decrease sta increased marginally, rom 15% to 14% (see Figure Four).

At the sectoral level, manuacturers employment expectations remained constant at +17%, whilethe gure or service sector rms ell our points to +11%.

0

10

20

30

40

50

Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession---- ----Recession----

Q42012


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8

8

FOCUS4ON4BUSINESS4CONFIDENCE4

Exporters condence that their turnover and protability will improve over the next twelve monthsrose markedly in Q4 2012. They are now much more condent than in the 2008-09 recession; butbalances are relatively weak by historical standards, particularly or services.

They are many explanations or the improvement in condence. The encouraging economicnews ater last summer and the continuing good news around employment would eed intobusiness sentiment.

Overall 59% o exporters eel that their turnover will increase throughout 2013; this represents a riseo ve percentage points rom the last time they were surveyed. As Figure Five shows when askedabout uture protability the gure was 50%; up our percentage points.

When broken down into its component parts it shows that exporters in the manuacturing sectorare more condent than exporters in the service sector. 62% o manuacturers eel their turnover willimprove and 56% eel they will see an improvement in their protability. For service rms the gurewas 57% or turnover and 40% or protability.

44 4Signicant4increase4in4number4of4rms4who4expect4turnover4and4protability4to4improve

10

20

30

40

50

60

Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession--------Recession----

Q42012


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9

44 4Fall4in4percentage4of4large4rms4reporting4raw4material4costs4are4adding4price4pressure4

44 4However,4raw4material4costs4ease4for4medium4and4small4size4rms4

When all respondents to the survey were counted together, the percentage o rms reporting rawmaterial costs are adding pressure to raise prices increased marginally rom 40% in Q3 2012, to 41% inQ4 2012. Despite the increase it is still a very low gure by historical standards.

When this is broken down into the our rm size categories, those respondents with over 250employees saw an increase rom 39% to 43%, between 50 and 249 employees saw a all rom 45% to44%, small rms (10 to 49 employees) recorded a drop rom 47% to 42% and micro rms (zero to nineemployees) saw a rise rom 29% to 31%.

This displays a continuing easing o infationary pressures, which have been a prominent eature o thediculties acing UK businesses over recent years. When broken down by sector it clearly shows howmanuacturing rms are more acutely aected by raw materials prices. Figure Six shows the averageresults on this question across rm size and split by sector.

None o the rm size categories in the service sector have a result above 40%. Whereas all o themanuacturing rm size categories have average results above 55%. The highest gure in the servicesector was small rms, who recorded a gure o 31%.

FIRM4SIZE4BREAKDOWN4

0

10

20

30

40

50

60

70

80

Manufacturing Services

250+50-24910-490-9

Firm size by number of employees

Q42012


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10

Melbourne

QueenslandWestern Australia

Northern Territory

South Australia

New South Wales

Victoria

Tasmania

Australian CapitalTerritory

DHL GatewayWeipa

Normanton

Katherine

Wyndham

DerbyBroome

Dampier

Carnarvon

Freman -

Bunbury

Albany

Esperance

Kalgoor -

Yulara

Coober Pedy

Port Augusta

CanberraAlbur

Port Lincoin

MountBallarat Ben-

Devonport

LauncestonHobart

Broken Hill

Wagga Wagga

Bourk

ToomwoombaGold Coast

Tamworth

Newcastle

Alice Springs

Uluru (Ayers

Tennant Creek

Mount IsaTownville

Rockhampton

Sydney

Brisbane

Adelaide

Cairns

Perth

Darwi

CitiesDHL Service Centres

Australias position as the 6th largest country inthe world, a per capita GDP comparable with

European economies such as the UK and Germany,and a trade policy supporting liberalisation andincreased economic activity, all make Australia anattractive destination for British businesses.

Key economic reforms implemented since the1980s have transformed Australia into an open,internationally competitive, trade orientedeconomy. Australias proximity to Asia Pacific andthe demand for mineral exports like iron ore, coaland copper from countries such as China, hashelped its continuous growth and resilience duringrecent global financial and economic downturns.The economic growth has recently slowed, but still

achieved 3.1% year on year, and the Q4 2012interest rate reduction to 3%, intended tocounteract a slowdown in the mining sector and

assist other sectors in keeping the economygrowing, mean opportunities for British businessesare significant.

The shared language, culture and history makeAustralia an easier country for companies lookingto start out in international trade, and its proximityto Asia Pacific means Australia provides a gatewayfor British businesses looking for further expansion.

Sources: DHL, UKTI, Foreign & Commonwealth Office, BBC

COUNTRY OVERVIEW

Australia: Country Profile

Currency: Australian Dollar (AUD)

GDP: US$1.463 trillion

Area: 7,741,220 sq km

Population: 22.1 million

Source: CIA World Factbook

Capital city: Canberra

Ethnic groups: White 92%, Asian 7%, Aboriginal

and other 1%

Languages: English 78.5%, Chinese 2.5%, Italian

1.6%, Greek 1.3%, Arabic 1.2%,

Vietnamese 1%, other 8.2%,

unspecified 5.7%

DHL4AUSTRALIA4FACT4SHEET Q42012


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(In working days,

from collection to

delivery at final

destination)

Transit Times

UK to Australia - Example Transit Times

Major centres (Including: Adelaide, Brisbane, Darwin, Melbourne, Perth & Sydney)

Document: 3 days Dutiable Shipment: 4 days

Albany, Western Australia: Document: 5 days Dutiable Shipment: 6 days

Derby, Western Australia: Document: 5 days Dutiable Shipment: 6 days

Alice Springs, Northern Territory: Document: 5 days Dutiable Shipment: 6 days

Katherine, Northern Territory: Document: 8 days Dutiable Shipment: 9 days

Port Augusta, South Australia: Document: 5 days Dutiable Shipment: 6 days

Mount Gambia, South Australia: Document: 5 days Dutiable Shipment: 6 days

Normanton, Queensland: Document: 7 days Dutiable Shipment: 8 daysRockhampton, Queensland: Document: 5 days Dutiable Shipment: 6 days

Coffs Harbour, New South Wales: Document: 5 days Dutiable Shipment: 6 days

Wagga Wagga, New South Wales: Document: 5 days Dutiable Shipment: 6 days

Canberra, Australian Capital Territory: Document: 5 days Dutiable Shipment: 6 days

Bendigo, Victoria: Document: 5 days Dutiable Shipment: 6 days

Devonport, Tasmania: Document: 6 days Dutiable Shipment: 7 days

TRADE INFORMATION

DUTY FREE ALLOWANCE 1,000 Australian Dollars (AUD)

US$242.2 billion

Import commodities: machinery and transport

equipment, computers and office machines,

telecommunication equipment and parts, crude oil

and petroleum products

Top Import Origins: China, US, Hong Kong,

Germany, UK

IMPORTS INTO AUSTRALIA

US$271.1 billion

Export commodities: coal, iron ore, gold, meat,

wool, alumina, wheat, machinery and transportequipment

Top Export Destinations: New Zealand, US, China,

UK, Hong Kong, Singapore

EXPORTS FROM AUSTRALIA

Source: DHL, CIA World Factbook

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Prohibited & Restricted Items

Australian Customs prohibit or restrict the import of the following items into Australia. Logistics providers

will also have a list of items that are prohibited or restricted for transport to any location, for example dan-

gerous goods.

Commercial invoices must include the receiver and shipper details, quantity of goods and a full description

of the goods (not just commodity codes), for example 100% Cotton T-Shirt. Brand names in place of adescription are not accepted.

To send Pharmaceutical products to Australia, approval is required from the Australian Department ofHealth. The receiver must also hold an import licence.

All alcohol and tobacco is subject to high duty and taxes.

All plant and animal material is subject to quarantine inspection; this includes items such as seeds,stone/mineral samples for analysis and leather goods.

ESSENTIAL CUSTOMS INFORMATION

Anabolic or androgenic substances

Antibiotics

ANZAC

Asbestos

Australian flag and coats of arms

Cat and dog fur products

Ceramic ware - glazed

Cetaceans (whales, dolphins and porpoises)

Chemical weapons

Chewing tobacco and oral snuff

Cigarette lighters

Cosmetics - toxic materials

Credit cards - counterfeit

Crowd control equipment

Cultural and heritage goods - general

Cultural and heritage goods from Papua New Guinea

Diamonds - from Cote d'Ivoire

Diamonds - Kimberley Process

Dog collars - protrusion

Dogs - dangerous breeds

Drugs and narcotics

Embargoed Countries (UN Sanctions)

Embryo clones - viable materials

Endangered animal and plant species - CITES

Erasers - novelty

Explosives, plastic

Firearms and ammunition

Fish and toothfish

Fly swatters/mosquito bats - electronic

Growth hormones and substances of humanor animal origin

Hazardous waste

Hydroflurocarbons (HFCs)

Incandescent lamps

Kava

Knives and daggers

Laser pointers

Money boxes, novelty - toxic materials

Ozone depleting substances/Synthetic GreenHouse Gases

Pencils and paintbrushes - toxic materials

Pesticides

Polychlorinated Biphenyls, Terphenylsand Polyphenyls

Pornography and other objectionable material

Radioactive substances

Suicide devices

Tablet presses

Therapeutic drugs and substances

Tobacco - unmanufactured leaf

Toys - toxic materials

Trade Practices Act goods

Woolpacks

Weapons

Source: Australian Customs and Border Protection Service



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Contact Customer Services on 0844 248 0844

Go online: http://www.dhl.co.uk/en/express/shipping/customs_support.html

The UK Trade Tariff can be used to confirm the commodity codes, termed Harmonised System (HS)

codes, referred to throughout this document.

The information is available at: https://www.gov.uk/trade-tariff

For information on how to confirm if your goods require an Export License, and how to obtain any

relevant licenses, please go to:

https://www.gov.uk/export-and-import-licences-for-controlled-goods-and-trading-with-certain-countries

For further information

If you need support with your exportdocumentation or advice on trade to Australia,contact your local Chambers office.

DHL Customer Services is also available on0844 248 0844.

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Q42012DHL4AUSTRALIA4FACT4SHEET4


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BRITISH CHAMBERS OF COMMERCE

65 PETTY FRANCE

LONDON SW1H 9EU

UNITED KINGDOM

T +44 (0)20 7654 5800

F +44 (0)20 7654 5819

[email protected]

WWW.BRITISHCHAMBERS.ORG.UK

DHL INTERNATIONAL (UK) LTD

178-188 GREAT SOUTH WEST ROAD

HOUNSLOW

MIDDLESE TW4 6JS

UNITED KINGDOM

T +44 (0)844 248 0844

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DHL/BCC Trade Confidence Index Q4

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