Why Global Shipping Delays Aren’t All Bad News.

There’s been much discussion about global shipping delays since the coronavirus pandemic began, but despite the ongoing congestion and backlog, cautious optimism is emerging among some businesses.

We’ve been warning clients for months about the need to order products well in advance, to ensure their arrival before the busy Christmas period.

However, in order to do that, businesses need to have confidence that their products will sell.

That confidence is definitely growing, with some clients now telling us they’ve never been busier.

Like the rest of the world, West Australians have been restricted in their ability to travel due to the ongoing pandemic. Rather than spend their money on flights and holiday accommodation, some consumers are instead opting for retail therapy.

And, with no firm date on when Australia might again allow international travel, spending on consumer goods is likely to continue.

In fact, the Deloitte Access Economics retail forecast for the second quarter is tipping consumer spending to grow strongly in the coming financial year, after surging in 2020-21.

We’re also starting to see this boost in confidence reflected in our clients’ purchasing habits, with some moving to the ‘just in case’ model, where they’d rather have stock sitting in the warehouse ready to sell.

Previously, many were ordering stock so it arrived ‘just in time’, to avoid being left with excess product.

This is indicative of a positive shift in confidence, and there are also other promising signs;

  • Consumer Spending; The latest Commsec State of the States report shows consumer spending is strong across the country, supported by ongoing fiscal and monetary stimulus, and a firmer job market. Here in WA, spending was up more than 10 percent in the March quarter. The report also showed WA is leading the way on relative economic growth.
  • Unemployment has decreased; Latest figures from the Australian Bureau of Statistics shows WA’s unemployment rate holding steady at 4.6% in August, the lowest level since 2013. National unemployment dropped slightly last month to 4.5%.
  • Housing figures; Nationally, total dwelling approvals were more than 27% higher in 2020-21 compared to the previous financial year, according to figures from the Australian Bureau of Statistics. Latest data from the Housing Industry Association also shows new home sales rose by 8.5% in July.
  • Certain products are in high demand; The recent increase in new home builds has also increased demand for building products, with tools, plumbing hardware, tiles, furniture, and timber among numerous products flying off the shelves.

Clients are now spending tens of thousands of dollars to keep warehouses full, with the high risk currently returning a high reward.

One of our clients has confirmed they’re investing upwards of $50,000 to ensure they have enough product on hand, because they don’t want to be the company that has to turn down a customer’s request for an item.

We haven’t heard that kind of sentiment in such a long time. It’s even more incredible to hear it on the back of the strange year that was 2020.

Read more here.