Freight & logistics transformation needs good cash flow to keep moving

In Australia and New Zealand, the sheer magnitude of change in supply and demand over the past two years has led to unprecedented transformation and growth in the freight and logistics sector. The upswing in e-commerce usage during COVID is now embedded amongst consumers with freight and logistics businesses innovating to meet demand and stay ahead of their competitors.

The freight and logistics sector could be described as a success story of the pandemic era with digital transformation at the forefront of strong growth in both Australia and New Zealand. With more businesses and individuals reliant on the sector than ever before, the focus is now on working smarter and delivering innovative solutions that are efficient and cost-effective.


The freight and logistics sector

The freight and logistics sector comprises national logistics organisations and SME operators and suppliers working across road and rail transportation, shipping, ports, stevedoring, warehousing, and distribution of goods from point to point.

In Australia, the sector has an estimated annual revenue of $101.51 billion adding $39.91 billion to the Australian economy in 2019-20. Across the Tasman, the New Zealand freight and logistics market is expected to register a compound annual growth rate (CAGR) of more than 3 per cent between 2022-27. Both domestic markets are dominated by road and rail freight, whether delivering nationally or supporting exports.

The strong growth projections within freight and logistics is expected to be driven by investment in the following growth areas:

Growth in ecommerce is expected to continue as customer behaviour and expectations become more embedded and digital marketing strategies more advanced. Resilience in delivery pipelines will be essential to meet the needs of a growing market of online consumers.

Government investment in infrastructure is also expected to be a key driver for growth. In Australia there is currently $75 billion dollars in funding allocated for road and rail infrastructure projects from 2018 -27.

Digital transformation has already taken place at an unprecedented rate over the past two years with many businesses investing heavily in solutions to boost efficiencies and maintain competitiveness. A forward-thinking digital strategy that includes automation (via AI/IOT) to pursue more efficient and cost-effective operations is essential for business to stay ahead.

Regional outlook, Australia is well placed to capitalise on global transport opportunities with manufacturing and logistics hotspots in Asia on our doorstep. We have a significant opportunity to be at the forefront of innovation in the efficient movement of goods both at home and across the globe.

Growth in exports of iron ore, coal and critical minerals, as well as agriculture and food exports are in demand globally, boosted by infrastructure investment as well as the knock-on effects of geo-political tensions and the war in Ukraine. Both Australia and New Zealand have an opportunity to push their export categories to new markets.

Logistics expertise is in increasing demand with supply chain management (the role that plans, organises and implements the collection and delivery of goods between points in an effective manner) becoming more pivotal to the resilience of the supply chain and therefore more valuable in today’s market.

How can invoice finance support growth?

Businesses in the freight and logistics sector can be at risk of cash flow problems as they balance the costs of operations, warehousing and distribution combined with extended payment terms of their customers (sometimes reaching up to 60 or 90 days). Very few businesses can afford to wait that long to be paid, especially as expenses, wages and other outgoings still need to be met on time.

A great solution for businesses looking for cash flow surety is an invoice finance facility that can be used as and when it is required. Invoice finance helps businesses close the gap between when they invoice their customers and receive payment. Find out more <LINK>

The freight and logistics sector looks set for a bright future with agility, continued innovation and investment said to be the key to driving business growth. Global consumers have changed their behaviour over the past few years in response to the pandemic, we are now more digitally savvy than ever before – however, our expectations are high. Resilience and efficiencies should be at the forefront of strategic planning so that disruptions can be managed, and deliveries can keep moving.

With good cash flow and access to working capital, freight and logistics businesses can focus on growth and innovation to gain traction within industry.

Find out more about how an Apricity Invoice Finance Facility could help power your business growth.