The Australian freight and logistics sector, encompassing road, rail, sea, air transportation as well as supporting services such as warehousing and storage, has an estimated annual revenue of $102.87 billion. The sector is one of the only markets expected to grow as the country looks towards recovery from the Coronavirus recession.
The freight and logistics sector is expected to experience growth of 2.5 per cent between 2020 and 2024. Growth projections are driven by increasing investment in recent years, as well as Government stimulus spending and changes in consumer behaviour brought about by the pandemic.
THE COUNTRY’S ENABLERS
The number of roles and resources needed to deliver the essential products that we buy everyday are too many to count. A supply chain that begins with pilots bringing freighters into port and continues through stevedores and processing teams, then on to road and rail transportation, before finally arriving on our supermarket shelves. Throughout the mayhem of 2020, these critical workers have been relied upon more than ever to deliver essential goods in the face of extraordinary circumstances and unprecedented demand.
This positive growth in an otherwise gloomy economic outlook is pleasing and one that is echoed by our Broker community (traditionally the first port of call from business looking to fund opportunity). In a recent survey conducted by Apricity Finance, Brokers were asked whether they were seeing growth in demand for particular industries. The response was an overwhelming 70 per cent in response to freight and logistics – a much needed silver lining.
FUNDING AND OPPORTUNITY
As expected the 2020-21 Federal Budget delivered significant infrastructure funding with a $7.5 billion investment in transport infrastructure. We can expect growth and employment opportunities across all states which could provide a lifeline for many businesses.
Road freight transport is the largest employing sub-sector followed by post, courier and delivery services. 2020 has seen significant growth in this space as customers turn to ecommerce through the pandemic (e-commerce logistics company Pack & Send has reported their e-shipping volumes in Australia rose by 241 per cent in the first fiscal quarter this year). This trend is expected to continue with many retailers switching to online and home delivery services in order to survive.
The efficiency and productivity of Australia’s ports will also be crucial to the recovery, allowing trade to flow in and out of the country. With plans underway to invest in port upgrades across the nation including a 30-year strategy for Port Melbourne announced this month, we can expect significant spending within the sector to meet demand, enable growth and create employment.
This year’s Federal Budget will fund and fast track a number of rail projects across the country with transformational projects such as the 1,700km Inland Rail connecting Melbourne to Brisbane and the Metronet high capacity signalling in WA (among many other smaller-scale regional projects) to be accelerated.
Technological development and digitisation aimed at better supply chain productivity are also expected to evolve in order to meet demand.
WITH GROWTH OPPORTUNITIES COME THE NEED FOR FINANCE
The Apricity Finance Broker Survey in September 2020, showed an uplift in demand for finance however, many businesses are facing obstacles accessing the funds they need in an increasingly risk-averse lending landscape. Additionally, the data showed that businesses are struggling with cashflow issues – often as a result of delayed payments from their suppliers.
So, while projected growth and increased spending across the freight and logistics sector may present great opportunity for SMEs, the challenge (as ever) will be around cashflow and gaining access to funding when needed.
For more information about Apricity Finance or to find out how an invoice finance facility could help your business take advantage of growth opportunities, visit our website here.