The government’s closure of Australia’s borders in March to stem the spread of COVID-19 has significantly reduced air freight capacity because around 80 per cent of air cargo is traditionally transported to and from Australia by passenger aircraft.

Export Council of Australia chair Dianne Tipping said a $350 million federal government scheme to subsidise air freight had been a “godsend” that ensured local agricultural and seafood products could get to lucrative overseas markets, especially in Asia.

However, with the scheme’s announced funding set to run out by the end of the year, she said further support would be needed to keep export channels open.

“I don’t see that January is going to be back to normal at all,” Ms Tipping said. “We need to consider that this will go on longer until flights are back to the normal sense of regularity.”

Data released by the Department of Infrastructure and Transport last week show that inbound and outbound air freight fell to 26,5151 tonnes in the four months from March to the end of June, a fall of 26 per cent from the same period last year and a 30 per cent drop from 2018.

Total exports of fresh and processed foods grew by 5 per cent in the year to June 30, according to the Department of Foreign Affairs and Trade.

Trade minister Simon Birmingham topped up the program’s initial $110 million funding with $242 million at the start of July, which he said would extend to program until the end of 2020. The program subsidises airlines to use empty passenger aircraft for otherwise unviable cargo-only flights and has so far supported 62,000 tonnes of exports to 63 destinations worth $1.1 billion.

Air cargo represents less than 1 per cent of Australia’s imports and exports by volume but accounts for 21 per cent by value, worth $43 billion a year, according to a 2019 report by Infrastructure Partnerships Australia and BIS Oxford Economics.

Singapore Airlines, the biggest international air freight operator in Australia both before and since the pandemic, last week flew six dedicated freighter aircraft return flights to Australia, along with 26 flights using passenger jets carrying only cargo and 10 flights carrying both passengers and cargo.

Singapore Airlines’ general manager for cargo in Australia and New Zealand, Nicholas Kok, said many of its cargo flights would not be viable without the IFAM program.

“The very sudden removal of more than 80 per cent of our cargo capacity in March this year placed a huge strain on the cargo industry,” he said.

“We know in normal times, cargo operations make up a small percentage of our overall revenue. Now, it is the only meaningful source of revenue for the business.”

Ms Tipping said that exporters of non-perishable or non-urgent exports had largely been able to shift to sea freight.  Airlines are plotting a long recovery for passenger travel from the COVID-19 crisis. Qantas boss Alan Joyce said in June that he did not expect to be doing any meaningful flying within the next 12 months.

Some airlines have started to return capacity to Australia however, with Qatar Airways resuming twice-weekly flights from Adelaide to Doha on Sunday.

This article was first published in Sydney Morning Herald on 17 August 2020

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• Cosmetic Supervision and Administration Regulation 2020
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This information has been supplied by ChemLinked, Reach24h Consulting Group.

What are Incoterms used for?

Incoterms® are primarily used for determining how the sale of equipment for delivery across international boundaries will be handled and who will pay for what in the transaction. They will not address the consequences of a breach of contract or exemptions of liability. Incoterms® relate to the terms between the exporter and importer.

Incoterms® cover the following broad points:

• Delivery – Incoterms® 2020 specify when seller delivers to buyer:
• Risk – Incoterms® 2020 specify when risk transfers from seller to buyer. Risk passes from seller to buyer when seller has fulfilled his obligation to deliver the goods
• Costs – Responsibility of costs passes from seller to buyer at a point up to which the seller is obliged to pay transport (and insurance) costs

Our third Incoterm® is

• FOB – Free on Board (Named Place)

FOB should only be used for sea and inland waterway transport.

Under the Incoterms® 2020 rules, FOB means the seller has fulfilled its obligation when the goods are loaded on the vessel nominated by the buyer at the named port of shipment. With FOB, the seller is responsible for loading the goods on the vessel, while the buyer is responsible for everything else necessary to get the goods to the final destination.

The risk or liability for the goods transfers from the seller to the buyer when the goods are on board the vessel, and the buyer bears costs from that point forward.

Because the seller is responsible for the goods until they are loaded on the vessel, they need to ensure the goods arrive at the vessel. Since most goods are now delivered to container yards rather than right to a vessel, and if FOB is the agreed upon term, both buyer and seller must agree upon exactly what “loaded on board” means in the sales contract, because it can vary for different types of vessels and commodities.

Quick overview

Seller delivers when goods placed on board the vessel nominated by the buyer at named port of shipment:

• Cleared for export by seller
• Only to be used for sea transport
• If commercial practice or at buyer’s request, seller may (but is not required to) arrange transport at buyer’s cost and risk

Incoterms® 2020 FOB rules are used only and exclusively in maritime transport or inland waterway transport. Use of FOB is not recommended for container transport.

Missed the first three articles? Catch up on them here:

1. What Are the Incoterms® Rules?
2. EXW–Ex Works (Named Place) Incoterms® Rule
3. FCA–Free Carrier (Named Place) Incoterms® Rule

This series includes seven bite-sized videos on how we manage plant pest and disease risks offshore, at the border and onshore in Australia.

1. Biosecurity and Trade
2. Market Access Requests
3. Import risk analysis
4. At the border
5. Exotic plant pests
6. Export processes
7. Now, it’s your turn (how you can help).

In November 2019, Rubina participated in the Australia Awards Women Trading Globally program. Funded by the Department of Foreign Affairs and Trade, the program enabled 14 female entrepreneurs from South Asia and Afghanistan to undertake export readiness training sessions in Melbourne and Sydney. After participating in the program, Rubina has updated her new marketing plan and maintained a connection with Cricket Victoria who runs diversity programs.

During COVID-19, SAFA was the first in India to set up a response system for food (dry rations) through a crowd funding platform, distributing rations across 6 major cities in India to over 280,000 individuals. This gained Rubina recognition as a Vogue Warriorby Vogue India, and she will also be featured in Vogue UK in September.

Read on, as Rubina shares her story with us through the Q&A below.

Q&A with Rubina Nafees Fatima
CEO / Founder-president
SAFA SOCIETY

What led to you to establish your organisation, and what drove you to commence international expansion?

SAFA was formed with the vision to socioeconomically empower women from marginalised communities. The thought arose from the unique culture of the Muslim communities and the delicate fibre of the patriarchal setup. Women when economically empowered rise up to change the course of intergenerational poverty as they focus on the development of families through education and social awareness.

The work we have done so far in providing livelihoods for such women has resulted in them manufacturing eco-friendly lifestyle products for which we have been looking at global markets. Eco-friendly products like bags in jute, cotton etc. are promoted widely in most international markets and we felt based on our quality and preparedness we were ready for bigger markets.

What steps have you taken to prepare for export?

We have listed out the trade fairs and international exhibitions for related products, did some trade mapping of areas, and also participated in a global expo in January with good learnings as it was our first one to participate in. All of these developments have come to post my trip to Australia. The inputs given by the mentors on the pitch and strategy have formed/validated some ideas that I had parked aside as I found them too idealistic. Similar inputs were given by the team and I have already included them in my new marketing plan. What did you gain from participating in the Women Trading Globally program?

There were a lot of learnings on exporting globally and also to Australia. Market behaviour and optimising resources were also a key take away. The participants were a mixed group at different organisational stages and the peer learnings were from real-time experiences. Such learnings in a closed set up are extremely difficult to get at any place or situation.

The introduction to the Cricket Victoria and their programs for young girls from different ethnicities was pertinent to the needs to SAFA too and I have connected with them to discuss programs that they could sponsor in Hyderabad for which they have shown an interest too.

We have a premium brand Artizania and since the markets here are diverse and a huge chunk rests with price-conscious too we are launching a budget brand in menswear called “Pride” which will be a budget-friendly mens clothing line. We will start with shirts initially – for local markets only.

We have also worked on the strategy to white label our brand in order to sell more. This came after a lot of discussions within the management and post my learning from the ECA trip.

How have you been impacted by COVID-19 and how have you responded?

The lockdown resulted in the loss of livelihood, dignity and starvation for many in India. We have been the first in India to set up a response system for food (dry rations) through a crowdfunding platform and have distributed rations across 6 major cities in India to over 280,000 individuals. We have forged partnerships with 16 NGOs and 2 with the government during this period.

We have also started manufacturing cotton masks and have made and sold over 200,000 masks so far with over 140 women engaged and generating income for themselves when the primary wage earner in their families was unemployed. We continue to do the same as we are now picking up bulk orders of corporates.

We have also raised funds for volunteers engaged in the last rites of COVID-19 victims by providing them PPE kits for 2 months.

We were given national and international media coverage for all our efforts and continue to gain traction. I will be featured in Vogue UK in the month of September.

Knowing how to plan ahead and the tools at your disposal is key – and – it could mean the difference between a profit or a loss.

• What’s driving AUD fluctuations and key currency corridors
• Types of currency risk you may be exposed to
• Simple currency tools you can use to manage FX risk
• Overview of Government support packages available to Aussie businesses and tips for day-to-day cash flow management
• How other businesses have successfully managed their FX exposure and use volatility to their advantage

The data shows that despite severe global economic shocks from COVID-19, Australia posted a record financial year trade surplus of $77.4 billion in 2019-20 with Australian goods exports growing by $9.29 billion or 2.5 per cent. Australia also recorded its 30^th consecutive monthly trade surplus in June 2020, worth $8.2 billion, the second highest monthly trade surplus.

Federal Trade Minister Simon Birmingham said the COVID-19 pandemic was testing all Australian producers and businesses, but today’s data highlighted the incredible strength and resilience of our export sector.

“Despite the ongoing domestic and international challenges, Australian exporters across a range of sectors like resources, agriculture and advanced manufacturingcontinue to withstand global economic shocks and remain highly sought after in our key markets,” Minister Birmingham said.

“It is a credit to our hard-working exporters that even in these incredibly challenging economic times, their high-quality, safe and reliable product remains in demand around the world.

“Notwithstanding factors such as rising export costs and disruptions to supply-chains, our exporters continue to show incredible resilience and ability to navigate through these significant global economic headwinds.

“The continuing strength of our exporting sectors reinforces the importance for Australia of keeping trading channels open and accessible, expanding market access through even more trade agreements and continuing to support a global, rules based trading system.

“We also recognise the current COVID-19 crisis continues to place immense pressure on parts of our services sector, including tourism and education businesses, many of whom felt the earliest and deepest aspects of the economic downturn.

“That is why our Government has taken significant steps to support businesses and jobs across the tourism sector through cash payments of up to $100,000 and the extension of the JobKeeper payment until the end of March next year.

“We’ve also taken action to keep supply chains open for our agricultural and fisheries exporters through initiatives such as our $350 million International Freight Assistance Mechanism, which has so far supported over $1 billion in exports and helped to protect regional jobs.

“Our Government’s strong track record of delivering high-quality free trade agreements with our key-trading partners has helped cushion the blow for our exporters. That is why we continue to pursue agreements with our key trading partners including with European Union and United Kingdom, to open up new markets for Australian farmers and businesses.”

• With the Australian and global economy powering along as late as December 2019, many would have dismissed the risks associated with a global pandemic (or escalating trade war)- Such risks might have been regarded as a ‘known unknown’ (i.e. was aware of it, but not the size of its impact), or an ‘unknown known’ (i.e. was aware of it, but disregarded it)

• • Many businesses were therefore unprepared for Covid-19
  • Interestingly, many were also able to adjust relatively quickly.

• But the current reality has now altered perspectives, with many firms now reassessing their risks and intending to revisit their supply chain strategies- A recent survey by Procurious (a global online network of procurement and supply chain professionals with over 40,000 members) found that 73% of respondents intend to make large-scale changes to their supply chains

• • 34% intends to shift from foreign to local suppliers
  • 21% plans to increase inventory levels.

• A firm’s response to potential reconfiguration of their supply chain will depend on the nature of the firm (including its size), its supply chain strategy, and where it is at in the supply chain evolution- An optimal position will be a balance between cost effectiveness and security, and a balance between control and cooperation among partners

• • These could be achieved without sacrificing agility and responsiveness
  • It will require transparency of information (including on performance measures) between parties in the supply chain, and real partnership and integration for better coordinated response.

• It is important to acknowledge that for certain enterprises pursuing a significant change in supply chains may be near impossible- They highlight the lack of competition among suppliers, including in terms of reliability of quantity and quality, as well as value for money
  – A further complicating factor may be that their supplier also happens to be in the same market/country as their customers

• • That geographic proximity is a crucial part of their strategy.

So what, if any, changes could be made?

• Blending supply chain strategies to find a compromise between cost efficiency and resilience (such as allowing for increased inventory). This may be influenced by a recalculation of risk weightings and redefining of product life cycle.
• Building better systems for information flow, disruption alert warnings and coordinated response to disruptions.
• Exploring alternative inputs or ingredients if there is no alternative to current supplier(s). This is a longer-term solution, and may potentially require increased R&D investment.
• Revisiting the value of investments in vertical integration, which can strengthen supply chains, including investing in infrastructure such as warehousing in third countries.

How can government assist?

On the domestic front, government initiatives might include:

• Investing in facilities that reduce transport and storage costs
• Extending funding assistance to SME traders (specifically for supply chain related activities)
• Increasing assistance for relevant R&D, including in production and logistics technologies

At the international level, government could:

• Ensure relevant aspects of current and future trade agreements (including on standards and conformance, rules of origin, investment and services) support the transformation of supply chains
• Increase international development assistance or ‘aid for trade’ to partner countries to undertake reforms, including as part of implementation of trade agreements
• With its counterparts in key partner countries, convene strategic dialogue between private sector organisations and relevant government agencies, as a contributing step towards collaboration and partnership.

Background

• stable supply chain strategy, when a firm is just focussed on reliability, without need for real-time performance
• efficient reactive strategy, an operation in which production meets customer demand on an immediate basis (e.g. just-in-time)

• The spectrum can go from a supply chain that has no shared goals, weak relationships and lack of coordinated flows of information
• At the other end of the spectrum is a supply chain management where all businesses and supply chain elements are integrated, there is complete sharing and efficient flow of information, and holistic planning and coordinated approach.