Export conditions toughest in a decade, but some still growing

New Zealand exporters are facing the toughest trading conditions recorded in a decade-long industry survey, with rising freight costs, geopolitical tensions and ongoing global uncertainty weighing heavily on businesses.

Every measured barrier to exporting worsened over the past year for the first time in the survey's 10-year history, according tothe latest ExportNZ DHL export barometer.

Transport and logistics remained the biggest challenge, which was identified by 55% of exporters as a significant barrier. Geopolitical tensions recorded the sharpest increase, which rose from 24% to 34%.

Despite the difficult environment, exporters continued to show resilience, with 45% of businesses reporting growth in international sales over the past year,. Only 19% recorded a decline.

ExportNZ executive director Joshua Tan said businesses had been forced to adapt rather than wait for conditions to improve.

"Many are developing new products, they're improving their business processes, they're investing in new technologies and they're entering new markets as well," Tan said.

He said exporters were increasingly looking beyond traditional destinations and expanding into Southeast Asia, India and the Middle East, helped by New Zealand's growing network of free trade agreements.

"Exporters aren't just sitting around and taking this on the chin, they're actually looking for new opportunities and engaging in new ideas," he said.

Freight remained one of the biggest pressures facing exporters.

The survey found 78% experienced higher shipping costs over the past year. Almost half of businesses said they were absorbing those additional expenses themselves rather than passing them on to customers.

Tan said that approach was helping businesses protect long-term customer relationships but was unlikely to be sustainable.

"Forty-five percent told us they're absorbing those costs, while only 9% said they're fully passing those costs on to their customers," he said.

"Exporters are looking to protect their customer relationships by accepting lower margins on their end. Over time, that will reduce their ability to invest and grow."

Rather than seeking protection from global competition, exporters are asking for more practical assistance from government.

Tan said businesses wanted ongoing support to attend overseas trade shows and stronger efforts to secure and expand free trade agreements.

"Businesses aren't asking government to shield them from the competition," he said.

"What they're asking for is for government to help create the conditions to compete overseas effectively."

Despite ongoing uncertainty, exporters remained cautiously optimistic about the year ahead.

The survey found 57% expected export growth over the next 12 months.

Tan said new trade agreements, including therecently signed agreement with India and the proposed Gulf Cooperation Council agreement, could create fresh opportunities for New Zealand businesses.

"If exporters are able to continue to diversify, if they're able to invest in their productivity, then we think that the export sector is well placed despite all of the issues at the moment," he said.