Cost transparency holding back exports
November 24, 2022
A British Chambers of Commerce survey, of 486 businesses, for its ChamberCustoms brokerage service has found a third of businesses have little or no confidence on the costs they will pay to export goods.
More than a third (34%) of SME goods exporters are either ‘never confident’ or ‘rarely confident’ about the final cost of shipping goods until they got the bill. Only 12 per cent are ‘always confident’, and 55 per cent are ‘usually confident’.
Half of SME exporters (47%) say it has become difficult to trade through UK or international ports since the start of 2022, while only three per cent say it has become easier. 38 per cent report no change.
Businesses cited constant changes in shipping and transportation prices, unexpected customs charges, exchange rate volatility, delays at borders and fluctuating fuel costs for the uncertainty.
The same research also discovered that SME exporters generally do not regard a weaker pound as beneficial to their business. Half (50%) say a weaker pound generally corresponds to an increase in input costs, while eight per cent say it corresponds with a decrease.
Only a quarter (26%) say it corresponds with an increase in export sales margins, while 29 per cent in fact say a weaker pound corresponds to a decrease.
Liam Smyth, Managing Director of ChamberCustoms, said: “In the face of a recession and a cost-of-living crisis it has never been more important to get Britain exporting. But we face an uphill challenge in persuading more firms to trade overseas when so many of them feel there is a lack of transparency around costs.
“It is very hard for businesses to build an operating model for their exports when they can’t establish what their sales margins will be. Some of the blame for this can be laid at the door of global supply chain disruption which has caused big fluctuations in shipping and transport costs.
“But there are also serious issues with the additional time being taken to process paperwork, and then delays at the borders when it is not done right, with four in 10 firms telling us trading through ports has got more difficult.
“That’s why the shift to a digital system of trade is so important, moving on-line can ensure that checks can be carried out beforehand to smooth the export process, removing a big chunk of the uncertainty.
“This is especially important for smaller firms, given the challenges of the current economic climate. With a weaker pound not appearing to offer exporters much of a competitive edge, they will be looking for any means possible to reduce their costs and increase their margins.
“The UK Government also needs to focus on pushing awareness of free trade deals, especially among smaller businesses, and take decisive action on reducing some of the removable EU red tape costs for traders.”