dhl/bcc trade confidence index q2, 2013

The DHL / British Chambers of Commerce

TRADE CONFIDENCE INDEX

OUT OF THE RED.

2ND QUARTER 2013

B

CONTENTS

THE BRITISH CHAMBERS OF COMMERCE

The British Chambers of Commerce is the national body for a powerful and influential Network of Accredited Chambers of Commerce across the UK, a Network that directly serves not only its member businesses, but the wider business community. Representing thousands of businesses of all sizes and within all sectors, the British Chambers of Commerce is the voice of the ‘real economy’. Every Chamber sits at the very heart of its local community working with businesses to grow and develop by sharing opportunities, knowledge and know-how. No other organisation makes such a difference to business as the British Chambers of Commerce.

For more information visit:

www.britishchambers.org.uk

DHL – THE LOGISTICS COMPANY FOR THE WORLD

DHL is the global market leader in the logistics industry and “The Logistics company for the world”. DHL commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. A global network composed of more than 220 countries and territories and about 275,000 employees worldwide offers customers superior service quality and local knowledge to satisfy their supply chain requirements. DHL accepts its social responsibility by supporting climate protection, disaster management and education.

DHL is part of Deutsche Post DHL. The Group generated revenue of more than 53 billion euros in 2011.

For more information visit:

www.dp-dhl.com

44 Introduction/Methodology4................................................................................ 4 2

44 Executive4Summary4.............................................................................................. 4 3

44 Export4Index4............................................................................................................ 4 4

44 Focus4on4Business4Confidence4......................................................................... 4 5

44 Focus4on4Export4Sales4......................................................................................... 4 6

44 Focus4on4Export4Orders4...................................................................................... 4 7

44 Focus4on4Employment4......................................................................................... 4 8

44 Firm4Size4Breakdown4............................................................................................ 4 9

44 Destination4Focus4-4Americas4........................................................................... 4 1044

FOREWORD

This is the first TCI where the results have been positive across all key measures. With many of the indicators at or near record high levels it is clear that the UK’s exporters are leading the recovery. So many of the results tell a good news story but I am particularly pleased with the strength of the employment figures. In the three months since we published the last report exporters have significantly increased the amount of staff they have taken on. And when asked about the next quarter most expect to hire again.

While the results justifiably create optimism, we cannot be complacent. We know from previous reports that things can change quickly; and with the global economic outlook still uncertain it is important the UK exporters receive the right support. The government must work to help firms penetrate new markets, and help exporters compete on a level playing field when it comes to trade finance, promotion, and insurance. And it is vital that new and growing businesses looking to export have access to the finance they need to grow and evolve.

I will briefly mention just two ways the government can help UK exports grow. Firstly, we have long argued that more can be done to expose small and medium-sized businesses to the opportunities of global trade through greater support for promotional activity and tradeshow attendance. And secondly, at the international level, the government must strongly press for the full implementation of the EU’s Single Market Act and the Services Directive. With the right pro-growth policies in place UK exporters can help ensure we have an economy that is great, rather than just good.

This quarter’s TCI key indicators are extremely encouraging. As exporters’ confidence in future turnover and profitability remains high, and the Index has increased to historically positive levels, it’s clear that this is an excellent time for businesses to consider making their mark on international markets. Existing exporters also need to strike out further afield to grow their businesses.

This quarter’s snapshot of South America shows that although the geographical distance from the UK is considerable, there are a multitude of opportunities for British exporters as purchasing power within South America increases and newly affluent consumers represent a significant percentage of the population.

However, there is still more to be done. Some businesses throughout the country might feel confident about these positive results but there are still a number that need our support to consider even testing the waters of international trade. The government’s aim is to double the UK’s exports to £1 trillion by 2020, as the logistics provider to the world, DHL can provide these businesses with local insight, guidance and global expertise, enabling them to sell their wares to profitable markets both near and far.

John Longworth

Director GeneralBritish Chambers of

Commerce

Phil Couchman

CEODHL Express UK & Ireland

2

INTRODUCTION METHODOLOGY

The DHL/BCC Trade Confidence Index (TCI) is a measure of the UK’s exporting health. By analysing trends in trading activity and key factors of exporting firms’ performance, the TCI gives a truly comprehensive picture of the UK’s internationally-trading business community.

The index casts new light on exporters’ levels of confidence and employment intentions, and paints a picture of regional exporting performance. Those wishing to obtain more information on the Index’s methodology and data sources are invited to contact the British Chambers of Commerce.

The TCI generates its results from two data sources:

– Questionnaire responses submitted by over 1,700 exporters, derived from the BCC’s Quarterly Economic Survey (QES). The QES is the largest and most representative business survey of its kind.

– Data generated from exporting activity that requires supporting documentation.

THE SURVEY

Fieldwork for the survey was conducted between 20 May and 12 June. Results are split into the following firm size categories:

– 0-9 employees (micro firms)

– 10-49 employees (small firms)

– 50-249 employees (medium firms)

– 250+ employees (large firms)

Unless otherwise stated, results refer to all exporters responding to the survey. Where results are split between the service and manufacturing sectors, this is stated clearly in the text. Results that are not split by firm size are weighted by the contribution of firm size to total exporting turnover.

Results are represented by either a balance figure or a pure percentage figure. Balance figures are determined by subtracting the percentage of companies reporting decreases in a factor from the percentage of companies reporting increases. Where a balance figure is positive it represents growth; where it is negative, it represents contraction.

EXPORT DOCUMENTATION DATA

Many types of exports require supporting and commercial documentation to ensure the timely delivery of goods and timely payment. Chambers of Commerce administer documentation required for exports outside the EU and have amassed a significant dataset around UK goods exports as a result.

The TCI uses data collected from this process to show both an index of documentation and regional comparisons of exporting activity.

Written4and4researched4by:

Tom Nolan, Policy Adviser

Mike Spicer, Head of Research

Sukhdeep Dhillion, Economic Adviser

Acknowledgements:

Printed by The Javelin Partnership Ltd. Printed on 75% recycled paper from a managed sustainable source, using pulp that is TCF and ECF and printed with vegetable soya based inks. www.thejavelinpartnership.com Tel: 0118 907 3494

The4British4Chambers4of4Commerce

65 Petty France St. James’s Park London SW1H 9EU Tel: 020 7654 5800

www.britishchambers.org.uk

3

EXECUTIVE4SUMMARY Q242013

44 Export4index4increases4by42.85%4on4previous4quarter4and42.94%4on4previous4year

44 4Index4is4now4at4its4highest4level4on4record

44 4Exporters’4confidence4in4future4turnover4and4profitability4remains4high

The TCI is also compiled from questionnaire responses submitted by over 1,700 exporters, derived from the British Chambers of Commerce’s Quarterly Economic Survey (QES). Overall, confidence levels amongst exporters were largely unchanged on the quarter, but there was a noticeable improvement in manufacturers’ confidence that profitability will improve. Confidence levels remain high by historical standards. Figure One represents how confident exporters are that their turnover will improve over the coming twelve months.

EXPORT INDEX OVER THE PAST YEAR

Q2 12 Q3 12 Q4 12 Q1 13 Q2 13

114.74 112.16 113.75 114.84 118.12

The results for the Q2 2013 DHL/BCC Trade Confidence Index (TCI) are encouraging for UK exporters.

The index number used to calculate the volume of trade documents administered by Chambers of Commerce across the UK now stands at 118.12 (see Table below); this represents a rise of 2.85% on the previous quarter and the index is now at its highest level since our records began. Compared to Q2 2012 the index recorded a yearly increase of 2.94%.

Another positive result from the survey was the increase in the number of exporting firms that hired new staff over the past three months. Firms are confident that they will take on new staff over the coming quarter as well.

Confidence Indicator

-40

-30

-20

-10

0

10

20

30

40

50

60

Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

% o

f rm

s

Condence Levels

Figure One: Balance of rms which are condent that turnover will improve over the next 12 months

4

EXpORT4INDEX

NATIONAL TRADE DOCUMENTS VOLUME

There was a significant increase in the volume of trade documents issued on the quarter and the Export Index is now at its highest level on record. The index now stands at 118.12. This represents an increase of 2.85% on Q2 2013, and 2.94% on the same quarter in 2012. The previous highest outturn was 116.59 in Q1 2012.

44 4Volume4of4trade4documents4issued4at4historically4high4levels

PERCENTAGE CHANGE

Index number 2007 = 100 Most recent quarter on a year earlier

Most recent quarter on previous quarter

Volume index of export documentation 118.12 2.94% 2.85%

REGIONAL PICTURE

Almost all areas experienced an increase compared with Q1 2013. The highest was recorded in Wales (up 11.53%). The next highest were the West Midlands (up 7.84%), the East of England (up 6.15%) and the South West (up 6.01%). The biggest fall was in Northern Ireland (down 14.88%). The only other area to record a fall was the East Midlands (down 0.54%). The areas with the highest annual increase were the South West (up 10.96%), the East of England (up 9.02%) and the West Midlands (up 8.42%). The biggest fall was recorded in Northern Ireland (down 22.24%).

Q242013

-25

-20

-15

-10

-5

0

5

10

15

Quarter on a year earlier

Qtr on Qtr

N IrelandWalesN EastS WestE MidsW MidsEastY&HScotlandN WestS EastLondon

Figure Two: % change of documents issued quarter-on-quarter (Q2 2013 on Q1 2013) and change on the same quarter a year previously (Q2 2013 on Q2 2012)

% c

hang

e

5

FOCUS4ON4BUSINESS4CONFIDENCE4

Exporters’ confidence that their turnover and profitability will improve over the next twelve months remained high by historical standards. However, for the second quarter in a row there was only a moderate change in confidence levels.

Overall, 60% of exporters feel that their turnover will increase throughout 2013; up one percentage point from the previous quarter. But the balance was unchanged as the percentage of firms who felt that turnover will worsen over the coming year edged up one to 16% .

As Figure Three shows when asked about a future increase in profitability the figure was 51%, also up one percentage point from previous quarter. The percentage of firms that felt profitability will worsen fell one point to 20%. When broken down into its component parts it shows that 61% of manufacturers feel their turnover will improve and 57% feel they will see an improvement in their profitability. For service firms the figure was 59% for turnover and 46% for profitability.

44 44Small4increase4in4share4of4firms4who4expect4profitability4and4turnover4to4improve

Q242013

10

20

30

40

50

60

Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Figure Three: Percentage of �rms who expect pro�tability to improve over the next 12 months

% o

f �rm

s

Pro�tability

6

FOCUS4ON4EXpORT4SALES4

In Q2 2013 the export sales balance rose to its highest level on record and now stands at +38%. This represents an increase of 11 points on the previous quarter. As Figure Four shows, the only time the balance was near this level was in late 2010.

44 Export4sales4indicator4increases4in4the4second4quarter4of42013

Q242013

Further breakdown of the export sales balance reveals that 48% of exporters reported increased export sales in Q2 2013; 10% of respondents stated that they decreased, and 42% stated that sales remained constant.

In the services sector the balance of exporters reporting that sales had increased rose by 12 points to +46% in Q2 2013. In the manufacturing sector the export sales balance continued to fluctuate widely and now stands at +28%. This is double the balance figure recorded in Q1 2013, but it is two points lower than the Q4 2012 balance.

-40

-30

-20

-10

0

10

20

30

40

Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Figure Four: Balance of �rms reporting an increase in export sales

% b

alan

ce

Export Sales

7

FOCUS4ON4EXpORT4ORDERS4

44 Export4orders4improve4for4both4manufacturing4and4service4firms

The export order balance increased by ten points in the second quarter of 2013 to reach +37%, as shown in Figure Five. This is the highest figure on record. The previous highest figure of +34% was recorded in Q4 2010.

Q242013

Further breakdown of the export orders balance reveals that 47% of exporters reported that their export orders increased in Q2 2013. 10% of respondents stated that they decreased, and 43% stated that orders remained constant.

Within the manufacturing sector the export orders balance figure increased by 13 points to +29%. This is the highest balance for the sector since Q1 2011. Within the services sector there was an increase in the balance figure of 11 points to +44%. This represents the highest outturn since our records began.

-40

-30

-20

-10

0

10

20

30

40

Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Figure Five: Balance of �rms reporting an increase in export orders

% b

alan

ce

Export Orders

8

FOCUS4ON4EMpLOYMENT44

The overall employment expectations balance increased by six points, to +20%, in the second quarter of 2013. This is the highest outturn since Q1 2012. The balance of firms that hired new staff over the past three months is now +24%. This is 12 points higher than Q1 and is the highest on record.

Splitting the employment expectations balance figure into its component parts reveals that the percentage of firms reporting that they expected to increase staff climbed from 28% to 31%. The percentage of firms expecting to decrease staff declined from 14% to 11% (see Figure Six).

44 4The4share4of4firms4expecting4to4take4on4new4staff4increased4in4Q242013

Q242013

At the sector level, manufacturers employment expectations increased by 19 points to +22%, while the figure for service sector firms increased by one point to +20%.

0

10

20

30

40

50

Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Figure Six: Percentage of �rms reporting expectations to reduce workforce

% o

f �rm

s

Expect to decrease sta

9

44 Fall4in4percentage4of4large4firms4reporting4raw4material4costs4are4adding4to4price4pressures

44 Raw4material4costs4continue4to4exert4pressure4on4micro-sized4firms

When all respondents to the survey were counted together, the percentage of firms reporting raw material costs were adding pressure to raise prices fell from 42% in Q1 2013, to 33% in Q2 2013. This share remains low by historical standards and displays a continuing easing of inflationary pressures.

When this is broken down into the four firm-size categories, the percentage for large firms (250+ employees) fell from 42% to 30%; for medium firms (50-249 employees) from 49% to 33%; for small firms (10-49 employees) from 44% to 31%; and for micro firms (0-9 employees) the percentage rose from 31% to 42%.

Micro firms within the services sector saw the largest shift, as the share of respondents reporting increasing price pressures rose from 25% to 46%. In the manufacturing sector the highest figure was seen in the micro-sized firms sector, with an outturn of 30%. Figure Seven displays the full breakdown by sector.

FIRM4SIZE4BREAKDOWN4 Q242013

0

10

20

30

40

50

ManufacturingServices

250+50-24910-490-9

% o

f �rm

s

Figure Seven: Percentage of �rms reporting raw materials are adding to price pressures

Firm size by number of employees

10

DHL4AMERICAS4FOCUS Q242013

B R A Z I L

C O L O M B I A

V E N E Z U E L A

E C UA D O R

M E X I C O

PA N A M A

C O S TA R I C A

N I C A R AG UA

H O N D U R A SG UAT E M A L A

B E L I Z E

E L S A LVA D O R

P E R U

B O L I V I A

A R G E N T I N A

C H I L E

U R U G UAY

PA R AG UAY

G U YA N A

S U R I N A M E

F R E N C HG U I A N A

Brasilia

MontevideoBuenosAires

Santiago

Asuncion

Lima

Quito

Bogota

Caracas

Mexico City

Sucre

ARE YOU MAKING THE MOST OFOPPORTUNITIES IN THE AMERICAS?

5. BOLIVIA

Capital: SUCRE

population: 10,461,053

GDp: $56.14 billion*

KEY FACTS:– the global recession slowed

growth, but Bolivia recorded the highest growth rate in South america during 2009

3. COLOMBIA

Capital: BOGOTA



KEY FACTS:– 3rd largest economy in latin

america

– included in the CiVEtS group of new emerging markets

– 45th ‘easiest’ country to do business in (World Bank)

7. ECUAdOR

Capital: QUITO



KEY FACTS:– one of latin america’s largest

crude oil exporters

– 24 ethnic groups in four distinct regions

– a country rich in natural resources, biodiversity and culture

8. PARAGUAY

Capital: ASUNCION



KEY FACTS:– Market economy distinguished

by a large informal sector

2. MEXICO

Capital: MEXICO CITY


GDp: $1.788 trillion*

KEY FACTS:– analysts predict that Mexico’s

economy will be larger than the uK’s by 2040

– the Eu-Mexico Free trade agreement (meaning no import duties) allows uK exporters to compete on equal terms with exporters from uSa and Canada

6. CHILE

Capital: SANTIAGO



KEY FACTS:– the uK is Chile’s 4th largest

foreign investor

– Widely recognised as the best managed economy in South america

– Extensive network of Free trade and Economic association agreements

1. BRAZIL

Capital: BRASILIA


GDp: $2.394 trillion*

KEY FACTS:– 5th largest country in the world

with a population of 201 million

– one of the world’s most rapidly developing economy with a GDp per head greater than China

*Gross domestic product (GDp) or value of all final goods and services produced within a nation in a given year. Figures are 2012 estimates. Source: www.cia.gov/library/publications/the-world-factbook/index.html

population data estimated for 2013 (Source: www.cia.gov/library/publications/the-world-factbook/index.html)

Key Facts source: uKti

Map fact source: fco.gov.uk

4. ARGENTINA

Capital: BUENOS AIRES



KEY FACTS:– 8th largest country in terms of

surface area

– 2nd largest economy in South america

– its 42.6 million inhabitants generate the highest per capita GDp in South america

11


B R A Z I L

C O L O M B I A

V E N E Z U E L A

E C UA D O R

M E X I C O

PA N A M A

C O S TA R I C A

N I C A R AG UA

H O N D U R A SG UAT E M A L A

B E L I Z E

E L S A LVA D O R

P E R U

B O L I V I A

A R G E N T I N A

C H I L E

U R U G UAY

PA R AG UAY

G U YA N A

S U R I N A M E

F R E N C HG U I A N A

Brasilia

MontevideoBuenosAires

Santiago

Asuncion

Lima

Quito

Bogota

Caracas

Mexico City

Sucre

9. PERU

Capital: LIMA


GDp: $332 billion*

KEY FACTS:– the uK is the second largest

investor in peru

– 100 companies have direct investments in peru

10. URUGUAY

Capital: MONTEVIDEO



KEY FACTS:– uruguay is a strong, growing,

open economy with many opportunities for uK business

– uK links are strong and provide a basis for further cooperation in culture and education

With growth rates of around 4% forecast for the next five years and a projected 8% share of the world economy by 2020, Latin America

has a significant role to play in the global economic recovery.

11. VENEZUELA

Capital: CARACAS



KEY FACTS:– apart from oil, Venezuela

produces very little and imports most of what it needs

12


dHL EXPRESS: KEY FACTS

TOTAL DHL EXPRESS VEHICLES

MEX

ICO

URUG

UAY

ECUA

DOR

PERU

CHIL

E

ARG

ENTI

NA

VEN

EZUE

LA

COLO

MBI

A

BRAZ

IL

BOLI

VIA

PARA

GUA

Y

DHL FLIGHTS PER WEEK

BRAZ

IL

COLO

MBI

A

ECUA

DOR

PARA

GUA

Y

BOLI

VIA

URUG

UAY

MEX

ICO

PERU

ARG

ENTI

NA

CHIL

E

VEN

EZUE

LA

NUMBER OF DHL LOCATIONSM

EXIC

O

VEN

EZUE

LA

URUU

AY

PERU

ECUA

DOR

COLO

MBI

A

ARG

ENTI

NA

CHIL

E

BRAZ

IL

PARA

GUA

Y

BOLI

VIA

1. BRAZIL

DHl VEHiClES: 440

DHl FliGHtS pEr WEEK: 11,350

DHl loCationS: 111

KEY EXPORT ITEMS / SECTORS:

– transport equipment

– iron ore

– Soybeans

– Footwear

– Coffee

– autos

2. MEXICO

DHl VEHiClES: 1,824

DHl FliGHtS pEr WEEK: 106

DHl loCationS: 357


– Manufactured goods

– oil and oil products

– Silver

– Fruits and vegetables

– Coffee

– Cotton

3. COLOMBIA

DHl VEHiClES: 109


DHl loCationS: 33


– petroleum

– Coal

– Emeralds

– Coffee

– nickel

– Cut flowers

– Bananas

– apparel

4. ARGENTINA

DHl VEHiClES: 98


DHl loCationS: 34


– Soybeans and derivatives

– petroleum and gas

– Vehicles

– Corn and wheat

DHl fact source: www.dhl.com/worldmap/intro.html Key Export items / Sectors source: Cia World Factbook

NUMBER OF DHL LOCATIONS

MEX

ICO

VEN

EZUE

LA

URUU

AY

PERU

ECUA

DOR

COLO

MBI

A

ARG

ENTI

NA

CHIL

E

BRAZ

IL

PARA

GUA

Y

BOLI

VIA

13

Q242013DHL4AMERICAS4FOCUS4


MEX

ICO

VEN

EZUE

LA

URUU

AY

PERU

ECUA

DOR

COLO

MBI

A

ARG

ENTI

NA

CHIL

E

BRAZ

IL

PARA

GUA

Y

BOLI

VIA

6. CHILE

DHl VEHiClES: 85


DHl loCationS: 38


– Copper

– Fruit

– Fish products

– paper and pulp

– Chemicals

– Wine

7. ECUAdOR

DHl VEHiClES: 42


DHl loCationS: 18


– petroleum

– Banana

– Cut flowers

– Shrimp and fish

– Cacao

– Coffee

– Wood

5. BOLIVIA

DHl VEHiClES: 19


DHl loCationS: 6


– natural gas

– Soybeans and soy products

– Crude petroleum

– Zinc ore and tin

8. PARAGUAY

DHl VEHiClES: 14


DHl loCationS: 11


– Soybeans

– Feed

– Cotton

– Meat

– Edible oils

– Wood

– leather

9. PERU

DHl VEHiClES: 80


DHl loCationS: 14


– Copper, gold, lead, zinc, tin, iron ore, molybdenum, silver

– Crude petroleum and petroleum products, natural gas

– Coffee, asparagus and other vegetables, fruit

– apparel and textiles

– Fishmeal, fish

– Chemicals

– Fabricated metal products and machinery, alloys

10. URUGUAY

DHl VEHiClES: 25


DHl loCationS: 13


– Beef

– Soybeans

– Cellulose

– rice

– Wheat

– Wood

– Dairy products

– Wool

11. VENEZUELA

DHl VEHiClES: 108


DHl loCationS: 12


– petroleum

– Bauxite and aluminum

– Minerals

– Chemicals

– agricultural products

– Basic manufactures


MEX

ICO

VEN

EZUE

LA

URUU

AY

PERU

ECUA

DOR

COLO

MBI

A

ARG

ENTI

NA

CHIL

E

BRAZ

IL

PARA

GUA

Y

BOLI

VIA

BRITISH CHAMBERS OF COMMERCE

65 PETTy FRANCE

LONDON SW1H 9EU

UNITED KINGDOM

T +44 (0)20 7654 5800

WWW.BRITISHCHAMBERS.ORG.UK

DHL INTERNATIONAL (UK) LTD

178-188 GREAT SOUTH WEST ROAD

HOUNSLOW

MIDDLESEx TW4 6JS

UNITED KINGDOM

T +44 (0)844 248 0844

WWW.DHLGUIDE.CO.UK

dhl/bcc trade confidence index q2, 2013

Documents