Australia’s biggest bank, the Commonwealth Bank of Australia, shut down its invoice financing division after it loaned more than $40m to Viking Group, a trucking company linked to the Comanchero motorbike gang. It is the mirror image of the cash flow financing, or “reverse factoring”, offered by Greensill Capital, the once high-flying finance group run by Bundaberg sugar farmer Lex Greensill, which collapsed messily last year. Omicron has also wrecked havoc on warehousing and distribution. However, he said the longer delivery pipeline also meant businesses need “to have positive cash flow to be able to purchase ahead and have larger inventory holdings”.Īs a result, companies – including his – are turning to invoice financing, a form of borrowing which has been unpopular for about a decade.Īlso known as factoring, invoice financing involves cashing in orders from your customers at a discount – typically, about 80% of face value – in return for immediate money from a bank or other financial institution. “The people that we’re seeing ordering ahead – because they’re realising if you’ve got stock, you’re in a really good position … they’re established brands and businesses, we really see them thriving,” he said. Villazon said up to half the staff in Stelno’s three distribution centres were off work at any one time. “Think about it logically – why would you assign all your fleet to our trade lane when you can make double the amount of revenue in other trade lanes?”Īdding to the bottleneck caused by shipping’s slowdown, Omicron has wreaked havoc in onshore warehousing and distribution. “The amount of vessels they have allocated to Australia is quite minimal compared to other trade links like China to Europe and China to America,” he said. Sign up to receive an email with the top stories from Guardian Australia every morning He said Australian importers also suffered because global ship operators consider Australia a “very small piece of the pie”. “So essentially, they’re modern day pirates at the moment because the prices are not really controlled or regulated by any government.” “All these shipping lines are registered to countries such as Panama, Mexico, the Dominican Republic and things like that, so they’re not really regulated,” Villazon said. While price-fixing cartels are illegal in Australia, international shipping companies are allowed to set prices collectively using an exemption that the chair of the Australian Competition and Consumer Commission, Rod Sims, has repeatedly called on the government to repeal. He blamed shipping companies for the surge. In a submission ahead of next month’s federal budget, the ARA urged the government to bring back cash grants for at-risk businesses, reintroduce rent reductions that applied during lockdowns, and give out free rapid antigen tests so that companies can test their employees.Ĭarlos Villazon, the managing director of Stelno Logistics, said transporting a 40ft (12.2m) long shipping container – the most common size – to Australia used to cost between US$1,000 and US$1,500, but over the last year the price had blown out tenfold. The organisation has called on the Morrison government for help. Photograph: Chameleons Eye/Rex/Shutterstock Space shortages on cargo ships are driving up prices tenfold, placing pressure on importers. “The other cash flow impact is retailers having to order and pay much earlier for stock – often as a leap of faith, given the uncertainty in the current market when it comes to customer sentiment and expectations,” he said.ĪRA members report that they are ending up with either not enough stock or stock arriving at the wrong time – a particular problem in highly seasonal sectors like footwear and frocks, which depend on the weather, and stationery, where sales are given a large bump by the back-to-school rush at the beginning of the year. Zahra said retailers were reporting a sevenfold increase in supply chain costs and ordering times from overseas that have doubled or tripled. That is putting pressure on their businesses at a time when many are already reeling from the direct impact of lockdowns over the past year as well as January’s “shadow lockdown”, caused by people staying home in a bid to avoid the highly contagious Omicron strain. The continued high price of shipping, together with ongoing uncertainty about when goods ordered from overseas will arrive, has forced Australian importers to order further ahead.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |