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Australian transport and logistics firms increase revenues in second half of year

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Continued COVID-related growth in online retail has raised revenues for transport and logistics companies across the country.

Specialist Advisory and Restructuring firm McGrathNicol released its ninth annual report, which included 137 ASX listed firms.

Despite a turbulent year for the logistics industry, not only did this year’s H2 revenues average 10 per cent higher than H1, they were higher than the previous three half-year periods.

Jason Ireland and Sean Wiles, Partners at McGrathNicol Advisory say the increase is driven by the continued COVID-related growth in online retail, along with a higher demand for bulk and containerised haulage due to increased mineral resources, grains, other agricultural exports.

Although the sector as a whole saw average Days Working Capital (DWC) extend by 1.5 days to 30 days in 2021, 55 per cent of the sample actually shortened their DWC. All of the companies that achieved this did so by paying suppliers more gradually (higher Days Purchase Outstanding).

The length of the supplier payment cycle increased by 8.5 days in 2021.  This reversed recent trends and appeared to signify a shift in the competitive positioning, especially for the traditional transport and freight operators, which also translated into more favourable pricing, margins and payment terms.

The report suggests 2022 should be a positive one for Australian transport and logistics companies. Compared to their international counterparts, operators have managed their working capital well and are therefore well positioned to take advantage of continued demand for courier services, even with traditional ‘bricks-and-mortar’ stores reopening.

From a logistics viewpoint, the return to domestic manufacturing in some sectors is expected to heighten the need for additional storage, automation, and general supply chain management.

The complete report can be downloaded here: McGrathNicol – Working Capital Report 2021.pdf .

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