The shipping crisis isn’t going away anytime soon, and even with President Biden opening the port of Los Angeles 24/7, there are still bottlenecks.
But air and road freight is still kicking along – and picking up some of the slack.
Despite a hefty drop in passengers, Qantas said in its annual report it had delivered 18 million kg of Australian exports – including fresh milk and abalone to China, beef and cheese to Japan, fruit and veggies to Thailand and lobsters and flowers to the USA.
But there’s a smaller player in the sector who has seen growth during the pandemic.
Back in September investment manager Angie Ellis at 80-20 Investments highlighted freight and logistics player Wiseway Group (ASX:WWG) as one of her top picks.
In its latest operational update, the company flagged that unaudited revenue grew to $32.1 million in Q1 FY22 compared to $31 million in Q1 FY21.
The company saw growth in imports and distribution which increased 88.9% from $1.8 million to $3.4 million on the previous corresponding period.
Wiseway also saw 66.7% growth in road transportation to $1.5 million (from $0.9 million), and a 59.5% increase in perishables to $6.7 million (from $4.2 million).
Trusted airlines’ trucking partner
Speaking with Stockhead, Wiseway independent non-executive chairman Michael Hughes said the company has cemented its role as the leading global airlines’ trusted national trucking service partner.
“With the reduction in international flights due to the impact of COVID-19, we saw significant growth in our road transportation segment, mainly due to our established relationships with the world’s leading airlines which consider Wiseway their trusted national trucking service partner,” he said.
“While passenger flights were reduced, freight flights continued, and we saw the demand for our road transportation services increase substantially, particularly during the lockdowns as our trucking services were integrated by airlines to link various cities and airports and deliver goods across Australia.
“Our partnerships with airlines, local trucking companies, and shipping lines made our operations more agile and resilient and our service to customers more reliable.”
Perishables revenue grew 59.5%
The company’s revenue from perishables increased 59.5% during the quarter, driven primarily by seafood, meat and milk exports, and saw significant growth due to an increase in volumes during this quarter with almost three million kilograms of freight forwarded.
And Wiseway also renewed a substantial contract with China Marketing Solutions Pty Ltd (CMS), one of the largest marketers and exporters in the Australian horticulture industry with plans in motion to become the largest stonefruit exporter in the Southern Hemisphere.
Hughes says the company is well positioned to take advantage of the expected growth in export opportunities during the peak Australian produce season, from October to January.
“We have completed investments to establish cool rooms, complete the fumigation of our facilities and upskill our staff capabilities to manage increasing volumes,” he said.
“While COVID-19 restrictions, labour shortages and international port backlogs continue to impact the logistics and transportation industry, we maintain a cautiously optimistic growth outlook for the short term.”
More growth expected as countries open up
Hughes said the company has strong relationships with its logistics partners and diversified freight services that will enable them to cater to clients are countries begin to open up – even with port backlogs and labour shortages.
“As the pressures on international supply chains begin to ease and the world moves towards a post COVID-lockdown era, the freight and logistics services sector is expected to continue to grow,” he said.
“We are confident that we will continue to be resilient and manage through the uncertainty in this operating environment due to our diversified business model, growing customer base, strategic industry partnerships, and expanding global footprint.
“We have built a sustainable business with diversified earnings and income streams and will continue to be at the forefront of the industry’s emerging opportunities and trends and to benefit from the global growth in the logistics industry, especially in the US and Asia Pacific where we have expanded our presence in 2021.”
Regional hub in Singapore
Speaking of that expanding global footprint, in August the company acquired TAF – a Singapore-based air freight company that has been servicing the Southeast Asian market for 30 years.
Hughes said establishing a regional hub for Wiseway in Singapore will deliver supply chain efficiencies and revenue synergies across the global network, as well as further diversifying income streams.
“TAF is strategically located within Singapore Changi Airport’s Airfreight Centre and provides a full range of services including customs brokerage and clearance, local transportation, and cross-border trucking,” he said.
“This will contribute to broadening our cross-border integrated logistics offering in new markets across Southeast Asia’s fastest growing economies – including Indonesia, Thailand, Malaysia, and Vietnam.
“As well, Brandon Teo, CEO of TAF, has been elected as a non-executive director, bringing an extensive network of relationships in the industry across Southeast Asia and boosting our management and board capabilities – further supporting our expansion strategy as we continue to open up opportunities for growth across our global network.”
Expanding US footprint
Plus, the company has opened a branch in LA and appointed Robert McNutt to the board – whose experience with M&A Ellis expects will help the company expand in the US.
It’s another arrow notched to the growth strategy bow.
The idea is to enhance access for Wiseway customers to the US market, which is one of the largest freight and logistics markets in the world.
And LA is the largest inbound and outbound freight destination in North America, and fourth largest inbound freight destination globally.
And while that port is backed up, it’s a solid opportunity for the company to carve out its own corner of the air and road freight market.