Summer 2016

Talk around Town

From a business perspective, it has been an interesting 2015. In December 2014, we sent out a marketing email entitled ‘Star Gazing into 2015’ – some of our thoughts/predictions included the following;

We thought that official interest rates may see 3 rate reductions over the 12 months and go as low as 1.75% – but the RBA has held them at 2.0%, after two reductions.

We also predicted the Aussie dollar would be mid $0.70 cents by year’s end, which is pretty close to where it is now. Our thoughts on fuel pricing also turned out to be correct, with the price of fuel now the lowest it has been for some years.

Our thoughts on the housing market that should see it hold up well in 2015, with increases in housing prices in most capital city areas held true. We did however, expect the share market to remain quiet static during the year, with some spikes late in 2015. The opposite happened and it spiked downwards late and lost any gains made during the previous 12 months. The ASX200 opened at 5,435 points, rose to 5,975 – before falling back to close the year out at 5,106.

So, what is in store for 2016, a little bit of more of the same, some upswing in business confidence maybe – we have outlined out thoughts further down in this newsletter.

Outlook for the rest of 2016

Well the kids are back at school, the holidays are behind us and we are all back at work and marching full steam ahead in to 2016.

So, what does 2016 hold in store for us in transport and small/medium business in particular?

Well the good judges are saying that we may not see the RBA move interest rates at all this year – holding the official rate at 2.0%, whilst a small minority suggest there will be in decrease in rates in the 3rd quarter.

Whether that is true, what has emerged in recent times is that the major Banks will move their interest rates independently of the RBA decisions. The major Banks blame APRA, the official regulator saying that they should hold more cash/liquidity as security against another GFC…therefore their margins need to be increased.

When a major Bank moves their rates, the second-tier Banks are not far behind in following, even though they do not have the same APRA requirements – so there is an element of Banks taking profit for profit sake.

How do you protect yourself…using Transport Finance who has access to over 24 Banks/Finance Companies – we can search through our panel to see which lender will be the best ‘fit’ for your business.

 

The early indicators through late 2015 and January 2016, is that business has been increasing with a lot of our regular clients updating and expanding into new opportunities.

 

The last 4 months have been amongst the most buoyant for some time.

Who is winning…and why?

There appears to be a trend amongst some of our long-term clients that have won either new business or new rate increases recently, and that trend seems to be old fashioned service.

The small to medium size fleet operators that are offering their clients a very personal service, reliable and are great communicators within not just their own business but with their clients appear to be given new work opportunities.

Whilst the industry has always been cut throat in terms of rates and what is promised, it would appear that good old fashioned reliability and commitment to do what you have said would be done is being acknowledged.

Companies that sometimes look to give their work to the ‘big’ end of the transport industry don’t immediately realise that they lose the personal approach, there is no substitute to dealing with the guy that owns the company, someone who can go that extra mile – companies large enough to get the job done but small enough to care.

Sensis Business Index – December 2015

The above quarterly survey, released in January 2016 confirmed that more than three times as many businesses are now confident as those that are worried. According to the SBI report, business confidence has reached its highest level since March 2011.

Confidence within business at these levels mean that people are going to be looking to grow their business – finding ways to expand, network and look to invest.

This is certainly the indicator that we at Transport Finance have been seeing since October 2015, whereby we have increased the number of deals settled over the 3 months by 34 or a 12% increase year on year.