Australian livestock exporter Wellard has released its annual report and financial year 2023 financial results noting changes in trade patterns.
Wellard’s financial results in FY2023 were significantly impacted by continued depressed live cattle exports from Australia which resulted in low charter rates and low vessel utilisation. This was exacerbated by the continuing trend of smaller consignments demanded by Indonesia importers. Illustrative of this trend was that 10 voyages departed the Port of Darwin in June 2023 with an average consignment size of just 1,488 head.
“That average sized consignment would take up less than one deck on Wellard’s M/V Ocean Drover with another eight decks to spare. Or, alternatively, all the cattle on those 10 voyages would have fitted on a single M/V Ocean Drover voyage, with room to spare,” Wellard Executive Chairman John Klepec said.
Overall, Wellard loaded a total of 142,086 cattle in FY2023, with a 99.95% delivery success rate, similar to FY2022 figures.
“Wellard commences FY2024 with a more promising charter book and growth outlook than in either FY2022 or FY2023, principally due to the pick-up in activity in the South America to Turkiye [Turkey] cattle trade and falling fuel prices,” Klepec said. Wellard’s two largest vessels, the large M/V Ocean Drover and the mid-size M/V Ocean Swagman have both been relocated to service the Brazil/Uruguay to Turkey markets.
Wellard’s annual report outlines three key trends the company has identified by taking a six-monthly snapshot of vessels accredited to operate out of Australia. The analysis is based on a square metre basis (rather than ship-by-ship) to account for vessel size.
• Trend One: Shipping capacity between Australia and South East Asia (primarily to Indonesia and Vietnam) more than halved from June 2021 to June 2022 and into December 2022. This was attributed to sustained very high Australian cattle prices as well as issues with foot and mouth disease and lumpy skin disease. Additionally, there was strong competition from Indian buffalo meat and Brazilian beef.
• Trend Two: The market for breeder cattle trade to China is almost at a standstill. New Zealand’s ban on live cattle exports in April 2023 led to a ramp up of trade beforehand followed by a backlog that Wellard expects will clear in 2024.
• Trend three: There has been a significant shift to South America, with almost half of the AMSA fleet deployed there this year. It is unlikely that these vessels will return to Australia anytime soon given the demand and relocation costs, says Wellard.