A national milk haulage company believes an extra two weeks’ supply of AdBlue from Indonesia won’t solve the issue of “price gouging” from larger diesel additive suppliers.
SRH Milk Haulage Chief Financial Officer, Ben Nix says he understands the need to limit supply but says a lack of direction from the government is causing confusion.
“I think the service stations are doing the right thing by limiting supply and will stop hoarding, but I’d like some clarity from the government around what’s actually happening,” said Nix.
“They’ve put up a high-level task force, but I haven’t seen anything come out of it yet. Because it’s an industry sector it’s just being pushed to the side.”
A further issue for freight companies is the additional logistical costs associated with extra trips to fuel their vehicles.
“The problem is that you’re not sure and the time and cost associated with sending the drivers there,” said Nix.
Nix’s company runs 65 trucks across the country and uses more than 300,000 litres of AdBlue a year.
“Most of the big companies have put the 50-litre limit in place, so you’re sending drivers more frequently and at a higher price at bulk,” said Nix.
“It’s additional costs and stress in an industry that’s already beyond thin margins.”
Although Federal Trade Minister Dan Tehan advised that a potential AdBlue supply from Indonesia could stretch Australia’s supply to February, at a small business level, the rhetoric doesn’t apply, given that some larger suppliers of AdBlue have reportedly been limiting supply not just in quantities, but also within their existing customer base.
“Most of them just say that they’re not taking on new customers,” said Nix.
“From a macro level it looks like there’s 5 or 7 weeks of stock there, but at a micro level, every individual transport company has their own supply chain.’
Nix believes that most of the limited suppliers in the market are some 4 weeks away from obtaining more supplies, but even then, new customers are put on priority lists or told that their books are closed.
“If your existing supply chain runs out, you then have to swap to someone else and if they’re not taking on new customers it makes it very difficult to source.”
Whilst there has been some discussion around utilising older trucks or re-mapping engines to get around the requirement of using AdBlue, milk freight industries such as SRH Milk Haulage, rely on newer technology to survive. So, converting to an older fleet just isn’t an option.
“Personally, we pride ourselves on having an up-to-date fleet and most of our customers want the current emissions standard and tracking,” said Nix.
“There’s a big push to be environmentally-friendly, so we can’t go back to purchasing old vehicles. The oldest vehicle in our fleet isn’t even 5 years old.”