AdBlue fiasco lays bare supply chain vulnerability


Transport operators are now starting to feel the impact of the return of the full fuel excise after its temporary halving expired late last month. 

Thankfully, its resumption coincided with the reinstatement of the fuel tax credit, which the Commonwealth Government thoughtfully increased to 18.8 cents, with the higher amount intended to offset an increase to the heavy vehicle road user charge of 0.8 cents per litre.

Factoring in tension and uncertainty from earlier in the year when supplies of AdBlue were disrupted, together with confusion over the suspension of the fuel tax credit whilst the fuel excise had been halved, it’s been a tumultuous year for operators of all shapes and sizes.

The supply of diesel and engine additives necessary to operate a heavy vehicle efficiently and safely is of critical importance – especially when it is considered there are only two fuel refineries in Australia and we are reliant on imports to sustain our industry’s thirst for technical grade urea used in AdBlue.

Indeed, the fiasco that occurred at the beginning of the year with AdBlue lays bare just how vulnerable Australia is to supply chain disruptions of the business inputs we need to operate.

We commend the government for committing $49.5 million over four years to increase the security of the diesel exhaust fluid market, with energy minister Chris Bowen announcing a stockpile of 7500 tonnes of technical grade urea, a competitive grants program supporting sovereign capability, and collection of voluntary data from industry for market awareness of urea and DEF stocks.

Whilst pandemic-related supply chain disruptions are easing, tension in Eastern Europe is showing no sign of abating any time soon, and the Chinese continue to sabre-rattle with respect to the status quo in Taiwan.

This amplifies the need for Australia to strive for supply chain sovereignty for the key inputs our industry needs to seamlessly operate. Fuel, fuel additives and a reliable labour force to service and maintain heavy vehicles are an absolute must for an economy as remote as Australia. If we can’t refine or make fuel and fuel additives locally, stockpiles are essential.

This also applies to the spare parts and components mechanics need to keep the nation’s heavy vehicle fleet safe and reliable. In the absence of local manufacturing, provision for a buffer of parts to hedge against the potential for fewer ships coming to Australia due to rising costs and shipping lane disruptions because of geo-political tensions.

As I said to VTA state conference delegates in March, we need regulatory and legislative settings to identify the risks that inhibit us from standing on our own two feet when it comes to things like labour and fuel security.

A growing workforce, sufficient reserves of fuel and energy, and the inputs necessary to keep road, rail and sea transport supply chains intact, are the basics we need for supply chain sovereignty and certainty as we recover from the pandemic and confront the geopolitical tensions in Eastern Europe and, increasingly, the Taiwan Strait.

On this measure, the incoming Albanese government is off to a good start, as evidenced by its commitment to stockpile technical grade urea, and its proactive outreach to groups like the VTA for assistance and industry advice. 

Its open-door policy with respect to fuel additives and other industry issues like minimum standards is very encouraging at a time when the economic and geopolitical headwinds are quite confronting. On these measures, they can expect candid and honest advice from the VTA on how to best protect the industry and, as a consequence, the Australian community we service. 

A VTA industry survey earlier in the year showed labour availability, costs and rates management, and fuel pricing are the most pressing issues for freight operators. 

We maintain that only by attaining higher rates of supply chain sovereignty will our industry and our community have economic security and confidence in our commercial viability.

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