LRTAWA – Is our Supply Chain secure?

LRTAWA by David Fyfe, President, Livestock and Rural Transport Association of Western Australia (Inc)

IS OUR SUPPLY CHAIN SECURE?

One thing the last couple of years has taught us is that Australia’s isolation is a double-edged sword.

On the one hand our island status arguably gave us a comparative advantage in addressing the COVID-19 pandemic. It enabled us to close off from the rest of world and bought us time to prepare. That very same isolation however, highlighted our vulnerability to global and domestic supply chain disruptions.

The AdBlue shortage that came to a head in December last year is a case in point.

China, the major supplier of the technical grade granular urea which makes up AdBlue, halted exports of the product leaving Australia with an estimated five weeks’ supply. As we all know, without Adblue most of our trucks would grind to a standstill. Food would not be delivered, medical supplies would not be delivered, fuel could not be supplied and supermarket shelves would soon empty.

The urgency of the situation initially seemed to fall on deaf ears, but it was eventually recognised as a crisis and the federal government moved into action.

Interim supplies were secured from other countries as a short-term fix and a deal was made with Incitec Pivot to manufacture technical grade urea in Queensland. Whilst a lifeline was found and supplies flowed again, it did not happen without a huge price spike and shortages in many regional centres.

Prices in many areas have not reduced significantly since the crisis and as a nation we are no closer to secure supplies. What happens if Incitec Pivot decides it doesn’t fit their business plan to continue to manufacture technical grade urea, or the manufacturing process is cost prohibitive

or the plant goes down for some reason?

The AdBlue shortage is another stark reminder of the precarious nature of our fuel reserves not only in Australia but Western Australia in particular.

The federal government has announced a fuel security package which includes construction of new diesel fuel storage for 780 megalitres of diesel. Fuel importers and refiners will be required to maintain a minimum stockholding at strategic locations which will be 40% above the minimum 90 day reserve by 2024.

The package will also enable Australian owned oil to be stored in the United States Strategic Petroleum Reserve. Currently this reserve is around 1.7 million barrels. Australia is said to currently hold around 100 days of fuel including the volume on the water at any given time.

Most of our fuel products come through the hotly contested South China Sea – an area that is particularly vulnerable to geopolitical upheaval.

Where does this leave Western Australia? Our only surviving refinery at Kwinana has ceased refining oil and relies on imported fuel. It provides around 70% of WA’s fuel needs. BP is required to co-operate with the state to ensure that the supply of fuel within WA is not adversely affected by the reliance on imports, however all the agreements in the world will not help us in the event of a disaster that impacts on imports. It has previously been recognised that WA’s ports and processing sites are potential military of terrorist targets. If WA was suddenly without a ready supply of fuel we would be reliant on supplies from the Eastern States, but even that is easier said than done. It is not easy to transport fuel into WA.

We have seen the impact on supplies recently when a 300-kilometre stretch of rail track on the Nullarbor was damaged during the floods. Major supermarkets resorted to shipping products by sea to address major food shortages but the journey took around 10 days. Would there be ships with fuel carrying capacity available for the job and could we hold out for 10 days without fuel in WA?

Whilst it is clear the federal government has implemented a number of strategies to address potential fuel shortages I remain concerned that it is smoke and mirrors and we’ll discover the reality doesn’t match the rhetoric in the middle of a crisis. We surely must avoid putting all our eggs in one basket and ensure we have reliable onshore manufacturing and a supply of key ingredients for products such as AdBlue that keep the supply chain running. WA’s isolation should be recognised as part of the planning.

Productivity

Congratulations to the WA Government for allowing 36.5m road trains to enter Perth via Greenmount Hill to address the shortage of essential items caused by the damage to the Trans-Australian railway between Port Augusta and Kalgoorlie. It is doubtful that an escort by a Main Roads inspector made any difference to the safety of this manoeuvre, however what it demonstrates is that 36.5m road trains can safety travel up and down Greenmount Hill.

There were no problems with the swept path at the bottom of the hill, not that we expected any given heavier B Doubles requiring more room have been safely using the hill for some time.

Given the positive experience of the last few weeks there isn’t a good reason for the ongoing prohibition on 36.5m road trains using Greenmount. At the very least they should be allowed to go up the hill.

It seems the problem is more about competition with rail than engineering concerns. Opening Greenmount has many potential benefits such as fewer truck movements (six movements would be reduced to two), less pavement wear, reduction in fatigue and a huge reduction in costs. Access to Greenmount Hill would get trucks back onto funded roads and give local shires and back roads relief from companies finding alternative routes in and out of Perth. The driver shortage would be relieved, and drivers would not be using unfamiliar roads to avoid the need for shuttling trailers from Northam.

Looking after our drivers and vehicles

We are making progress on facilities for drivers including ablution blocks with both the WA and federal governments agreeing to a rolling funding program to lift the standard of rest areas at key sites which in some cases includes the construction of toilets and showers.

After urging from industry, the southern areas of the state are starting to receive more attention with agreement for toilets to be built at the Bunbury Road Train Assembly Area and toilets and showers at an expanded area at Main Reef Road, Leonora.

Our thanks to Main Roads for agreeing to install cameras at the road train assembly area in Kewdale.

It is hoped cameras will contribute to better security for equipment legitimately parked there. Unfortunately, some companies continue to abuse the area and use it for their accumulation yard or long-term parking. There are even people camping on the site and for some inexplicable reason the authorities find it hard to move them on. We continue to seek support to expand the area as demand is outstripping available space. The surrounding land is owned by different government agencies and it takes time to cut through the bureaucracy. We’ll keep at it!

Given the positive experience of the last few weeks there isn’t a good reason for the ongoing prohibition on 36.5m road trains using Greenmount. At the very least they should be allowed to go up the hill