Finance Consumer No more milk or Weet-Bix: National supply chain could ‘grind to a halt’

No more milk or Weet-Bix: National supply chain could ‘grind to a halt’

A looming shortage of a diesel exhaust fluid could lead to empty supermarket shelves in February. Photo: Getty
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Supermarket shelves could be empty within months as a key shortage leaves trucks parked across the country and strangles supplies of even the most essential goods.

Trucking companies have warned thousands of vehicles will be taken off the road without a major government intervention, while a major supermarket chain has said it is “monitoring the situation carefully”.

It all comes down to a shortage of AdBlue – a crucial diesel exhaust fluid that is already in short supply and likely to run out altogether by February.

AdBlue is injected into the exhaust systems of modern diesel vehicles and is a legal requirement for trucks in Australia as it helps to reduce emissions.

But Australia faces a major shortage of urea – a key ingredient of AdBlue – because its main supplier China has banned the export of the product in an attempt to drive down domestic fertiliser prices.

Parked trucks

Australian Trucking Association chair David Smith said all of Australia would be affected once the road freight industry hits a “brick wall” in February, which is when stocks of AdBlue are expected to run out.

Mr Smith said running out of AdBlue would affect a large chunk of Australia’s trucking fleet.

“[Without AdBlue], the truck would lose … about 30 per cent of its power, which in effect makes it not driveable,” he said.

Mr Smith said the issue could result in a shortage of goods in every industry and affect every Australian.

“There is nothing made or consumed that doesn’t travel on a truck,” he said.

“It would affect your Weet-Bix on the shelf.”

Road Freight NSW CEO Simon O’Hara said at best prices will rise and at worse products will go out of stock.

Mr O’Hara said Australian’s supply chain would grind to a halt if the majority of the nation’s trucks were pulled off the road.

Supermarkets ‘completely dependent’

CommSec senior economist Ryan Felsman said major supermarket chains such as Coles, IGA and Woolworths are “completely dependent” on trucks.

“That’s probably going to be the biggest issue for consumers,” Mr Felsman said.

“If there is this potential problem, it could lead to a shortage of some of those key staples and food products, [like] fruit, veggies, milk and bread.”

Mr Felsman said although supermarkets probably have “ample” supplies over the next two months, a “bottleneck” supply chain issue would affect consumers’ ability to find various goods and services, including petrol.

A Woolworths spokesperson said the supermarket chain and its distribution partners Linfox and Toll were “monitoring the situation closely”.

As for retail more broadly, Australian Retailers Association CEO Paul Zahra said the “emerging issue” was a significant concern and supply chain “challenges” were likely to continue well into 2022.

“If the AdBlue shortage is realised, it could severely impact the movement of many essential goods around the country,” Mr Zahra said.

“Businesses are currently assessing the full extent of the potential impacts and mitigation options.

“The ARA is also liaising with the federal government on potential solutions and how this situation can be avoided.”

International co-operation needed

Australia is not the only country suffering from a shortage of urea – the issue is a global one.

Mr O’Hara said South Korea recently flew a military oil tanker to Australia to take back urea it had originally exported.

“That’s how serious this is,” he said.

The shortage has pushed up the price of urea by 400 per cent since January, exceeding the previous high recorded in 2008 after the Global Financial Crisis, according to Australian AdBlue supplier BioBlue.

Mr O’Hara said co-operation between international governments could help ensure Australians had enough access to AdBlue.

He said the trucking industry wants the federal government – particularly Deputy Prime Minister and Transport Minister Barnaby Joyce – to deal with the issue before the Christmas period.

“Our concern is, we’re coming up to Christmas, and a lot of public servants go home and take holidays,” Mr O’Hara said.

“Given February’s just around the corner, we would call on the federal government to … give us a roadmap out of what appears to be a looming supply chain issue for Australia.”