Life The Stats Guy: How our freight network held up through the pandemic
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The Stats Guy: How our freight network held up through the pandemic

freight
As we live our lives and order mountains of stuff online, there is a massive logistics network operating in the background. Photo: TND
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As we live our lives, drive to the store, pick up items from the shelves, order mountains of stuff online, there is a massive logistics and trade network operating in the background. This all-important network was tested during COVID and, all things considered, held up well. So let’s look at some trade and logistics data today.

But first a bit of basic background.

Exports (and imports) are divided into goods and services.

The export of goods (stuff we produce in Australia and stuff we dig out of the ground) remained high throughout the pandemic. The resilience was due to high iron ore (that’s our largest export category) prices. At the same time, the low Australian dollar offset low prices for LNG (fourth largest) and coal (second largest) during 2020.

In 2021 the cost for LNG and coal rose to record heights. That was a welcome boost to our economy during challenging times. Exports of goods rose by 17 per cent in 2021 compared to the pre-COVID benchmark of 2019.

A quick look at the map below adds a geographic element to our analysis. Iron ore is almost exclusively found in Western Australia. The export-driven local economic boom was a prerequisite for WA’s isolationist approach handling the pandemic.

Source: Department of Infrastructure, Transport, Regional Development & Communications

Access the interactive version of the map here (have a play with the interactive map and explore your region).

The export of Australian services depends heavily on the movement of people. Unsurprisingly, both tourism (the fifth-largest export category) and education (third-largest export category) took massive hits over the last two years.

The classification of tourism and international education as exports sounds weird at first. After all, we are bringing people into the country instead of sending something (like coal) abroad. The flow of money is what counts here. By sending coal abroad we receive money from overseas and by allowing tourists into the country we also receive money from overseas.

Border closures and the lack of tourists and students led Australia to lose 41 per cent of its total services exports between 2019 and 2021. A loss of 41 per cent is brutal. Thankfully, services made up only 21 per cent of all exports in 2019.

Having the small export sector (services) decline sharply was more than offset by the big export sector (goods) significant increase. Overall, Australia saw its exports grow by 5 per cent, from $492bn in 2019 to $518bn in 2021.

This doesn’t mean that everything is great for everyone though. The mining sector responsible for the positive overall export result only employs 271,000 people – and that’s in boom times. Other industries implicated in exports employ significantly more people.

Manufacturing (900,000) and hospitality (850,000) are the two most obvious examples. The loss of $42 billion in services exports negatively impacts way more Australian workers than the additional $67 billion in goods exports impacts workers in a positive way. The direct economic benefits of mining are divided among fewer workers, and even fewer business owners.

Australia also imports a lot of stuff. Imports don’t translate into money lost to Australia. Some of the stuff we import drives up productivity, and some Australian businesses make money through imports too – that’s the nature of trade.

Our largest import is personal travel. Because of the closed international borders, wealthy Australians have tons of money (around $33bn) lying around that is usually spent in Bali, London or LA. Australians used this money to renovate their homes and buy lots of stuff to put into their homes. The lack of one import category (international travel) benefitted other import categories.

The next largest import categories are refined petroleum, cars, telecom equipment, and computers. Australians showed quite the interest in importing stuff to keep them entertained during the lockdowns. Consequently, we saw imports go up in the early stages of the pandemic.

At some stage in 2021, the global supply chain struggled to keep up with demand.

More and more workers in warehouses and container ports around the world had to quarantine, there was a global container shortage, shipping costs went up, bottlenecks in the system appeared, just-in-time delivery systems stuttered and consumables grew more expensive.

Multinational logistics companies prioritised routes where demand and, therefore, prices were highest. This led to some ports receiving much fewer vessels.

Terminal closures in the Yantian and Ningbo ports in China impacted the movement of shipping containers to Australia way more than the much-publicized grounding of the Ever Given in the Suez Canal. Australian businesses had to move away from the just-in-time approach and implemented just-in-case strategies by investing into greater local storage and warehouse operations.

All things considered, the impacts to Australia’s supply chain were relatively small and well handled.

While most freight comes to Australia aboard big ships, quite a lot arrives in airplanes. The dedicated cargo planes weren’t affected too badly by the lockdowns.

But one cargo category that’s frequently carried aboard passenger planes is mail. So, the reason the parcel from your aunt in the UK took forever to arrive is the lack of passenger flights rather than incompetent postal services.

The logistics sector represents about 9 per cent of our GDP, which makes it an important industry in its own right. Without airplanes, ships, rail and trucks we wouldn’t get to enjoy our consumables.

We should be proud of our logistics network that held up under extremely challenging circumstances and allowed us to get through the pandemic alright – a bit of luck (in form of favourable commodity prices) also helped Australia to remain economically successful.

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