A logistical nightmare

By James Urquhart

11th May, 2022 

 

The recent harvest provided a physical and emotional rollercoaster with the highlights of big yields and strong pricing counterbalanced by persistent harvest rains and the subsequent delays and quality issues.

 

For growers, the operational difficulties of harvest are quickly fading from memory as the focus has well and truly shifted to planting into what is been widely regarded as a textbook autumn break. However for exporters, domestic consumers and other members of the supply chain, the rollercoaster ride continues as the task of executing an enormous program continues to throw up challenge after challenge.

 

Rail is a critical component of the export supply chain and in a normal export year, is responsible for an estimated 70-80% of grain movements from upcountry to port. However, this year a perfect storm of factors will mean rail performance will fall well short of delivering what has been asked of it.

 

A shortage of qualified drivers has meant crewing trains has been problematic. The unreliable nature of the Australian crop size has seen a reduction in driver numbers over the last ten years, and with drivers requiring up to two years of training there is no immediate solution available. Furthermore, retaining drivers over the competing industries of mining and passenger services can be difficult, as both offer their own attractions.

 

Environmental forces have also been a big factor. Between flooding and hot weather Queensland’s rail capacity has been reduced over the summer months, not helped by Olympics-related line interruptions. Flooding across much of NSW has seen numerous line closures where tracks have been inundated. Wet weather has also seen significant ground damage and landslides, with Port Kembla most significantly impacted by long term rail line outages.

 

Rail equipment is also in short supply and like most things at the moment, new ones are taking longer than usual. The wait time for new wagons and locomotives is measured in years, not months.

 

So with significant rail under-utilisation, additional pressure is applied to the road freight industry to pick up the shortfall.

 

Unfortunately, the national bulk tipper fleet was surplus to requirements over consecutive poor production years and whilst in the process of rebuilding, it falls well short of meeting demand in the current production environment. In addition, at least in the short term, a sizeable percentage of the national fleet is confined to farm duties, as the drivers are dedicating manhours to putting the crop in the ground.

 

Covid-19 continues to impact workforce availability, and with so many other employment options available to them finding full-time truck drivers that are willing to commit to the lifestyle, is challenging. As a result, it is not unusual for 10-15% of the fleet to be sitting idle without drivers.

 

As such, the demand for bulk tippers is through the roof, adding further tightness to a market already fuelled by government stimulus construction (eg road and rail projects), urban growth projects (eg housing, rubbish, soil, gravel) and other booming agri-commodities (eg almonds, sorghum, cottonseed, fertiliser).

 

With demurrage rates (the charges incurred by loading vessels outside their nominated window) now in the order of US$50,000 per day, there is a lot riding on the successful navigation of what seems at times to be a logistical nightmare.