15 September 2022
The National Road Transport Association has welcomed the Federal Government’s decision to invest almost $50 million over four years to build a stockpile of urea, a critical component of diesel exhaust fluid commonly called AdBlue.
Now AdBlue is an anti-pollution additive used in most modern diesel vehicles, and without it, modern tractors, trucks and utes can’t run. And the supply chain basically comes to a halt.
Last year you’ll remember, Australia came very close to running out of AdBlue due to a worldwide shortage of urea. Warren Clark is the CEO of the National Road Transport Association. Warren, what do you make of this announcement of a urea stockpile to make AdBlue
Look, I think the announcement is really positive for the industry and for the country. It’s crucial that we have a secure supply chain. I think the Albanese Government has made a really wise decision to put these things in place.
So, you know, one of the big things that we’ve seen in the past is uncertainty and this is a step to removing that uncertainty.
Just looking at the current stockpile in Australia, then, how long does that sort of keep us, the wheels turning, so to speak?
Well, we’d like to see that stockpile even longer, but you’ve got to start somewhere. Okay. So, you know, Minister Bowen’s announced that they’re going to put a stockpile in place. Well, that’s a great start because we haven’t been able to get the technical grade urea to make it. They’re going to have enough of the AdBlue.
You know, if you look at how long it’s going to last for, we’d like to see probably six months supply of AdBlue in the country. But let’s take one step at a time I think the idea about investing money into the country to make it self-sufficient is also a great idea. So all positive, all going in the right direction.
And what is the stockpile currently that I don’t know. I mean, you’d have to talk to the manufacturers on that. They’re dealing with that stuff day to day. And that would change literally day to day
And the announcement of this stockpile sort of that gives us a stockpile of six months. Is that what you’re saying?
Yeah, well, no, that’s what we need. I mean, look, you know, we’ve got a stockpile here of the chemical the actual manufacturers of a blue AdBlue would be looking at, you know, increasing their stockpile. I’d imagine from probably three months to six months. So it’s all tied together. But, you know, if we had six months supply of AdBlue, that would make our industry a lot more secure. It would also help the agricultural sector.
And any idea where it’s coming from, where the urea is coming from, Warren? Because it isn’t easy to find these days.
No, look, it’s not. And, you know, traditionally, most of the readers come out of China as we know it’s the cheapest option to get. It is out of China. And I know the manufacturers were waiting for that market for the heat to come off it so they could source it out of China. So on. Actually, where it is, where it’s coming from, the press release and the minister hasn’t actually indicated that. So that’s something that we’d have to follow up. Yeah.
And what are the prices like? You know, before the crisis point, sort of late last year when this first came into the headlines, this shortage of AdBlue and concerns around it, how was the price move from that point until today?
Well, this is another crucial thing that you’ve brought up, actually, is the price of it. Okay. So literally the cost of AdBlue has doubled. Why is it still high? That’s a very good question. And what we’re asking for is the ACCC to take a closer look at this because, you know, we’re starting to put in place measures where you know, the supply chain is secure, there’s enough product. Why is the price still high? So it’s a crucial part that the group will see looks at that we don’t want price gouging, but it’s basically double what it used to be.
And what response have you had from the ACCCC to that request?
Well, I know, they’re looking at it, but the transport industry is at the coalface. They see the results. are that the price is still extremely high. So, you know, until we start to see that come down at the bowser, then not a lot has change really for the truck operator.
And what sort of pressure is that putting on the industry?
Look, it’s an enormous amount of pressure, but it’s just an added cost in an industry that traditionally runs on about two and a half per cent profit margin for these smaller guys. Right. So, you know, when you’ve got something that’s doubled in price, everyone’s forcing everyone to be green and clean, which, you know, we 100% agree to, but it eats into their profit margins. So there’s no justification really on why that price should be. Now double post the initial problem.
So, you know, let’s look at getting back that back to a fair price for the operator and what range of vehicles use AdBlue.
It goes on the structure of the motor really and you know, AdBlue and these types of motors have been in the country for, you know, probably ten or 15 years. So it’s not a new thing this. But as you know and as Minister Bowen has said that you know, we want to reduce the carbon emissions, we want to make this country more acceptable in the world of carbon emission. So this is really going to impact a lot of motors going forward.
We want to make sure that we’ve got a sustainable green industry and by ensuring that we’ve got enough supply of this and at a right price then our operators can put it in their motors and everyone’s happy.
Yeah, so pretty happy with the stockpile situation and the announcement today. But it’s that price that is the real focus of your attention from this point on.
Oh, exactly right. And look at it a hundred different ways, but the price is still extremely high. If we’ve solved the supply chain issue and we’ve solved, you know, the other issues around AdBlue, why is it still extremely high?
Really good to talk to you. Thank you, Warren. Clark. He is the CEO of the National Road Transport Association.