From the CEO: Supply chain woes make road freight more vital than ever

Whether something is manufactured here or overseas, unless it’s bulk freight, it will probably end up on the back of a truck for a good part of its journey to market.

Read time: 3 mins

By Warren Clark

Originally Published in Big Rigs – Issue Friday, 15 September 2023

If you dig hard enough, you can find something occurring today that was predicted by someone at some point in the past. A 2019 paper by Engineers Australia is a great example.

For the scholars who’d like to read it, the paper is called Exploring national mobilisation issues in a collapse of global governance. For the rest of you, I’ll spare the detail and cut to the chase.

The paper found that “in the event of major disruptions to global supply chains” with “a prompt effect on transport and freight which in turn would affect the movement of goods and people”.

It went on: “Without Australia’s transport networks, there would be an effect on food security, healthcare services and the ability for people to travel for work.”

Does that sound familiar? And can it happen again?

Yes and yes.

I don’t know about you, but “peak pandemic” seems like half a lifetime ago. Most of us with busy lives have moved on.

Speaking with those who worked at the frontlines of long-haulage businesses, they still vividly recall the seemingly daily changes in border rules, the overwhelming red tape that choked almost every movement of freight and the perplexing way in which various arms of government applied one rule or ignored another.

In a subsequent research paper, the engineers put it this way:

“Across Australia there has been a shortage of supplies in major supermarkets caused by panic-buying and national border restrictions which hindered the easy movement of goods. Fuel prices have since increased due to global factors, increasing pressure on already rising household costs.”

Clearly, the pandemic gave us lots of lessons to learn.

The impact of disruptions to global supply lines are going to teach us a few more.

The world is a different place now we’re living with COVID-19. 

Fuel prices went up – and have stayed there ever since.

The War in Ukraine played a role for a time but the ongoing issues are due to supply and demand. Suppliers of oil (the 13 nations that comprise OPEC) have tightened supply and therefore prices will stay high because of sustained demand.

Closer to home, all the pressures of the last few years have been too much for some operators. In addition to years of struggling with heavy-handed enforcement and diminishing returns, they have chosen to exit the industry.

These departures don’t attract the same headlines as the dramatic collapse of Scott’s Refrigerated, but they are having a profound impact and are adding to our industry’s shortage of skilled labour.

But back to supply chains and the big question many economists and business analysts are now asking is, “Did the pandemic kill the system of so-called ‘Just in Time’ manufacturing?“

‘Just In Time’ emerged after World War II when Japanese car maker Toyota needed to compete with rivals in the USA who had ample access to raw materials.

The Japanese came up with ‘Just In Time’ – otherwise known as ‘lean manufacturing’ – by making parts at a rate that matched demand, eliminating waste and making them more competitive.

It was an alternative to ‘Just In Case’, which involves stockpiling manufactured goods, and it caught on around the world.

Fast forward to today and even manufacturing juggernauts like Apple are having second thoughts about rigidly sticking to ‘Just In Time’ and are making computer chips in the USA instead of sourcing them as needed from China.

A third of UK companies reportedly want to relocate their own sources of manufactured goods to their home country.

Big manufacturers aren’t ditching ‘Just In Time’ as much as modifying it and using technology to be better at it.

All these changes won’t make a lot of difference to the freight task within Australia in the medium term.

Whether something is manufactured here or overseas, unless it’s bulk freight, it will probably end up on the back of a truck for a good part of its journey to market.

You can talk up artificial intelligence and its undoubted ability to streamline processes and speculate about autonomous trucks – which do have a future in remote haulage along well-defined routes (such as around mine sites) – but the sun isn’t setting on humans being integral to the humble truck driving profession any time soon.