Shortage of AdBlue Challenges Supply Chain
Australia has around five weeks’ worth of a crucial product keeping the supply chain afloat as fears grow that the shortage could pull thousands of vehicles off the road. About 500,000 diesel trucks, buses and heavy machinery in Australia rely on an additive known as AdBlue, which is made from high-grade urea and deionised water and is injected into the exhaust system to reduce emissions.
The key component, urea, is in short supply due to China halting exports to firm up their local supply instead. Key industries warn that without it, the stability of Australia’s supply chain could be up in the air, and trucks could be unable to transport essential items such as fresh food to supermarkets. After strong calls from the transport and agriculture industries, the federal government today revealed the details of Australia’s situation. It said there are currently more than 15 million litres of AdBlue on hand, equivalent to almost five weeks of business-as-usual demand.
There is a potential lifeline from Saudi Arabia to help ease the shortage, but it is currently stranded on the docks in the Middle East because of the global shipping logjam. The Australian Competition and Consumer Commission said on Friday that petrol prices had hit a seven-year high in Australia. The competition regulator said prices on a seven-day rolling average basis in Sydney, Melbourne, Brisbane, Adelaide and Perth increased to $1.724 a litre at the end of October. In response to the increase and due to the challenges and costs presented by the shortage of AdBlue, there has been an increase in Fuel Surcharge on local deliveries up to 18% effective immediately across Australia.
To tackle the shortage, the government is looking at alternate supply countries or even potentially manufacturing urea locally. We will provide further updates on the situation as further information becomes available.