28 August 2023
6 min read
#Transport, Shipping & Logistics
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The continued growth in Australian trade, combined with recent volatile global supply chain conditions, has highlighted the essential need for the smooth operation of global and domestic supply chains. Governments at both the federal and state/territory levels are taking action to ensure this need is met.
In seeking to ensure a strong and resilient Australian supply chain, the Federal Minister for Infrastructure, Transport, Regional Development and Local Government (Minister for Transport) has this month announced the commencement of a review of the National Freight and Supply Chain Strategy (Supply Chain Strategy). This review, originally scheduled for 2024, five years after the commencement of the Supply Chain Strategy in 2019, will take place this year “in recognition of the importance of Australia’s freight and supply chain network to the national economy and ongoing productivity enhancements”.
The Supply Chain Strategy, in conjunction with the National Action Plan (Action Plan), was adopted in 2019. Its primary purpose is to set an “agenda for coordinated and well-planned government and industry action across all freight modes over the next 20 years and beyond… [as well as setting] a national vision for freight systems and supply chains to contribute to a strong and prosperous Australia”. The Action Plan is the instrument through which the various Australian governments, in consultation with industry, seek to operationalise the more aspirational goals contained in the Strategy. The Action Plan aims to implement the Supply Chain Strategy through four main ‘action areas’:
A number of mechanisms exist in order to ensure that the Supply Chain Strategy and the Action Plan are achieving their objectives. These include the delivery of annual reports on the Supply Chain Strategy and most pertinently, a five-yearly review process of the Supply Chain Strategy itself. The recently announced inquiry will be the first major review of the Supply Chain Strategy.
According to its terms of reference, the review of the Supply Chain Strategy will focus primarily on:
The scope of the review will cover all matters under the Supply Chain Strategy, which includes major modes of transport such as shipping, rail, road and air. As the Supply Chain Strategy review’s discussion paper makes clear, whilst there will be a particular focus on ‘decarbonisation’ and ‘supply chain resilience’, the review welcomes suggestions concerning other gaps in the Strategy, specifically mentioning issues such as “land use planning considerations under the National Urban Freight Planning Principles, cybersecurity or emerging technology”. Given that 19 per cent of Australia’s direct greenhouse gas emissions derive from the transport sector, supporting a “national vision for decarbonisation efforts” has been expressed as a ‘key consideration’ of the review.
Hermione Parsons, CEO of the Australian Logistics Council, has been vocal on the importance of refreshing Australia’s strategy on supply chains, a landscape which has seen a drastic change since the implementation of the Supply Chain Strategy in 2019: “[a] new strategy must… address the critical skills shortages facing the sector, ensure infrastructure planning enables efficient freight corridors, and protects land for future transportation needs… we must bounce forward, creating a stronger, better system”.
Bringing the review forward by one year reflects that, in a volatile global environment, the efficient functioning of the Australian supply chain is vital to both Australia’s strong social and economic performance.
In November 2022, the National Food Supply Chain Alliance, an industry group representing nine influential food industry associations, warned of the danger that supply chain inefficiencies can have on Australian markets and individuals, as is evidenced by the recent cost-of-living and food affordability crisis:
“[L]ong term supply chain issues, including ongoing natural disasters and labour shortages, are set to increase food prices for the foreseeable future… recent threats have laid bare Australia’s food supply chain’s dependencies, risks, and vulnerabilities”.
In addition to these social considerations, there are clear economic and commercial reasons for strengthening Australian supply chains. This can be seen in the recent and significant increase to the cost of container shipping, rising almost sixfold in the period between January 2020 and September 2021:
“Container shipping costs reached historic highs in 2021. The Drewry’s composite World Container Index (WCI)… reached a peak of $10,377 (USD) for a 40-foot container in September 2021… [b]y way of comparison, the WCI was $1,832 on 2 January 2020”.
In responding to such challenges, and in attempting to minimise cost and maximise efficiency in Australian supply chains, the Supply Chain Strategy aims to provide a framework for strengthening core infrastructure and logistics networks. The Strategy’s annual report for 2021-22 highlights various initiatives that have, in pursuance of Supply Chain Strategy/Action Plan goals, been completed during the 2021-2022 period. Some of these projects included:
In line with the ethos of the Supply Chain Strategy, the review will seek extensive industry input. As emphasised by the Minister for Transport during the review announcement, “stakeholder engagement will be an important part of identifying these gaps and priorities”. In addition to industry consultation and inviting public submissions, a ‘round table’ has been proposed to hear directly from the freight industry about how to strengthen and improve the Supply Chain Strategy.
More information about the review and how to make a submission can be found here. The current deadline for public submissions is 29 September 2023.
Results of the review will be provided via a report to the Infrastructure and Transport Ministers by the end of 2023, and an updated Supply Chain Strategy and Action Plan for the next five years by mid-2024.
If you have any questions about the Supply Chain Strategy or would like any assistance making submissions in the review, please get in touch with partner Nathan Cecil from our Transport, Shipping and Logistics team.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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