Expert warns Australia’s AdBlue supply could run out within weeks causing major supply chain issues

Australia’s supply of urea – an additive used in diesel engines – could run out in weeks, meaning the trucking industry could grind to a halt.

Australia could run out of a crucial component of diesel fuel within weeks, with an expert warning nobody knows how much we have left.

The nation, along with other developed nations, has been facing an AdBlue crisis for weeks, with fears that if the additive runs out, trucks could be taken off the road, sparking a chain of shortages on supermarket shelves across the country.

Urea is a large component in fertiliser and a key ingredient in AdBlue. Australia typically imports the ingredient from China, but a recent halt on exports has had a significant effect on supply.

Transport and agriculture industries warn that without AdBlue - which can’t be made without urea - trucks could be unable to transport fresh fruit and vegetables along with other staples to supermarket shelves.

“Most trucks have to use AdBlue. The major ingredient in that is urea, and obviously China has now halted the export of urea ... 80 per cent of our urea comes from China,” Marcus Carmont, executive director of supply chain consulting firm TMX Global, told the ABC.

“We saw Indonesia give us 5000 tonnes of urea, that largely will last us a week. The biggest issue we face here is if we don’t have AdBlue and trucks can’t deliver things like fuel, this will create a major squeeze.

“I think the challenge we see at the moment is I don’t think anyone actually knows how much we have left, which in its own right is a major concern at the moment.”

One of Adblue's multipurpose B-doubles, delivering AdBlue in bulk.

Mr Carmont said claims of how much was left varied widely, sparking fears that nobody is entirely sure.

“We’re hearing reports that there’s capacity up to, sort of, mid-January, end of January, into February, and, you know, now you’re seeing some government stimulus to get local production back up but that’s going to take some time.

“So there is a real risk into the back-end of the holiday season that things like fuel may be constrained, but again this is across the board. 

“We are highly relying on this and (it) does underscore the – how perilous our fuel security is in this country at the moment, given we’re so reliant on one ingredient in a supply chain and when that goes we’re really hand-to-mouth at the moment.”

Yara opened world's largest AdBlue plant in 2018.

On December 10, after strong calls from the transport and agriculture industries, the federal government said there were currently more than 15 million litres of AdBlue on hand, equivalent to almost five weeks of business-as-usual demand.

Running out of urea would be a major blow to the logistics industry, causing the country’s trucking fleet to stop.

“You think about it, most of the fuel tankers that go to our service stations across the country are relying on AdBlue to be able to run,” Mr Carmont told the ABC.

“So that for me is probably the biggest issue. Probably less about the consumables or the triple-smoked ham.

“For me I think the issue is really around fuel supply, particularly (in) the holiday season when the consumption of fuels is as high as it is throughout any other point in the year.”

He said there had been a global squeeze in terms of shipping capacity in the last 12 months, which had compounded the problem.

“We have seen massive shutdowns in terms of manufacturing in South-East Asia, which is really the heartbeat of our inventory levels, and we have seen the Covid problems in Australia with a lot of the warehouses struggling to cope with the demand, you know, given by our pent-up retail appetite,” Mr Carmont told the ABC.

There are fears supplies of AdBlue could run out in weeks.

“What this has resulted in now is we have seen our local retailers having to hold excess inventory levels, we had a tightening in everything; from pallets to workers.”

With shoppers today heading out to the Boxing Day sales, Mr Carmont said there had been a lessening of discount offers during Black Friday and Cyber Monday which he put down to lower stock levels.

“I think we’re still going to see – we’re talking $21 billion of pent-up retail spend today, all the usual staples, no doubt, will be there but I think we’re probably going to see a lack of some of the selections, but, you know, the broader view on this is going to last into 2024 with no real end in sight in terms of the current supply chain issues today.”

Originally published as Expert warns Australia’s AdBlue supply could run out within weeks causing major supply chain issues