Drought and supply chain economics

hay freight

hay relief

By Cate Hull

The worst drought in recent memory is taking its toll on sweeping parts of eastern Australia. Record-low rainfall in some regions and successive seasons of above-average temperatures have blighted large swaths of Australia’s grazing and crop land.

Throughout the stricken regions, the farmers and their livestock are suffering. Assistance has come in different forms. The Rapid Relief Team charity sent 1,200 tonnes of hay to New South Wales (NSW) farmers with a convoy of 23 road trains as part of Operation Drought Relief.

The hay was distributed to drought-stricken farmers in the greater Condobolin area, including Tullamore, Tottenham, Nymagee and Lake Cargelligo.

Prime Minister Malcolm Turnbull announced the government will spend $1.8 billion to assist farmers, local councils and businesses dealing with the drought. In addition, caps for low-interest loans for struggling producers have been raised from $1 million to $2 million.

These conditions are having a serious impact. Prices rise when demand exceeds supply. Jeff Shirtcliff, the cotton seed trading manager for Namoi Cotton, reportedly said the drought had turned cotton seed to “white gold.” He said there was about a million tonnes of cotton seed available, but the demand was very strong, supplies tight and the transport costs prohibitive.

Roads and Maritime Services is fielding requests to raise the height limit on hay loads.

Weather forecasters are not offering any short-term predictions of relief. The Bureau of Meteorology is pointing to drought conditions intensifying and seeping toward Victoria.

This crisis underscores the fragility of our supply chain networks. As we evolve into a digital market where goods and commodities are purchased on the Internet, our supply chains must be nimble and efficient.

When nature causes a drought in one area we must be able to shift resources in a timely and efficient manner. Granted, there are some natural occurrences we cannot fully anticipate or be prepared to deal with. However, having a supply chain that is responsive to market shifts and other external factors allows us to keep needed supplies moving to their destinations.

We have faith that Australia’s farmers and the vast support network that underpins our country’s agricultural community will weather this storm.

For the future, companies like ours, which strive to advance an efficient movement of goods, will continue to strengthen our supply chains.

Our FreightDesk platform automates the movement of goods. With FreightDesk, you can connect orders, inventory, warehouses and carriers to move freight seamlessly.

This devastating drought is a reminder of how fragile the supply chain can be – and why it is imperative we continue to make it stronger.

Cate Hull is the CEO of FreightExchange, a freight distribution company based in Sydney.