OPINION: Supply chains must be rebuilt around volatility

IT IS halfway into 2025 and like most of us, economists looked forward to the end of 2024 and towards the new year with hope and also trepidation. However much in the last six months has changed. What is likely to keep us awake at night as the year continues?

There is no doubt Australia’s supply chains are under pressure — not from a single event, but from a convergence of ongoing disruptions that are increasingly structural in nature. Geopolitical instability, economic uncertainty, infrastructure gaps and a deepening workforce crisis have made unpredictability the norm rather than the exception.

We’ve moved beyond isolated shocks. We’ve entered an era where volatility is the baseline — and supply chains need to be rebuilt around that reality.

Globally, the rules of trade are shifting fast. Tariffs between the US and China are changing in real time. Exemptions are floated and then repealed. As global trade flows become more reactive, Australian operators, even at a distance, are impacted. Delays, congestion and route changes are placing pressure on importers and exporters alike, complicating logistics planning and undermining reliability in freight timelines.

The suddenness and immediate effects of trade policies between two of the world’s largest economies, continue to cause imbalances and bottlenecks in trade routes. The impact has been evident in recent months in Australia.

The great thing in our land of droughts and flooding rain, particularly the latter, is bumper agricultural exports. Being an island, our farmers and regional exporters rely on incoming container trade to capitalise on the current boom in regional exports. The disparity between seasonal container demand and container supply continues to be a challenge in the Australian marketplace.

The global climate is the great disruptor but has also seen some positives for Australian businesses.

It has spurred the government in fast tracking the fair-trade agreement with the EU.

Australian agricultural exporters are experiencing more demand from our Asian trading neighbours as they swing away from US agricultural imports.

New trade opportunities are emerging for some Australian agricultural industries. The $2.5 billion US beef export market to China ground to a halt during April.

Australia's cattle industry is enjoying a surge in demand from China for grain-fed beef and is filling the gap.

Statistics from Meat and Livestock Australia (MLA) show Australian grain-fed beef exports to China have ramped up significantly, with 21,885 tonnes shipped in February and March — up nearly 40% on the same period last year. In April, Australia exported more than 127,000 tonnes of beef, a record for that month. The biggest customer was the United States (37,213 tonnes), followed by China (21,572 tonnes).

Australia's almond export to China has burgeoned as well, from 0.7% of Chinese almond imports a few years ago to nearly 70% this year.

The Chinese market had been the source of the majority of grower revenue for the last few years but Californian growers, who hold 80% of the worlds almond export market share, expect to see a decline.

Likewise, there is an opportunity for any Australian export commodity that does not have a tariff attached, to take advantage of international market opportunities.

We must move away from treating skills development as a reactive fix and start viewing it as core infrastructure.
Sue Tomic, chair of the Supply Chain & Logistics Association of Australia

Exporters need to be mindful that these opportunities and growth are occurring in a volatile international market. The old saying “don’t put all your eggs in the one basket” remains even more relevant now, than it did during Covid. The opportunities can be negated with a slowing Chinese economy and the recent 90-day moratorium on Chinese tariffs as announced in early May.

The other benefit to Australia is that import prices here may fall in the short term if China has a surplus of goods and pivots to other markets as a response to decreased US demand. Container volumes into the US have already dropped dramatically, but price benefits require a longer lead time to measure any expected benefits.

At best, the supply/demand situation will continue to be unpredictable at port level as US shippers either pivot to non-Chinese markets for imports or try to move as much product as possible before the 90 day moratorium expires. Container carriers may be ramping up blank sailings to our Pacific region to cater for surging demand elsewhere.

So with all the volatility globally, the question remains on how Australia will increase freight efficiency domestically to retain competitiveness?

Locally, policy ambition hasn’t yet translated into operational change. The Federal Budget’s focus on local manufacturing and freight strategy is important, but real-world outcomes remain elusive. Freight diversification, particularly the shift from road to rail, has been a consistent government talking point, but continues to lack fast-tracked delivery….sorry, not sorry for the pun. Rail freight and intermodal transport remain underutilised, despite being an obvious lever for congestion relief, emissions reduction and resilience.

Without decisive infrastructure and policies favouring modal integration, operators are left relying on increasingly fragile road corridors and grappling with rising labour and compliance costs. For small to medium businesses in particular, this landscape creates compounding challenges. Many are now operating in survival mode, adapting reactively rather than planning proactively. That’s a risky position in an environment where cost blowouts and scheduling volatility can’t be easily absorbed.

The road freight market continues to experience mergers, acquisition or outright business collapse in the wake of global and local cost pressures and demand volatility. Contracts negotiated for a period of years become commercially unviable in a matter of months. Cashflow imbalance pressures where some freight supply chain service providers impose short credit trading terms and shippers are increasingly requesting 60 and sometimes up to 90-day credit terms, is untenable for the majority of freight carriers. Only the largest are able to survive. We all know what lessening of competition means to our industry.

This is not just an infrastructure or freight issue. It is an issue of imbalance and disparity across the freight supply chain.

But, its also a capability issue.

Technology is advancing at pace — from automation to predictive analytics and AI-enabled logistics tools — but implementation is still inconsistent. Many businesses simply aren’t ready to unlock the potential of these systems. It is not the tools that are lacking, but the human capability to embed and use them effectively.

This brings us to what is arguably the defining issue of our time in supply chain: workforce readiness.

The labour shortage we face isn’t just about numbers. It is about strategic capability. It is about whether the people leading our freight, procurement, warehousing and planning systems are equipped to think differently, lead change and work across evolving platforms and processes. Warehouse and distribution centre operators have embraced the available automation and predictive technology much more so than others. Transport carriers especially, all too often rely on the dreaded Excel spreadsheets and legacy systems rather than exploring current market capabilities or focusing integration of data rather than duplication.

Too often, career development in this sector is undefined. There’s a lack of clarity in progression pathways. There’s a mismatch between training systems and the actual demands of modern logistics roles.

Australia’s talent pool is deep, but under-supported. We must move away from treating skills development as a reactive fix and start viewing it as core infrastructure.

That means strengthening partnerships between industry and education; prioritising training that adapts to emerging technologies and methods; and providing clearer, modular career paths that support long-term leadership growth.

Supply chain leadership isn’t confined to the boardroom. It lives in planning teams, shift supervisors, freight coordinators and analysts. It is the ability to make confident, informed decisions under pressure, to adapt, recalibrate and keep goods moving even when conditions change without warning.

The state of supply chain in Australia today is one of tension, transition and potential. Our systems are stretched but not broken. Our people are capable but in need of support. And our national ambition is real — but it needs sharper execution.

This isn’t about getting back to stability. That may no longer be realistic.

It is about building supply chains that can function without it. That can absorb pressure, adapt fast and move forward in the face of uncertainty. Because in today’s world, resilience is no longer a competitive edge, it’s the baseline.

This article appeared in the June-July 2025 edition of DCN Magazine