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In Brief
- Diesel shortages are disrupting transport and supply chains across Australia.
- Rising fuel costs are expected to result in food price increases within weeks.
Shoppers should prepare for certain price increases, as supply chains face significant disruptions due to ongoing conflicts in the Middle East affecting oil supplies.
Supply chain management and logistics specialist Elizabeth Jackson emphasized that these rising costs are now inevitable, stating, “It’s no longer a question of if, but rather when these higher expenses will impact consumers.”
Jackson highlighted the critical role of diesel fuel in the transportation of food, noting, “Every kilojoule of food sourced from an Australian farm is transported by diesel-powered vehicles.”
She explained that even the simplest foods, such as fresh fruits and vegetables, which undergo minimal processing, rely heavily on transport systems. This dependence extends to the most processed foods destined for export.
Jackson added, “Additionally, diesel is crucial for the mechanization involved in food production, such as the operation of tractors.” This underscores the wide-reaching implications of fuel disruptions on food supply chains.
Price rises are likely to begin with fresh produce because of its short supply chains and constant need for transport.
Increases were possible within two to three weeks with a “slow burn” most likely rather than one sudden spike.
“The fresher the produce, the quicker we’re going to see the prices increase,” Jackson said.
At least 107 petrol stations in NSW have run out of diesel, while more than 40 have reported not having any fuel at all.
Jackson said the situation underscored the need for stronger fuel resilience in Australia, including greater investment in alternative energy sources such as biofuels, rather than continued reliance on fossil fuels.
In the short term, she said governments were limited in how much they could intervene beyond managing supply.
Coles said it would review how much it was paying companies transporting food and groceries to its stores more frequently.
The supermarket giant did not say whether this would lead to an increase in prices for shoppers.
“We will be temporarily increasing the frequency that we review the fuel component of our freight rates from monthly to twice per month — so that changing fuel costs are reflected more quickly and fairly,” a Coles spokesperson said.
“In the current climate, this means transport providers will be able to recoup more of the rising fuel costs.”
Commonwealth, state and territory leaders will meet next week for another national cabinet meeting on the shortages.
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