This is PART 1 of an article detailing the flaws and problems in how government public services officials handled supply chain issues during the COVID pandemic (2020-2023). These were identified in the COVID-19 Response Inquiry Report, which landed on the public earlier this week (i.e. late October 2024).
Set up in September 2023, the Report provides a high level overview of a vast range of Australian life that was affected by the COVID-19 pandemic and its handling by government. This article will focus on the supply chain and on seafarers.
PART 2 of this article can be found by clicking here.
A focus on supply chains
Chapter 22 of the report focuses on supply chains. Inevitably, owing to the huge scale of the report, and the massive size of all the different sub-sectors that make up the concept “supply chains”, and much focus on the supply of product (e.g. finding resources to procure health equipment, along with commentary on domestic manufacturing), so the report in this area in relation to the actual moving of goods is both rather scant and superficial. The chapter explores the impact of the pandemic on the systems, process and business involved in producing, processing, and transporting goods.
It was found that the pandemic had an immediate, widespread and largely unanticipated impact on supply chains and highlighted the reliance on the “just in time” model of logistics, and the vulnerabilities of that model. The Report argues that the pandemic disproved the “widely held assumption that the free flow of goods over borders would continue uninterrupted”.
The pandemic affected the supply of certain daily essentials such as medicines, groceries, pallets, building materials, shipping containers, personal protective equipment, ventilators, and testing kits among other things. Some of the factors affecting the situation were outside of anyone’s control such as the limits in overseas production of some essential goods, a reduction of international airfreight, a spike in the demand for sea freight, a shortage of international shipping containers, the spike in the price of transporting goods, the surge in demand for goods, consumer stockpiling of goods (e.g. food and medicines), and increased demand for goods via online shopping.
Some damning comments – limited understanding, failure to consult, or listen… or even turn up
However, some areas were withing the control of Australian State and Territory governments. And, although worded politely, the findings are damning:
“Many of the domestic supply chain challenges were the result of the implementation of public health measures which were developed by governments that had a limited understanding of supply chains and undertook minimal industry consultation ahead of making key decisions,” the report says at the foot of page 604.
Elsewhere in the supply chains chapter it was noted that the response suffered from a lack of understanding of supply chains within government, and stakeholders highlighted the gap in preparedness to ensure that supply chains would remain resilient. There was a lack of expertise on supply chains and the visibility of supply chain work across the Australian Government, including gaps on how the sector worked.
“Industry representatives recounted that while government officials considered how to ensure finished medical products like COVID-19 vaccines were imported, they did not consider how to import the critical components for other medical goods until the issue was raised by industry… in the Inquiry’s Freight and Logistics Roundtable, supply chain sector representatives told us that the government’s lack of knowledge of supply chains resulted in government officials making poor decisions regarding health measures. We heard that the sector had to continually attempt to educate government officials, both at the Australian Government and state and territory level, over this period so that measures could be amended in a way that enabled supply chains to function”.
There was no crisis plan for supply chains, and a patchwork of measures were used to ensure the continued operation of critical supply chains. It was also found by the Inquiry that there was a common theme that it was unclear as to which Departments should take the lead in responding to specific supply chain challenges. This added to inefficiency, as did the fact that central departments, such as the Treasury, became involved in leading on supply chain issues.
However, one set of highly-welcome comments in the Report is that: “Managing supply chains is a complex endeavour involving many different groups of policy and industry representatives. Industry is the primary expert in this area, with an understanding of the discrete components of supply chains spanning the various stages of production, transport and distribution. It also has the practical experience and specific skills to ensure that supply chains function”.
It was also noted that “peak bodies played an important role in ensuring information was communicated between businesses and the government. These bodies had the ability to engage with government to obtain answers to questions the sector had, and the relationships with businesses to relay information to them from the government”.
But unfortunately, public service officials didn’t always listen to supply chain experts. As the Report notes, industry representatives had to repeat the same information to different parts of government, “without a tangible change to policy, priorities, or service provision”.
The Report goes on to say that industry had difficulties in communicating to health officials at all levels of government of the risks that public health measures posed for supply chains and for disruption that was unforeseen by decision-makers.
“We heard from industry that it reached a point where industry were looking at closing the interstate rail network, which would have stopped 80 per cent of goods going to Adelaide and Perth. At the Freight and Logistics Roundtable we heard that travel restrictions placed the iron ore export industry within two weeks of shutting down, as the helicopter pilots responsible for transporting seafarers between ports and ships could not travel to attend work,” the Report states on 616, adding with some considerable understatement, “this would have had serious consequences for the Australian economy”.
It gets worse.
The report adds that health officials often did not accept invitations to attend meetings with industry to discuss supply chains. Where officials did attend, they were not decision-makers and there was no tangible outcome of industry’s attempts to share information.
One long-term measure to build resilience
The Australian Government has recognised that many of the supply chain challenges during the pandemic demonstrated that there is a need to build supply chain resilience. One measure was that the then Treasurer, the Hon Josh Frydenburg MP, tasked the Productivity Commission with reviewing Australia’s resilience to global supply chain disruptions. Incidentally, that review looked into the question of whether the ocean going shipping part of the supply chain is vulnerable.
Spoiler alert: the report found that ocean going commercial shipping is not vulnerable.
The Vulnerable Supply Chains study developed an analytical framework to identify supply chains that are vulnerable to disruption and then apply it to Australian imports and exports.
One of the Government responses to the pandemic was the establishment of the Office of Supply Chain Resilience under the Department of Industry. It has adopted the framework in the Vulnerable Supply Chains study for its ongoing work program, which includes monitoring Australia’s international supply chains to assess vulnerabilities and to guide whole-of-government efforts to improve supply chain resilience.
The Report found as a fact that the Office of Supply Chain Resilience holds a regular Supply Chains Roundtable, with industry bodies and officials and that the Round Table received “positive feedback from some industry representatives”.
Shipping Australia is pleased to report that we are a regular attendee at the Round Table of the Office of Supply Chain Resilience and we often provide international maritime logistics updates to the Office, and to the Round Table participants.
Further Reading
“Commonwealth Government COVID-19 Response Inquiry,” Department of the Prime Minister and Cabinet, Australian Government, October 2024.
