I came up with a scenario where the preferential system isn't great at doing its job. Can someone double check if what I'm saying is accurate. (assume everyone voted above the line)

Let's say there's a state where the quota is 2001(14000 votes) to elect each senator.
Party A gets 6003 -> gets all 3 candidates elected immediately
Party B gets 4002 -> gets 2/3 candidates elected

Party C, D, E, F have 998 each

CDEF all have preference for party B 2nd.

After the allocations are done all unsuccessful candidates are removed. Now because the 3rd candidate of party B has gotten 0 votes they are discarded immediately.

So even though all of CDEF have preferred party B over each other, the votes will end up going to their 3rd preference.