Supply Chain Security

Strategic risks and the vulnerability of the munitions supply-chain

By Mike Lima.

The COVID-19 pandemic has caused significant disruptions to global supply chains. The pandemic has shown us the fragility of commercial supply chains; it gives us a reason to think about what a disruption to supply chains might have for the outcomes of military operations. This article will focus on one particular commodity that is strategically significant to all militaries that if disrupted in war severely constrains the likelihood of operational success.

 Ammunition often dictates the duration and intensity of war against an adversary. To prevent a shortage of ammunition during combat munitions must be amassed as far forward as safely possible and delivered to the forward line of troops. Global supply chains provide the means to move munitions to the destination using a combination of military/commercial vessels and infrastructure. Various problems at critical points can easily disrupt these assets, including manufacturing, transportation, and intermodal terminals.

Supply Chains

Supply chains provide the transportation and production of raw materials into finished products and include producers, warehouses, transportation companies, distribution centers, and vendors. In the case of munitions, they are created in manufacturing plants and arsenals, and then stored and distributing from depots to armed forces. The military customer at the end of this transaction requires ammunition for training, day-to-day operations, and during a crisis, combat load for missions. If ammunition and explosives are not where and when they are needed, it is disruptive to Defence Forces’ planning and execution.

The COVID-19 pandemic had a global impact, with ‘stay at home orders’ initiated to prevent the spread of the virus. This has seen disruptions to commercial supply chains of around 75 percent.  The interruption in supply can easily translate to the defence sector, especially during times of conflict or escalation, leading up to a conflict where munitions would need to move through the global supply chain at a rapid pace. Munitions are a unique commodity of supply and are vastly different than other military classes of supply, such as food, construction material, repair parts, or major end items. This is due to the hazardous nature of the items which require special handling and storage. Issues in the munitions supply chain may happen in various points in this complex system.

Manufacturing

The munitions industrial base is a segment of a nation’s defence industrial base and the primary producer of military munitions. The forms of the munitions industrial base take up many forms and depend on the country. One example is the Australian Strategic Domestic Munitions Manufacturing contract, which allows industry access to government-owned/contractor-operated (GOCO) facilities to produce the most critical explosives and ordnance. Another is the United States, with GOCO manufacturing plans also has a sizeable organic category of production facilities which comprises government-owned/government-operated (GOGO). While there may be numerous production facilities throughout a nations’ munitions industrial base, there are fiscal restrictions that prevent redundant production of military-specific manufacturing.

 An illustration is the Defence Mulwala Facility, a vital manufacturing site of military propellants and high explosives in Australia, and the munitions facility at Benalla, Victoria, which uses the explosives in their products. Similarly in the United States, Lake City Army Ammunition Plant is the primary provider of small-arms ammunition for the military and over 99% of all small-arms ammunition for the United States Army. These two examples highlight the dependency on just one facility as the main source for a military-specific product. While production in unique military products does not attract private industry, and private firms are more concerned with items that can be used by the commercial and military sectors. The dependency can exaggerate disruptions in the supply chain when there are significant issues.

Major problems, such as industrial accidents, can easily halt production.  Lake City Army Ammunition Plant had an accident in 2017, with subsequent investigations uncovering safety concerns and an unreported explosion. These accidents not only halt production, but they also require an extensive restructuring of processes that take time to develop and implement. It is also a possibility that these single points of production may be susceptible to other forms of distributions. Such as terrorism, as seen at Pensacola Naval Air Station, or as seen with COVID-19 cases in large meatpacking plants where workers stand close together and performing simple repetitive tasks. As Defence and Government facilities have learned from these experiences, there are still out of ordinary disruptions that can produce unforeseen repercussions that must be mitigated further along the supply chain.

Transportation

The primary means of munitions transportation to the port of departure is road and rail. Continuing with the two national examples of Australia and the United States, the countries use Australian Code for the Transport of Explosives by Road and Rail, and the Code of Federal Regulations (CFR) Title 49—Transportation, respectively. Both regulations provide strict requirements for marking of packages, vehicles and transport containers, requirements for the documentation, and that of storage and segregation. The national regulations are extremely detailed and specific to munitions rather than as seen with general cargo; these regulations demand strict adherence to explosive safety measures.  Transportation from exporting ports to the national receiving port is by air or sea and have specific requirements both nationally and for international commerce. Internationally the regulations are chiefly, Maritime Dangerous Goods (IMDG) Code and International Air Transport Association (IATA) Dangerous Goods Regulations, respectively, for maritime and air transport.

Disruptions in transportation are the most flexible as different modes of transportation may be used if there are constraints in one mode or replacement transportation used if the primary method cannot. For the United States, it includes the ability to use intermodal standards based on operational needs and have interoperability and interchangeability to optimize defence distribution. With the usage of twenty-foot equivalent units (TEU) of Dangerous Goods Containers, used with Australian Container Roll-Out Warehousing System (CROWS) or the United States Container Roll-Out Platform (CROP). Together, the containers with munitions aboard ships with a cargo-carrying capacity of more than 27,870 square meters can proceed to a terminal for sea transportation. Vessel ships are abundant, but ammunition ships in defence forces are few, with their numbers often proving a constraint in planning for operations.

Intermodal Terminals

Intermodal terminals do not have the flexibility to handle disruptions in munitions supply chains. In Australia, explosives limits are legislatively mandated, and some ports are not suitable for the operations of any quantity of explosives due to populated areas with the infrastructure of schools and hospitals. For sea transport operations from Defence maritime facilities are accomplished following Manual of NATO Safety Principles for the Transport of Military Ammunition and Explosives. While shipments of containerized ammunition through state/commercial wharves are conducted using Australian Standard AS 3846. Shipments can only go out or into ports with approved explosives limit handled at terminals.

The Australian Port Authority of New South Wales provides class 1 explosive import and export separation distances, and Net Explosive Quantity (NEQ) limits permitted aboard ship for specific terminals. Multi-Purpose (Navy) Wharf-Eden berth requires 689 metres separation distance to “Protected Place” for 30,000 kg Net Explosive Quantity (NEQ) permitted aboard ship for Hazard Classes 1.1, 1.5 & 1.6. The NEQ is quite small compared to other parts of the Australian continent, or other nations. Port Alma, near Rockhampton, is the designated east coast port of Australia for large quantities of Class 1 explosives and ammonium nitrate cargo with a limit of 1,500 tonnes of explosives. The explosives’ limits are requested by the port authority or operator to the Chief Inspector of Explosives and approved for each port. The strict adherence to these limits is essential and can severely damage the infrastructure of the munitions supply chain.

The consequence of a failure to respect these limits can be shown in an incident at Chinese Tianjin city’s port, where an explosion of 49,000 tons of highly toxic chemicals, including ammonium nitrate in a warehouse. The explosion destroyed buildings and surrounding infrastructure, while debris shot into the adjacent area. The damage was extensive and created a massive disruption to the port city. While not as extensive simple accidents, such as the shutdown of Morehead City Port, North Carolina, United States, and the evacuation of residents from punctured containers of highly explosive material. The spectrum of accidents can range from the unfortunate death of individuals to simple evacuation.

Catastrophic accidents, or the outcomes of any form of disruption at critical locations of the likes described here, will have far-reaching repercussions. As we’ve seen with the impact of the COVID-19 pandemic on private manufacturing, disruptions and key points in global supply chains can have far reaching effects. Exponential disruption creates systemic vulnerabilities if continuity plans are not in place. These continuity plans must include working with, promoting, and growing a commercial defence industry that can be called upon during a call to arms.

Conclusion

Global supply chains primarily involve the manufacturing, transportation, storage facilities, and the terminal infrastructure for products to make it to the end-user. Manufacturing of munitions is stored in bulk to ensure there are enough for training and combat operations.  The munitions supply lines during the war can easily be affected by external influences other than typical supply issues such as shortage of raw material. Accidents, terrorism, and pandemics in critical locations at times can create significant problems throughout munitions supply chains that have strategic impacts. Present supply chains that do not have redundant systems and have a limited number of carriers and approved terminals are the most vulnerable. Nations must develop the infrastructure and plan for alternatives sources, and respect the risks. The outcome of large-scale combat operations will depend on the ability of nations to move ammunition through global supply chains; these supply-chains are essential components of military resilience.

Michael Lima, D.B.A., is an Ammunition Warrant Officer and has served 21 years in the United States military and over eight years as an adjunct instructor.  He can be found on Twitter @Mike_k_Lima or LinkedIn https://www.linkedin.com/in/limamike10/ and provides pro bono consulting in munitions and explosives safety on mikelimaconsulting.org

Winning the war for prosperity – the military, supply chain security and the post-pandemic world

By David Beaumont.

Supply chain security is the concept which encompasses the programs, systems, procedures, technologies and solutions applied to address threats to the supply chain and the consequent threats to economic, social and physical well-being of citizens and organised society. – World Bank, 2009

Deborah Cowen’s book, The deadly life of logistics, describes the intertwined relationship between commercial logistics and security. ‘With logistics comes new kinds of crises, new paradigms of security’, Cowen opens, describing how the global logistics enterprise developed from Second World War experience has been employed by government and business to define the modern world.[1] The COVID-19 pandemic threatens to end the fragile order of international supply and industrial production for the short term at least. This event has direct existential and strategic consequences for Western militaries, but also requires them to be part of national economic responses.

This article is an attempt to consider a few aspects of this ‘new world’. It is an attempt to describe its implications for national security as it pertains to supply and industry, and otherwise initiate a conversation about how Western militaries might prepare for the post-COVID-19 future.

Supply chain security came upon us in the last decades of the twentieth century. A confluence of factors started the way the new world did its business. Globalisation was well in train, but economies adjusted to the opening of borders. During the 1980’s, a wave of deregulation washed over the Western world and formerly protected national economies were exposed to global forces.

Production shifted to those regions of the world where costs were low, and global supply chains became the veins of a system of wealth generation that stretched across the planet. A ‘revolution in logistics’, one shared by business and the military, was accelerated by ‘just in time’ view of supply. More stuff was moving, more quickly and to more destinations. It was a time of tremendous economic opportunity for those countries in a position to take advantage. Good were cheaper and freely available.

Supply chain security was not an idea developed by militaries to chart threats; it is an economic concept which looks to surety of commercial supply. It was conceived as a concept to recognise emerging vulnerabilities to normal patterns of human (Western human, mind you) existence. It has become militarised over time, a consequence of expeditionary wars in the Middle-east, the blurring of civil and military production in industries such as electronics, and in consideration of new challenges to the existing global order.

There are numerous ways in which militaries have experienced this problem and concept, two of which I will describe here.

Firstly, like everyone else, governments and their militaries became wedded to lower-cost procurement options which were enabled by low-cost international production and transportation. Military hardware could be produced in countries where manufacturing costs were low. The supply lines established to sustain military hardware criss-cross the globe, through geographic regions that now include real or potential ‘battlezones’ versus the depots and production facilities within the national support base.

Secondly, and perhaps even unwittingly, national strategic interests morphed to reflect the realities of global trade. Access to resources half the world a way mattered. Access to markets, or to industrial capacity elsewhere mattered. This was not just a concern for military logisticians who were interested in where sources of ammunition and parts may originate, but for those interested in protecting domestic prosperity.

The COVID-19 pandemic has hammered home the fragility of global prosperity. It is now naïve to think that geoeconomics and commerce is not a national security issue. It probably is the national security issue of our time, the driving force behind a veneer of ‘hard power’ concerns and other military-strategic problems. Prosperity is what nations ultimately strive to protect. Geography, influence, options for force posture are second-order issues that are made relevant by the desire to protect prosperity. While military strategists haven’t been particularly fixed on global economics, the problem of supply chain security has certainly been fixed on them.

Problems crept up on a new generation of Western national security and military planners slowly. Operations off the ‘horn’ of Africa to protect traffic from Somali pirates gave way to concerns about ‘anti-access, area-denial’ weaponry on significant maritime choke-points, which in turn gave way to the implications of man-made island building in the South China Sea, and cyber-attacks on defence industry. People understood the strategic implications of trade, but now its importance was re-emerging, almost subliminally, in often unrelated discussions.

Sources of production were also becoming a critical part of the conversation. Volcanic eruptions in Iceland in 2010 and the Fukashima nuclear accident created shudders throughout the global economy, and all soon learned how vulnerable the connective tissue of the World truly was. Localised disruption to manufacturing now had global effects.

The economic cataclysm wrought by purposeful government decisions to slow the COVID-19 pandemic has created a new blend of the economic and military. An alarming lack of resilience in the commercial systems society has created for itself has been revealed. Military logisticians were already becoming increasingly concerned with the implications of limited sources of supply for the purposes of the armies, navies and air forces they belonged to. Now this problem has moved beyond a challenge to military supply and into challenges to ‘normal’ human patterns of existence.

Although admittedly a guess, it seems a certainty to me that the strategic calculus about supply-chains, along with concerns for national resilience, will change. It must change if nations want greater control over factors that influence resilience. This will have considerable implications for what militaries must do for their nations, if not how they create capability in the first place.

Furthermore, the nature of military and industrial / economic relationships in Western countries will necessarily evolve. Militaries receive sizable budgets for the purpose of preparedness for war, and it is evident that governments will turn to the military to deliver some return during a time of national crisis. Militaries around the world are performing tasks they were patently not expecting to be performing; from supplementing hospitals to producing medical supplies. However, militaries are being seen to offer governments a point of leverage into the national economy. Defence activities such as procurement and capability development can be rushed ahead – albeit inefficiently and with excessive costs – of timelines to stimulate some form of local economic activity. At one end of the spectrum planned expenses will simply be brought forward. At the other end, it is possible that future capability decisions will be seen to renew, even re-establish, national industries that have withered since globalisation accelerated.

As we are seeing with the recent declaration of the US President Trump to invoke the Defence Production Act (DPA), governments are willing to co-opt existing military systems and processes to deliver economic outcomes. This is an opportunity that must be taken if the situation demands it. In the case of the DPA, an Act conceived to support mobilisation, industry is being directed to produce commercial products for national security purposes. In the aftermath of the COVID-19 pandemic emergency, and as nations recover, it will be critical that defence planners consider ways in which seemingly natural links between the military and national support base can be appropriately leveraged for highly unusual crisis as is being witnessed right now. Defence industry policy and other Acts of government can be the bedrock upon which national security responses can be formed.

It may be that at the end of the COVID-19 pandemic, and after the economic recovery erases our memory of the cost of deliberately causing international trade to seize, behaviours and the interests of military and other national security organisations will return to normal. Now, amid a pandemic, it seems incredulous to suggest life will be so kind. National security is fundamentally about the preservation of normality, and militaries will have an important role in assisting their society assure it.

It is an unwritten rule of military logistics start preparing for the time in which forces will return home just as they arrive on a military operation. Perhaps it is time to start planning now for ‘what comes next’, and to reconsider the national security implications of the globalised international economy. Speaking of Western military forces, they will look out on a world that faces great uncertainty as nations strive to quickly regenerate their wealth and ensure prosperity. They will be viewed as institutions of order and support, and their people as a symbol of assurance. But they must also start thinking

[1] Cowen, D., The deadly life of logistics: mapping violence in global trade, University of Minnesota Press, USA, 2014, p1