By: Raven Dekker, Business Development Manager
January 14, 2022
The following article is written by our government and defence team to provide insight into the current global market environment. The author, Raven Dekker works in business development in the Netherlands with a core focus on the government and defence vertical at Crane Worldwide Logistics.
Below he outlines:
The global defence market is in a state of change and response to several shifts in the geopolitical landscape, the most prominent one being the change of Presidential Administration in The United States, leading to the withdrawal of US military assets out of the major conflict zones, meaning that the countries within the Europe, Middle East and Africa region (EMEA) are now forced to become more self-dependent on establishing readiness of their armed forces.
Many countries are hesitant to engage in ‘boots on the ground’ to enforce/maintain security for their nation, which is why a global trend of heavy investments in unmanned crafts is having its impact within EMEA too.
This, in combination with the required military self-dependency of nations within this region creates a landscape with a strong focus on local -or regional manufacturing efforts and an increase in delivery of unmanned crafts. With the UK exiting the European Union, they are ensuring involvement and relevancy in the global theatre by engaging in international collaborations with friendly nations.
The geopolitical developments mentioned earlier, are also having an impact on the way nations develop, maintain, and train their armed forces. Due to the US pulling out of major conflict zones and international tensions, the threat theatre is transitioning from an asymmetric, terror-oriented readiness to more of a symmetric, nation-oriented readiness profile.
This transition into a nation-oriented threat readiness model also means that the Research & Development strategies of major contractors, as well as the procurement strategies for government agencies, will change and adapt to this new situation. C4ISR and Systems integrations with interoperable combat platforms are popular subjects within the industry, maximizing the effectiveness of smaller-scaled militaries who, due to a reliance on US military support, have neglected their recruitment and budgetary efforts over the past few decades resulting in a headcount gap and more importantly: a knowledge gap.
This knowledge gap is filled by intensifying the relationships between government organizations and the commercial sector across the region, regional agreements between friendly nations, and fresh diplomatic ties. The Middle East is showing some very interesting developments, going into multiple joint ventures with the US- and the UK-based military contractors to localize manufacturing, and the UAE restoring its diplomatic ties with Israel, opening new channels for trade and knowledge transfers.
Looking at the Commercial Air Freight Market since the beginning of COVID has been exceptionally interesting, with airlines battling for survival, but also showing their flexibility and creativity, the past year has been hectic. In terms of defense, the aerospace industry has in some cases put a stronger emphasis on their defense business to mitigate the impact of COVID on their commercial operations and diversify their business income and risk.
The above, combined with an increased demand for unmanned crafts seems to be leading to increased competitive and demand-based pressure for both the new and existing defense contractors out there. Also, with more organizations entering the unmanned crafts space, the R&D focus on new projects to 'keep up' will be much more intense.
As mentioned, the buyers in the market are showing a huge interest in unmanned crafts, having visited several defense tradeshows over the past couple of months, I can confidently say that almost no stand was complete without at least one unmanned system on display.
Integration has played a key role here, for example by having several UAVs deployed, acting as eyes and ears, sensors in the field able to communicate with attack aircraft and personnel on the ground or in a control set up. Also, the implementation of 5G will have a positive impact on the effectiveness and reach of drones, given the fact that operating on 5G networks will provide stable connectivity, faster exchange and transfer of data and information as well as being able to transmit data of higher quality, like high resolution imagery or audio recordings. As 5G also reduces the time between sending a command, receiving a command, and executing a command, the margin of error that could happen during flight and/or conducting operations will be further decreased.
Also, the space domain will become increasingly important - launch costs are going down and military powers want to build their military presence in space, for example, the US Space Force - which will, from my point of view, lead to more funding released in this market, giving an impulse to the R&D and rapidly propelling its developments forward on a global scale.
Military Space Systems have evolved from having communication as their major application to being able to provide a wide range of other activities, like remote sensing, targeting, navigation, tracking, etc. Also, the US Space Force is deploying GPS 3 Satellites, as well as rapidly planning for deployment of more payloads in space which would increase global coverage of communications, thus paving the way for a more robust communications network for unmanned crafts.
The above brings the below important trends for the aerospace domain:
For ground systems, like aerospace, there will be a strong focus on autonomous and unmanned systems, both with offensive capabilities as well as supporting capabilities. Imagine a military unit having to cross rough terrain, bringing their heavy gear and equipment with them, decreasing mobility and slowing them down.
Organizations like Rheinmetall have recognized this challenge and are bringing products into the market which are capable of carrying loads or carrying out offensive initiatives remotely. With systems of this type, the integration with other systems and personnel on the ground seems to be a key focus area. Feeding back information and data to personnel on the ground or in a mission control set up and enabling personnel on the ground to make informed decisions and mitigate their risks by intelligent use of unmanned ground systems is in my opinion (one of) the way(s) of the future.
For your information, from a study from RAND:
Needless to say, where also this market's R&D will be targeted in the coming years. Going fully autonomous anytime soon is probably not happening, however, removing the human element from parts of the processes and operations can definately change what military missions look like and offer some noteworthy advantages in terms of the safety of the deployed personnel involved.
Electric Vehicles (EV's) are already a big trend and growing in popularity on commercial markets as seen in the Automotive sector, slowly but surely the military sector is starting to show an interest in this way of transportation as well to hit sustainability goals and/or to become less energy-dependent. What I am especially interested in seeing, is how the manufacturers of these military EVs intend to counter the increasing threat of EMP (electromagnetic pulse) attacks and the limited active range of the currently available battery technology for EVs.
The above displays the following trends for this market:
The global military sector for marine systems has been rapidly expanding, both from a shipbuilding perspective as well as from a technology perspective. I remember a couple of years ago, being on one of the first trials with the Holland Class OPV with the Dutch Royal Navy, which was revolutionary due to having only fifty people on board and being equipped with the first ever fully integrated sensor mast in the world, fascinating.
Looking at this market, western governments make up most of its spending and focus, although it is to be expected that the markets in the APAC region will be upcoming players here as well. A focus on unmanned crafts is also taking place here, although in an earlier stage than in the ground and aerospace systems markets.
The technologies involved are growing in complexity and sophistication and the need for stealthy, long-range engagement capable vessels is there. Looking at the developments in hypersonic weapons technologies which in my opinion would be a military vessel's worst nightmare, there will be an increased demand and focus on Missile Defense systems. Missile Defense systems will have to adapt quickly to be able to effectively counter hypersonic anti-ship missile systems.
The need for stealth in the context of the military maritime sector brings up the term Submarine. As sonar and submersed weapons systems become more advanced and with hostile nations demonstrating their power in this domain, there is a big and ongoing need for constant heavy investments in R&D and product development, which I do not expect to change in the coming years.
Geopolitics has a clear and constant influence on the global defense markets and landscape. They determine what types of foreign military sales are made, where the new conflicts will be, thus determining indirectly the need for new product development and R&D and they can steer in which nations form fronts and which nations oppose each other.
One of the easiest ways to determine how good relationships between nations are to observe the quality and how modern the military equipment they sell to each other is. The more modern the equipment, the better the relationship. So, if nation A sells a lot of rusty old soviet-era equipment to nation B, but a state-of-the-art missile system to nation C, you know that the diplomatic ties between nations A and C are way better than between nation A and B.
Geopolitics also determines the shape of the threat landscape. When nations are 'integrated' and have strong diplomatic ties, the borders between them (if they are neighbors) will become virtual lines, whereas when they have no or poor diplomatic ties, these borders will most likely be heavily controlled and monitored and in some cases even a frontline.
By determining these frontlines and virtual lines in terms of borders and diplomatic ties, automatically threat areas are created where tensions can be volatile, thus the allies of each nation involved will focus on being threat ready for the specific volatile area, leading to specific R&D and systems manufacturing, but also training of personnel to be able to efficiently operate within the specific threat area. In this way, there is a clear influence on the R&D and product/training development by geopolitical factors.
Crane Worldwide Logistics is a globally recognized partner for the defence industry with excellent references. We service the industry 24/7 using government control towers strategically placed around the globe.
With the ever-changing geopolitical landscape and its impact on R&D and procurement strategies across the world, the last thing you want to deal with as a defense contractor is logistics challenges. The competition, modern-day demands of your end users and of course your focus on contributing to global security should be your priority.
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