Trends Driving Growth : How 5.0% CAGR Will Propel Defense Logistics to a $329.9 Billion Market by 2032

According to a new report published by Allied Market Research, titled, "Defense Logistics Market," The defense logistics market was valued at $203.79 billion in 2022, and is estimated to reach $329.9 billion by 2032, growing at a CAGR of 5% from 2023 to 2032.

There is an increase in the integration of technological advancements in defense logistics services for the improvement and modernization of military supply chain operations. The utilization of AI and ML in defense logistics facilitates sophisticated data analysis, predictive modeling, and the automation of decision-making processes. This results in improved accuracy in demand forecasting, optimized route planning, and the ability to make real-time adjustments to logistical plans, thereby enhancing overall efficiency and responsiveness. Moreover, advancements in technology provide solutions for real-time tracking of military assets, including vehicles, equipment, and personnel. This increased visibility enables better coordination, reduced transit times, and an enhanced overall situational awareness, contributing to more effective logistics management.

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In addition, there is a surge in the incorporation of The Internet of Things (IoT) for the interconnection of devices for data communication. In defense logistics, IoT applications include smart sensors on equipment, RFID tags on shipments, and other connected devices. The deployment of advanced analytics tools helps defense logistics operators to extract valuable insights from extensive datasets. The utilization of data-driven decision-making enables accurate resource distribution, enhanced risk evaluation, and the recognition of optimization potential within the supply chain.

Consequently, incorporating these technologies to establish adaptable, effective, and secure supply chain systems is anticipated to offer substantial growth opportunities for the market. The military encompasses a crucial sector of a nation's armed forces, focusing primarily on ground-based activities that include infantry, artillery, armored vehicles, and specialized units. Its pivotal role in preserving national security remains significant. Responsibilities of the army commonly involve executing land-based military operations, upholding territorial integrity, and addressing a spectrum of security challenges.

Defense logistics manages the flow of goods, equipment, and supplies from manufacturers to military units in the field. In the army, defense logistics is responsible for the movement of equipment, and supplies through various modes of transportation, including land, air, and sea. The integration of advanced technologies, such as real-time tracking, automation, and data analytics, has enhanced the efficiency of defense logistics in the army, which is expected to propel the growth of the defense logistics industry.

Numerous companies partner with the army to provide logistics and maintenance services, which is expected to drive the defense logistics market. For instance, in October 2022, S&K Aerospace (SKA) secured a prime contract from the Defense Logistics Agency (DLA) Land and Maritime to provide support for the U.S. Army vehicle maintenance at the Red River Army Depot (RRAD) in Texarkana, Texas. Under this contract, the company is expected to be responsible for the bin and line-side delivery of bench stock items essential for maintenance and production lines.

The navy is a branch of the armed forces of a country that primarily operates at sea. It is responsible for securing maritime interests, defending coastlines, projecting power through naval presence, and conducting operations at sea. Naval forces typically consist of warships, submarines, and specialized units trained for maritime warfare.The navy holds a vital position in national defense, safeguarding maritime borders, upholding freedom of navigation, and bolstering a nation's security. Sustaining naval operations demands a continuous and dependable provision of fuel, spare parts, ammunition, and various consumables. Defense logistics manages the supply chain to ensure that naval assets are well-equipped and operational.

Moreover, military branches, including the navy, focus on their core operational activities (such as training, missions, and strategic planning) while outsourcing logistics to specialized companies. capabilities and readiness of the defense forces. For instance, in June 2023, Amentum secured an eight-year, $475 million contract to provide maintenance and logistics support for F-16 aircraft fleet of the U.S. Navy. In this contract, Amentum is expected to collaborate with the Naval Air Warfare Center Aircraft Division (NAWCAD) to maintain F-16A/B/C/D variants across organizational, intermediate, and depot levels.

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The airforce is a branch of military forces of a country that primarily focuses on aerial warfare and operations in the air domain. Its responsibilities encompass safeguarding airspace, executing air operations, strategic bombing, reconnaissance, and furnishing air support to ground forces. Defense logistics involves overseeing the supply chain for a diverse array of materials, including aircraft components, fuel, ammunition, and other consumables. Additionally, companies establish agreements with the defense sector and government to enhance the capabilities and preparedness of defense forces. For example, in July 2022, Parker Aerospace, a division of Parker Hannifin Corporation, forged a significant agreement with the Defense Logistics Agency (DLA) and the U.S. Air Force. The agreement involves a five-year performance-based logistics (PBL) contract, specifically covering hydraulic equipment across five key airforce platforms. Under the sustainment agreement, Parker Aerospace is expected to provide supply chain, engineering, and field service support at the Ogden Air Logistics Complex.

Impact of Russia-Ukraine war

Countries increasingly recognize the importance of defense logistics and actively engage in programs to enhance their military capabilities. For instance, in October 2022, the Defense Logistics and Support Summit (DLSS) took place in Ankara, Turkey, focusing on the critical role of military logistics, particularly highlighted by invasion of Ukraine by Russia. The event, organized by the Ankara Chamber of Industry (ASO), addressed defense industry projects in Turkey exceeding $60 billion. Moreover, a surge in defense spending is expected to generate an increased demand for defense logistics and associated services.

Key Findings Of The Study :

By commodity, the technical support and maintenance segment is anticipated to exhibit significant growth in the near future.

By end-user, the airforce segment is anticipated to exhibit significant growth in the near future.

By transportation mode, the waterways segment is anticipated to exhibit significant growth in the near future.

By region, LAMEA is anticipated to register the highest CAGR during the forecast period.

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Key players operating in the global defense logistics market include Lockheed Martin Corporation, Colak Group, Crowley, BAE Systems, Northrop Grumman, Raytheon Technologies, General Dynamics Corporation, L3Harris Technologies, Inc., SEKO Logistics, and Leonardo S.p.A. The companies are adopting strategies such as contract, and others to improve their market positioning.

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