Many industries in the U.S. have suffered over the last few months as the economy experienced a downturn from last year. The COVID-19 pandemic created hardship and uncertainly for many markets, which in turn, affected the logistics supply chain.  One of the exceptions is the military industry, which is experiencing a rise in spending.  This is expected to trigger the growth of the defense logistics market, and its supply chain, in the next few years.

Building the Defense Logistics Market in the U.S.

The current administration has a strong focus on military spending.  The United States spends more money on military budgets, at almost $600 billion annually than any other country in the world. This accounts for 54% of all federal spending. However, at the end of 2019, the administration signed a defense bill that exceeds this, at $738 billion.  This includes increases in training, border control workforce, and updates to technology.

An increase in military spending has benefits to other sectors of the economy, such as employment and defense logistics. The defense logistics industry provides support to the increase in military spending.

Defense Logistics Market Growth

The defense logistics market will grow at a CACR of about 2%, or USD 3.54 billion over the next four years.  The market, which is already concentrated, is expected to get more concentrated during the 2020-2024 timeframe.  The major players such as Lockheed Martin, Honeywell International, AECOM, Northrop Grumman, and Bae Systems will need to focus on the areas that offer more growth prospects in the fast-growing market segments while keeping their positions in the slower-growing market segments. The continuation of rising global military spending will be the key in driving market growth.

Network-Centric Warfare Communication Growth

The increasing adoption of network-centric warfare communication infrastructure will add to the growth of the defense logistics market. Network-centric operations are used by the military to translate information technology into a competitive advantage. It combines computer networking with geographically dispersed forces. The system also includes weapons platforms, sensor systems, and command and control centers that will be linked. As the military builds this component, the defense logistics market will be able to function more efficiently with the establishment of improved networking.

PPE Supply Chain Growth

Another area in which the defense logistics supply chain is with personal protective equipment that is still in high demand throughout the country. Last month, the Defense Logistics Agency signed a contract with Global Safety First, manufacturer of the ReadiMask.  This NIOSH-certified N95 strapless mask uses skin-friendly, reusable adhesive.  The Defense Logistics Agency is a support agency under the Department of Defense. The agency manages the global supply of raw materials to end-users.  The movement of these types of goods throughout the country will increase the supply chain demand as well as the shipping portion.

As the administration continues to increase defense spending, the supply chain will grow in many ways as more raw materials from different suppliers and industries are needed.