Out of Thin Air, Contested Logistics

Good afternoon from the military training grounds of the Mojave Desert. Welcome to those of you that joined us this week! The Arsenal team is supporting USMC’s Integrated Training Exercise (ITX) practicing distributed operations and living some of the concepts we touch on in this edition. The New York Times recently profiled a similar exercise in a story detailing a mock battle using innovative tactics and advanced equipment to simulate a potential war in the Pacific.

This week’s post:

• 📦🚚📦 Like Amazon Prime, but with the Vans Being Blown Up: Contested Logistics

• 🏆 Out of Thin Air Solution

• 💰 Term Sheet

• 🚩 Red Team Update

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Like Amazon Prime, but with the Vans Being Blown Up: Contested Logistics

You may have heard of logistics, but have you heard of contested logistics? The phrase du jour is indicative of how our recent military dominance has colored our assumptions - logistics has been so assured that it’s usually an afterthought, at least to non-logisticians. Challenging this paradigm for a future fight with a near-peer or peer feels so new that it deserves its own adjective of “contested.” Logistics for the US military in WWII weren’t so assured, especially in the Pacific, as Admiral Turner’s quote reveals.

Anything we do in a conflict against peer adversaries will be contested.

The DoD recognizes the problem with its existing “iron mountain” approach (single point of failure), with major investments in logistics targeting the most difficult problem: the more capable adversary (China) in the largest and more dispersed theater (INDOPACOM). For its $9.1B FY24 Pacific Deterrence Initiative request, $1.102B is dedicated to “Improved Logistics, Maintenance Capabilities, and Prepositioning of Equipment, Munitions, Fuel, and Materiel.”

What’s the requirement?

“The Department requires a logistics and sustainment posture west of the IDL [International Date Line] built around a tactical and commercial distribution network that integrates service specific sustainment capabilities to provide joint and combined logistics solutions.”

In a nutshell, logistics provide the physical means for forces to wage war: procurement (obtain things), transportation (move units), distribution (give units things), sustainment (keep giving them things), repair (replace losses). Try doing those things against an adversary, and they become contested. Think about how to do them and you get the Joint Concept for Contested Logistics, a core concept of the Joint Warfighting Concept, DoD’s vision of how it wages future war.

Adversary + supply = contested logistics.

Problem Framing

We’ll keep consistency with DoD thinking and focus on the Pacific, for two reasons: 1) it’s huge (about half the world’s geography is in the INDOPACOM area of responsibility), making the “tyranny of distance” a much more acute problem, and 2) it’s home to China. Getting troops and materiel to theater (Taiwan is almost 7,000 miles away from San Diego), moving them around within theater (about 375k DoD troops/civilians are there now), and resupplying and repairing them, can rapidly become the classical “logistical nightmare.”

This problem becomes more difficult by the operating concepts that the joint force plans to use in order to address key combat challenges: they’re all essentially dispersal responses to increase survivability when operating within INDOPACOM. The Navy has its distributed maritime operations (DMO), the Marines their expeditionary advanced base operations (EABO), the Air Force its Agile Combat Employment (ACE), all of which look to solve the twin problems of vastness and enemy targeting by spreading out. This makes logistics harder.

Some Potential Solutions

What does this have to do with defense tech? If you’re wondering why this matters to defense tech entrepreneurs (and you’re not in the supply chain space or otherwise somewhat familiar with these challenges), you’re not alone. It’s become cliché to talk about how important logistics are to war, and equally as cliché to mostly ignore logistics modernization while pursuing other exquisite technology - some of which will enable better logistics (AI/ML, for example). We’re used to the speed of information, but the logistics problem puts us stubbornly back into the realm of moving mass through space at speeds far slower.

We’ve broken down a high-level way to think about the problem below:

Some notes:

1. Although these options appear equally weighted, they’re not. Different applications will call for different mixtures of the options, and sometimes these options are at odds. Smaller nodes reduce point demand but not necessarily total demand, and require more connectors, for example.

2. Better planning underpins all of this: ML-enabled network optimization to determine best routes and minimum distance routing, for example.

3. There is strong interplay between concepts (which entrepreneurs have less control over) and technical solutions (which entrepreneurs have more control over).

With #3 in mind, here’s our ranked list of what we think are the most fruitful approaches for technology disruption, with some amplifying details:

1. Point of use - we’ll detail an example of this below, but this is essentially shifting production to where it’s needed. This still requires moving (or sourcing) raw materials, but frequently those materials are more abundant and can be diversified into different things, depending on need.

2. Local acquisition - this feeds approach #1 (raw materials), or otherwise involves sourcing things without moving them (far) from other vulnerable iron mountains (in INDOPACOM or even from continental US). Think “21st century foraging.”

3. Increase efficiency - this involves everything that reduces demand while keeping the mission or objective fixed, so things like energy independence or even better probabilities of kill for munitions (requiring less of them).

4. More connectors - distributed operations like DMO, EABO, ACE (mentioned above) will require more connections, some of which already exist but in insufficient quantities. But those that do exist are often too large or slow for what these concepts truly need. Things like DARPA’s Liberty Lifter fit here. Or the ability to resupply by de-orbiting mass from space - which would be similar to a ballistic missile or hypersonic trajectory, but remain intact and survive reentry. New connectors need to either be hard to find, or in such massive quantities that targeting them all becomes intractable, because domain awareness, even open-source, is only increasing:

5. Smaller nodes / preposition - these are arguably the most concept-intensive, meaning they’ll be largely driven by DoD. We see the former already happening (in theory), and the latter exists today: pre-positioned war reserve materiel (PWRM) as floating stock or in caves in Norway, for example.

With that 20,000’ overview in mind, let’s look at an example of an actual technology a start-up is using to attempt to enable contested logistics through the point of use approach by synthesizing alternative jet fuel.

Out of Thin Air

Direct Air Carbon Capture Potentially Provides A Point of Use Solution

Project SynCE - Synthetic Fuels for the Contested Environment - is an Air Force and DIU initiative to explore innovative ways to synthesize aviation fuel on-site at the point of use, like creating jet fuel from the atmosphere.

The DIU, dedicated to accelerating commercial technologies for national defense, has been progressively expanding its investments across the synthetic fuel innovation landscape. DIU recently awarded a $65M contract to the Air Company, a company based in Brooklyn, New York that provides vodka, perfume and of course, synthetic fuel using its proprietary carbon capture technology.

The Air Company's proposition uniquely intersects two groundbreaking technologies: Direct Air Capture (DAC) of CO2 and synthetic fuel production. DAC operates on the principle of extracting CO2 directly from ambient air, making it a subset of Carbon Capture and Utilization (CCU) technologies. Post-capture, the CO2 is then combined with hydrogen, produced from water through electrolysis, to create synthetic or "e-fuels." These fuels, including jet fuel, diesel, and gasoline, are chemically identical to their fossil counterparts but can be carbon-neutral if the CO2 and hydrogen are derived from renewable sources.

The potential of on-site synthetic fuel production could revolutionize DoD’s approach to fuel supply and, by extension, its operational resilience. Any location with access to air, water, and renewable energy could feasibly produce fuel, a prospect that has profound implications for the DoD and its approach to contested logistics.

DAC does hold the promise of virtually unlimited fuel, derived straight from the air. However, it's essential to acknowledge that DAC is highly energy-intensive. Creating synthetic jet fuel from air would require a substantial amount of energy, most likely necessitating a large solar panel footprint, possibly on-ship production using a nuclear reactor or carbon producing energy processes. The input energy requirement could increase the cost of synthetic fuels to multiples of conventional fuel prices. Herein lies the challenge for broad commercial or military adoption of synthetic fuels.

For now though, the military can see immense value in producing aviation fuel on site without the requirement to transport the fuel 7,000 miles across contested battlespace. Not to mention the sustainability of eventually producing these fuels from renewable energy sources, which should accelerate its development in the commercial world.

Air Company’s Funding and Pipeline

Air Company raised $30M in Series A funding in April 2022. The funding was led by Carbon Direct Capital Management with Toyota Ventures, JetBlue Technology Ventures and Parley for the Oceans joining the round. Air raised $8.5M in funding in 2020. It was also awarded $50,000 by NASA in August 2021 for demonstrating how carbon dioxide could be converted into sugars.

Air Company is also partnering with Boom Supersonic, Jet Blue and Virgin Atlantic. Boom has entered into an agreement to purchase 5 million gallons of synthetic fuels made by Air each year with JetBlue promising to buy 25 million gallons over 5 years and Virgin Atlantic promising 100 million gallons over 10 years.

It remains to be seen whether the future of point of use, synthetic fuel is dominated by carbon synthesis technologies or a biological precursor approach which DARPA demonstrated in its Living Foundries program.

Red Team Update

The Plan to Cripple US Military Logistics and Supply Routes

• A People’s Liberation Army Navy (PLAN) Admiral admitted that the “(USN’s) logistics ships were a primary target (for the Chinese)…because if he can take out logistics, he takes out the lifeblood of the fighting ships.”

• The western Pacific is characterized by the “tyranny of distance,” where vast distances separate the operational area of the East and South China Seas and the First and Second Island Chains. This makes it easier for the Chinese to hit the boats that transfer fuel, food, and ammunition to US Navy’s fighting vessels. It is the biggest vulnerability dogging every plan the US military has come up with to counter China in the western Pacific.

• The ongoing war in Ukraine bared how the enemy can target long supply lines. Russia partially withdrew from Kherson to the west of the Dnieper river in November because Ukraine had begun hitting the thinly stretched Russian supply lines feeding its long-range gun and rocket artillery systems. China will try and do just that.

• Fuel is the biggest component for naval combatants. Most navies do not allow it to drop below 25% of the total capacity, even in peaceful times. Thus, the USN’s Henry J. Kaiser-class fleet replenishment tankers would be the first targets for the PLAN when resupplying the Arleigh Burke-class destroyers on the high seas. The PLAN’s missile and fuel inventory can easily fight the US armada until the latter runs dry.

WSJ: China Plans Spy Base in Cuba

• China and Cuba have allegedly reached a covert agreement to establish an electronic eavesdropping facility in Cuba, posing a significant new geopolitical challenge to the United States. The facility, located around 100 miles from Florida, would allow China to intercept electronic communications throughout the southeastern U.S., including regions where several U.S. military bases are situated.

• The news has sparked alarm within the Biden administration due to the potential threats associated with an advanced military and intelligence facility operated by its major economic and military rival, China, so close to the U.S. mainland.

• The intelligence about the new base arrives at a time when the Biden administration is attempting to improve U.S.-China relations. However, this move by China seems to indicate an escalating phase in its broader defense strategy, which could be seen as intentionally provocative.

China Establishing Commanding Lead with Key Military Technologies

• According to an analysis by the Australian Strategic Policy Institute (ASPI), Chinese research in key military technologies is so advanced that the U.S. and its allies might never be able to catch up. (Unless they subscribe to AoT!)

• The report shows that China is leading in 19 out of 23 crucial categories, including hypersonics, electronic warfare, and undersea capabilities. For instance, in hypersonics, China produces over 73% of all high-impact research, surpassing the U.S. and the next eight countries combined. (See our analysis of China’s hypersonic weapons program here).

• The report also reveals that China is leveraging Western research institutions to its advantage. Around 14% of "high-impact" Chinese authors, those whose works are frequently cited, received their post-graduate training in the U.S., Australia, or Britain. This figure increases to nearly 20% for researchers writing about hypersonic detections and approximately 18% for electronic warfare.

• Despite China's significant lead, the U.S. and its allies maintain an edge in certain areas: the U.S. leads in high-impact research on autonomous systems, quantum computing, quantum sensors, some areas of artificial intelligence, and protective cybersecurity.

• When the US is combined with Australia and Britain under the AUKUS partnership, the research gap narrows further, although China still retains a significant advantage. The ASPI suggests that these findings could support calls for AUKUS to expand its technology cooperation to other countries, such as Japan.

About Us

Our team has 30+ years of combined experience as military officers using the end products. We’ve worked in both government and industry. From MIT to Wharton, Wall Street to biotech, and DARPA to the flightline, we offer you a unique perspective on how to navigate America’s defense tech industry.

The opinions expressed in this newsletter are solely those of the authors and do not necessarily reflect the views of DoD, our employers or any affiliated organization. This newsletter is for informational purposes only and is not intended to provide legal, financial or professional advice.OustedOut