Defense Transportation Journal

The Official Publication of the National Defense Transportation Association

February 2023

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Overcoming Challenges The State of the Defense Industrial Base

U.S.-flag shipping and logistics solutions from America’s leading Ro-Ro carrier

2 | Defense Transportation Journal | FEBRUARY 2023

February 2023

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FEATURES BUILDING SUPPLY CHAIN RESILIENCE February 2023 • Vol 79, No. 1 PUBLISHER

VADM William A. Brown, USN (Ret.) MANAGING EDITOR

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By Emily Harding and Harshana Ghoorhoo

IMPACT OF CONSTRAINED LITHIUM SUPPLY TO THE US DEFENSE INDUSTRIAL BASE

12

Sharon Lo | slo@cjp.com

By Lt Col Paul Frantz, USAF

CIRCULATION MANAGER

DEPARTMENT OF DEFENSE STRATEGY AIMS TO SUPPORT CRITICAL FACET OF DEFENSE INDUSTRIAL BASE

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BRINGING MANUFACTURING BACK TO THE US REQUIRES POLITICAL WILL, BUT SUCCESS HINGES ON TRAINING AMERICAN WORKERS

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FORTHCOMING RULES WILL NECESSITATE CLIMATE REPORTING AND SUPPLIER VISIBILITY ACROSS THE SUPPLY CHAIN

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By Sharon Lo

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military and commercial flights, 60 maritime vessel movements, and many times more rail and truck movements providing aid worth over $27 billion in support of European allies and partners. The center of effort for US support continues to be training support to Ukraine—and equipment. As usual, things are busy. This is expected to remain the case throughout 2023. On top of this, our thoughts and prayers go out to the victims of the Türkiye/Syria earthquake.

Inflation continues to be a top concern for shippers, logistics and transportation providers, as well as the cost of capital as

As we are already a few months into 2023, it looks to be a challenging year— we are up to it! The war in Ukraine has passed the one-year mark (24 Feb 2023) and finding a short-term solution to end what has become known as, “Putin’s war of choice,” is unlikely. Meanwhile, the US has continued to supply Ukrainian forces and NDTA members in uniform and in industry have continued to deliver across challenging lanes. Per US Transportation Command (USTRANSCOM), there have been approximately 1,000 combined

SUSTAINING • All Aboard America Holdings • Holland & Knight • Signature Transportation Group • Smith Currie & Hancock LLP

interest rates have risen. Meanwhile, our Nation’s much needed focus on the Industrial Base continues to take shape as more and more questions beget actions to ensure we are not reliant on hostile actors for critical support items—material, See Pres. Corner pg. 30

SURFACE FORCE PROJECTION CONFERENCE “Achieving Surface Deployment at the Speed of War: Supporting Large Scale Operations”

May 15-18, 2023 Christopher Newport University, Newport News, VA REGISTER TODAY!

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This conference focuses on the challenges associated with deploying large military organizations through the U.S. strategic seaports, via surface transportation, while integrating and adapting to contend with the contested environment of today and tomorrow.

Join the National Defense Transportation Association (NDTA) and Christopher Newport University’s Center for American Studies (CAS) along with

the NDTA Surface Committee and Ports Subcommittee as we team with USTRANSCOM’s Military Surface Deployment and Distribution Command (SDDC), U.S. Department of Transportation’s Maritime Administration (MARAD), commercial industry and academia to find creative and innovative ways to improve deployment readiness, solve challenges and improve U.S. ability and capability to respond and operate in a global, multidomain, and contested environment.

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When you need a partner to solve your biggest problems, before they are your biggest problems.

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6 | Defense Transportation Journal | FEBRUARY 2023

WE CARRY THE THINGS THAT CARRY THE WORLD FORWARD

Building Supply Chain Resilience

By Emily Harding, Deputy Director & Senior Fellow, International Security Program, Center for Strategic & International Studies, and Harshana Ghoorhoo, Research Assistant, International Security Program, Center for Strategic & International Studies

www.ndtahq.com | 7

I

n late 2021, global supply chains were stretched to breaking point. A British parliamentary committee found that an average of one in six adults in Great Britain experienced essential food shortages in late October and 37 percent struggled to get fuel. Two months earlier, a survey found that business stock levels were the lowest they had been since 1983.

Around the same time, the port of Los Angeles was in the middle of a crisis. Ships were lined up for miles, unable to move products through the bottleneck at the port. The port’s executive director said the port had the capability to run 24 hours a day, but a shortage of truck drivers and nighttime warehouse workers prevented a nonstop schedule. He cited the tremendous challenge of getting “this entire orchestra of supply chain players to get on the same calendar.”

The Covid-19 pandemic brought the fragility of global supply chains into stark relief. A complex system of producers and suppliers collapsed under the weight of high demand, just-in-time delivery, workforce shortages, and low supply. Producers overindexed on efficiency in production and did not build enough buffer to anticipate disrupted global trade. Even the defense industrial base was not able to withstand the shocks. The Ukraine war exacerbated the situation, highlighting single-threaded suppliers and foreign control of key elements.

Shocks will never be completely foreseeable or preventable. Instead, government and industry should focus on resilience, or maximizing quick recovery from disruptions. The White House’s Executive Order on Supply Chain Security (EO 14107) said “more resilient supply chains are secure and diverse—facilitating greater domestic production, a range of supply, built-in redundancies, adequate stockpiles, safe and secure digital networks, and a world-class American manufacturing base and workforce.” In operational terms, a resilient supply chain identifies critical nodes, anticipates likely disruptions to minimize strategic surprise, creates buffers 8 | Defense Transportation Journal | FEBRUARY 2023

or alternatives for those nodes, and adjusts to recover quickly from a disruption.

SUPPLY CHAIN CHALLENGES

A supply chain crisis is not any one problem; instead, it results from a combination of poor visibility that hampers planning, a narrowing of a pipeline that creates focused risk, and then a shock that throws the system off the rails.

Poor Visibility into a Deep Supply Chain

Visibility risk is at the core of supply chain vulnerability. Without complete insight into the spreading web of suppliers, there is always a risk that an unforeseen disruption will derail production. However,

Shocks will never be completely foreseeable or preventable. Instead, government and industry should focus on resilience, or maximizing quick recovery from disruptions.

modern supply chains have so many layers that constrained time and research resources prevent full visibility.

Prime suppliers often trust that their subcontractors are monitoring their own supply chain, when sometimes critical components slip through the cracks. Companies may not know when an adversary or competitor acquires a sub-subcontractor, or the chain of custody for a critical widget might be obscured. The Department of Defense (DOD) suffers from this problem much like any other consumer. DOD relies on contracts with prime contractors and expects those primes to manage their own supply chains, but too often that has proven to be a misplaced trust.

While DOD once conducted its own supply chain security evaluations, that capability has atrophied over time as

Congress sought to shift the burden onto contractors to verify their own work. As a result, DOD officials are now grappling with how to evaluate layered risk. One interviewee said that there are excellent software tools that can map the many layers of the supply chain, but none of those tools describe the capacity of production within each production line or identify which systems use the same sub-tier suppliers. In other words, if Prime Contractor A understands their supply chain, and Prime Contractor B understands their supply chain, but A and B are unaware they are both drawing on Subcontractor C, the capacity and resilience of the supply chain is actually more fragile than A and B might assume.

Rules designed to protect proprietary information also contribute to blind spots in the supply chain, according to our interviews. Each prime should rightfully expect their intellectual property (IP) to be protected, but that protection obscures information relevant for risk assessments and restricts some data from access. For example, to populate supply chain management tools, DOD needs to get approval from each contractor to access proprietary data. Further, DOD cannot use contractors to pull together this data, because that might open the door to industrial espionage, leading to workforce shortages.

Narrow Pipeline Creates Focused Risk

Focused risk happens when a supply chain narrows to a single source or single location that can be disabled by a shock event.

For example, a critical facility or transportation route could be in the path of a tsunami, terrorist violence could imperil a key rail line, political instability could displace a workforce, or a public health emergency could lead to an extended lockdown.

Foreign dependence aggravates focused risk in supply chains, with Taiwan’s nearmonopoly on advanced semiconductors being a prime example of concentrated risk. A conflict over Taiwan would cut off

global access to about 90 percent of highend semiconductors. Any conflict in the Pacific would lead to massive disruptions to a range of supplies; China controls 87 percent of the market for permanent magnets, which are used in the manufacturing of electric vehicle motors, electronics, wind turbines, and defense systems. The United States is still dependent on China

for rare earth and other minerals, critical to goods from consumer electronics to weapons systems.

Shocks Happen

The diagram above is far from a comprehensive list of shocks, but it illustrates some of the most common causes for supply chain disruptions.

GETTING TO TRUE RESILIENCE

A mindset of resilience means assuming disruptions will occur and planning for a rapid recovery to acceptable functionality.

Entities should approach resilience in three steps: First, improve visibility to minimize blind spots in the supply chain.

Second, identify potential shocks and evaluate which ones are most likely and most www.ndtahq.com | 9

Containers are stacked on a ship at dock in the Port of Los Angeles. From mid-2021 into 2022, the port experienced a crisis with ships lined up for miles, unable to move products through the bottleneck at the port.

Photo courtesy the Port of Los Angeles.

disruptive. Third, create contingency plans and buffers for the most critical, vulnerable portions of the supply chain.

Step 1: Improve Visibility to Minimize Surprise.

Maximizing visibility into supply chains should always be the goal. The DOD should step up its staff resources to improve visibility into critical defense supply chains.

Further, this staff should build resilience by identifying gaps and working to match those gaps to nontraditional suppliers.

When engaging in evaluation of supply chains, entities should put a premium on constructing a diverse team of analysts.

Geographic diversity, socioeconomic diversity, and racial and gender diversity on a team can contribute to fewer blind spots. For example, a person whose family includes truck drivers and Midwesterners might understand transportation during extreme weather better than most. Immigrants and children of immigrants might provide critical insights into seasonal labor concerns and visa challenges. Assembling a team that represents a diverse set of disciplines has repeatedly been shown to result in better outcomes.

10 | Defense Transportation Journal | FEBRUARY 2023

Entities should focus on predicting and extending the lifespan of critical components to minimize urgent need. “Digital twins”—or virtual representations of realworld objects that mirror the environment and stresses on the object—are increasingly becoming the go-to industrial approach to accurately predict the operational lifespan of products to anticipate the demand cycle.

Step 2: Identify Potentials Shocks.

Entities should identify single points of failure or places where the supply chain narrows to criticality. Evaluating each critical piece for threats, like risk of environmental shock or workforce scarcity, in a rigorous way can then inform scenarios analysis and crisis production plans. Part of that rigor is a diverse team doing the analysis.

The US Government has a role to play both anticipating potential security shocks and facilitating information sharing. The Committee on Foreign Investment in the United States needs to keep evolving to identify potential threats early and create a robust support structure for industry. Further, the United States should use existing regulatory authorities and industry groups

to encourage critical infrastructure providers to conduct an in-depth, rigorous analysis of potential shocks to their systems and the challenges for recovery.

Creating a diverse workforce and talent pipeline can insulate against labor shifts.

The DOD has attempted to create geographic diversity in its pipeline, and industry is working on ways to cultivate both a cleared and uncleared workforce for added diversity. Getting a security clearance can be time consuming and a large hurdle, eliminating some potentially talented candidates who could contribute at the unclassified level. The creation of apprenticeships and embedded trade schools can also facilitate a strong pipeline of certain key skills. Some entities are creating intentional pathways to underserved communities, like the National-Geospatial Intelligence Agency’s initiatives to collaborate with the local community surrounding its new facility in North St. Louis.

Step 3: Create Buffers and Contingencies.

The simple act of rigorous evaluation and contingency planning can lay bare a previously unconsidered problem. Taking the next step to create buffers for key nodes in a supply chain can shift an event from a catastrophic shock into a temporary disruption.

DIGITAL SEED BANK

A database of information, which one participant described as a public-private digital seed bank, could stockpile plans for creating critical components. In a crisis, when current supplies cannot meet sudden and urgent demand, the government can match those plans with companies who might be well suited to shift production lines to meet the dire need. Critically, participating companies would need reassurances about protection of IP or compensation for its use.

VENDOR DIVERSIFICATION

A vendor chain that builds in diversity will more effectively create resilience.

Vendors that cover several geographic areas are insulated against environmental or security shocks; vendors that represent a variety of backgrounds and experiences will be better able to identify and anticipate developments. Entities should place a high value on a diverse supply chain as a hedge against shocks. DOD is already working to bring in new entrants to the DOD contracting market to improve diversity and innovation, but more can be done. For example, DOD’s strict requirements and complicated contracting processes can be a barrier to entry for smaller businesses, so elements of the department are working with potential contractors to discover the biggest cost drivers and adjust or eliminate them. Since the economic incentives that pushed production of key parts overseas still exist, DOD is also looking for ways to incentivize onshoring or friend-shoring using existing regulatory authority.

STRATEGIC STOCKPILING

While big pieces of equipment are impractical to stockpile, the most critical, or most likely to break, components of those pieces could be stored. For example, rather than store an entire generator, utilities can store the elements of their existing generators that are most prone to failure. Additive manufacturing can be a flexible and costeffective alternative for some parts, providing a bridge capacity for creating those critical parts until regular supply chain mechanisms have recovered.

CREATE A DIVERSIFIED WORKFORCE PIPELINE

Government should create a national imperative for bolstering industrial skills, such as encouraging trade apprenticeships; Industry could partner with unions, which have proven proficient at retraining and upskilling. In order to sustain their diversified workforce, companies also need to take steps to promote inclusivity. Social inequalities present an underlying challenge both to creating a robust pipeline into the

The Department of Defense completed a one-year assessment of supply chains in the defense industrial base (DIB), in response to President Biden’s February 2021 Executive Order (E.O.) 14017. The report provides a strategic assessment of five critical supply chain areas: Kinetic capabilities, energy storage and batteries, castings and forgings, microelectronics, and strategic and critical materials. The report also identifies four strategic enablers which underpin the four key focus areas: workforce, cyber posture, manufacturing, and small business. Graphic and information by the Office of the Assistant Secretary of Defense for Industrial Base Policy.

defense industry and to growing a diverse array of potential suppliers.

NEARSHORING AND FRIENDSHORING

Companies should carefully evaluate which key parts need to be located within friendly territory, for reasons ranging from counterintelligence concerns to human rights violations to a dependable justice system for resolving disputes. Coordinating with allies and partners for secure manufacturing of precursors is critical. The G7 could be a vehicle for this coordination, given its flexibility, decades of experience working through economic challenges, inclusion of key US allies, and high-level coordination mechanisms. As one workshop participant said, “The challenge in operational resilience is fundamentally an international game.”

CONCLUSION

As the conversation on supply chains builds renewed urgency, EO 14017 has laid a sol-

id foundation for continued steps toward resilience. The 100-day follow-on report to EO 14017 said “America’s approach to resilient supply chains must build on our nation’s greatest strengths—our unrivaled innovation ecosystem, our people, our vast ethnic, racial, and regional diversity, our small and medium-sized businesses, and our strong relationships with allies and partners who share our values.” Innovation drawing on these strengths is the surest path to true resilience. DTJ

This commentary was produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary.

CSIS does not take specific policy positions.

Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

Impact of Constrained Lithium Supply to the US Defense Industrial Base

By Lt Col Paul Frantz, USAF, Student, Seminar 13, The Dwight D. Eisenhower School for National Security and Resource Strategy, National Defense University

The views expressed in this paper are those of the author and do not reflect the official policy or position of the National Defense University, the of Defense, or the US Government.

12Department | Defense Transportation Journal | FEBRUARY 2023

IMPACT OF CONSTRAINED LITHIUM SUPPLY TO THE US DEFENSE INDUSTRIAL BASE

Over the last twenty years, lithium (periodic symbol: Li) has evolved into a critical material for the US Defense Industrial Base (DIB). Uses for lithium within the DIB and the US economy continue to expand. The increasing reliance on lithium is readily apparent to casual observers. However, the fragility of the world’s lithium supply chain remains more challenging to perceive. Over the last decade, the lithium supply has lagged behind demand across the market. With regard to national security, how lithium limits the surge capacity of the DIB is particularly concerning. The negative impact on the DIB’s surge capacity is not a forecasted problem; instead, it is a present and worsening problem. Policymakers should view risk to the DIB and national security as unacceptable. US policies and corresponding strategies must quickly evolve to address the ongoing and projected challenge to the lithium supply chain and the associated negative impact on DIB surge capacity.

BACKGROUND – WHAT LITHIUM IS / HOW IT WORKS / SUPPLY CHAIN HISTORY

Scientists identified lithium as a distinct alkali metal element in the year 1817. However, the use of the new metal proved difficult as it did not respond to conventional electrolysis—the process used to isolate and separate some metal elements found in the natural environment.1 It was not until the latter half of the nineteenth century that scientists were able to isolate lithium through extreme heating paired with electrolysis.2 From this point forward, lithium received use in a wide range of applications—most of which have emerged in the postindustrial era.

Figure 1. Lithium supply and demand disconnect.5

Figure 2. Lithium price in China from January 2017 through March 2022.7 www.ndtahq.com | 13

Figure 3. Global EV sales February 2011 – February 2022.8

Lithium’s innate resistance to regular electrolysis remains key to the material’s usefulness. At room temperature, lithium is stable and does not easily break down when exposed to a sustained electrical charge. Lithium is also much lighter than most alkali metals. The combined features of resistance to deterioration, conductivity, and low weight relative to mass have made lithium an attractive material for batteries.

As uses for lithium expanded during the twentieth century, supply generally kept pace. However, lithium’s supply and demand profile evolved in the twenty-first century. Demand has increased exponentially with improved battery technology and expanded product applications, including significant growth in telecommunications, transportation, and power storage.

Various forms of lithium receive use across a wide range of commercial applications, including high-end manufacturing alloys, medicine, ceramics, and air conditioning.3 However, over the last fifteen years, batteries have consumed most of the world’s lithium supply. Presently, battery production consumes 65% of the lithium market, with most production occurring in China. The balance of raw lithium usage spreads across the following sectors: ceramics and glass – 18%, lubricating greases – 5%, polymer production – 3%, continuous casting mold flux powders – 3%, air conditioning equipment – 1%, small scale/niche uses – 5%.4 Global demand for lithium remains on track for tremendous growth in the coming years. The next three to five years, in particular, promise to be especially challenging.

14 | Defense Transportation Journal | FEBRUARY 2023

The chart at figure 1 depicts the severity of the lithium supply problem. The black line within the chart depicts current and forecasted market demand. Yellow bars speak to proven production, while blue depicts additional forecasted production.

The shades of blue indicate degrees of risk – dark blue bars have solid footing, while lighter shades of blue indicate increased risk concerning production and availability.

Until recently, lithium production has kept pace with rapidly expanding demand in the market. However, due to COVID-19 related impacts on market behavior, lithium supply temporarily surpassed demand—this resulted in a tapering of global production, a dramatic price drop, and a (false) sense of confidence. The surplus lithium supply has now been exhausted, and production has not ramped up sufficiently to meet current demand.

The spot price for lithium is now at an alltime high and almost 500% higher than last year. The present problem is challenging enough, but it pales compared to projected supply problems over the next three to five years. Furthermore, problems over the next ten to fifteen years may prove disastrous without change across the market.

The chart at figure 2 depicts the Chinese market price of lithium over the last five years. The chart is depicted in Yuan as most lithium component manufacturing occurs in China.6 Over the last decade, especially in the last five years, commercial sector demand for lithium has advanced primarily through global Electric Vehicle (EV) sales.

Figure 3 depicts global EV sales through

the last ten years. Despite the challenges of the COVID-19 global pandemic, 2021 proved to be a banner year for the electric auto industry.

LITHIUM AND THE DEFENSE INDUSTRIAL BASE

As with commercial demand, defenserelated lithium requirements have steadily increased over the last twenty years. However, the need for lithium within the defense sector will, in all likelihood, expand sharply over the next five years. Should a conflict with a peer or near-peer competitor occur, the gap between supply and demand may reach new extremes.

Along with extensive use in batteries, lithium enables several additional capabilities within the defense sector. Examples include alloys used in steel armor plating, combat-rated impact glass, and several polymers needed for aerospace, cyber, nautical, and space-related hardware.9 Lithium-related demand within the defense sector is poised to grow sharply in the near term. Two defense requirement categories will drive this change; these are (1) autonomous vehicles and (2) microgrids.

Lithium applies to several other defenserelated requirements. However, these two misunderstood categories likely provide the strongest demand signal.

Autonomous and remotely piloted vehicles are becoming more and more prevalent across the battlefield environment. This new breed of weapon systems participates in the air, land, sea, and space domains. Paired with artificial intelligence and advanced algorithms, new au-

tonomous and semi-autonomous weapons systems continue to push the character of warfare into new directions. Within the ongoing war in Ukraine, remotely piloted aircraft like the Turkish-made Bayraktar Tactical Unmanned Aerial System have proved decisive. As with other unmanned weapons systems receiving operational use during the ongoing conflict, the Bayraktar relies on relatively lightweight, long-lasting lithium-ion batteries for propulsion and to supply power to on-board avionics, communications, and combat systems.10 Lithium-based power supplies enable extended battlefield loitering times while exposing a relatively slim operational profile. The light footprint and low heat signature of the Bayraktar make it resistant to conventional anti-aircraft and detection systems.

In addition to having success in Ukraine, the Bayraktar also proved effective in Syria and the recent Armenia-Azerbaijan war.

Air-based autonomous and semi-autonomous weapons systems have taken the spotlight in recent conflicts. However, lithiumpowered capabilities are abundant across the other physical warfighting domains.

Space-based systems have long relied on lithium-ion batteries paired with solar panels. Space capabilities have been pivotal to the American way of war since the first Persian Gulf War. Unsurprisingly, space-based systems have become more capable with improvements in computing hardware and software fueled by top-end lithium-ion battery systems.

Lithium-enabled weapons have taken center stage in space and cyber domains.

However, the same level of impact will soon occur in the land and sea domains. Lithium-ion battery-enabled robot combat systems like the Army’s Ripsaw autonomous combat vehicle and the Navy’s Snakehead Large Displacement Unmanned Undersea Vehicle (LDUUV) have reached the initial stages of operational fielding.11 These systems, and others like them, may prove decisive in future conflicts.

Weapons systems that function at or near the front line typically receive the most attention within defense circles.14 However, one of the essential capabilities

Figure 4 – Textron Ripsaw Combat Vehicle.12

Figure 5 - Snakehead LDUUV.13

enabled by lithium batteries includes the opportunity to construct power supply microgrids. Independent microgrids reduce and eliminate the risk associated with large power production sites. Microgrids gather and store power provided by conventional generator farms, solar panels, wind turbines, or other forms of renewable power production. In forward combat areas, microgrids enable operational resilience and reduce risk by creating the opportunity to disperse both power production and power supply. This spreading of assets makes for a much harder target.

In addition to the capability provided to forward war fighters, microgrids offer the opportunity for exceptional resiliency to

the civilian sector—both in times of peace and in times of war. Microgrids have the potential to significantly limit the negative impacts from natural disasters and manmade disasters—such as a precision deep strike attack against a large power plant.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG)

While lithium offers tremendous environmental benefits by reducing—and potentially eliminating—the need for carbon-based energy, the material also offers particular environmental challenges.

Extracting lithium typically involves largescale strip mines and significant quantities of water. Additionally, some skeptics have www.ndtahq.com | 15

As supply and demand challenges across the lithium industry grow, the need for intelligent policies also increases. The US must take care in setting governance practices that enable optimal outcomes.

Supply and demand must be assured, but the environment must also be protected.

More lithium is needed, but failure to halt climate change is its own challenging national security problem.20 POLICY & STRATEGY

Aerial view of the lithium mine of Silver Peak, Nevada, California, USA.

asserted that lithium is difficult to recycle and may create as many problems as it solves.15 However, the accelerating rate of global climate change may prove to be a forcing function for lithium technologies and the policies that guide the industry.

More than 95% of lithium extraction occurs in four countries: Australia, Chile, China, and Argentina.16 These countries increased lithium production in each of the last five years. However, supply continues to fall short of demand. Prospects for the long term are even worse. Planned mine expansions do not come close to forecasted requirements.

Despite the aforementioned difficulties, some hope is available regarding lithium production. A tremendous surge in lithium surveying activity is underway globally. This multipronged survey effort has achieved success and will likely continue to achieve success. New and expanded lithium reserves are being revealed on an almost daily basis.

As a whole, known sources for lithium have increased by more than three times over the last three years.17 However, the efficacy of these new sites remains unproven. Further exploration and proof must occur.

Increased lithium production has advanced innovation within the mining industry. Conventional lithium extraction requires 500,000 gallons of water per ton of useable material. However, new extrac16 | Defense Transportation Journal | FEBRUARY 2023

tion techniques may enable this number to drop to almost zero.18 While getting to zero water use may ultimately prove unreasonable relevant to the associated costs, other innovations offer more in the near term.

Recent research at the University of Texas hints at the potential for a low-cost method

Most lithium processing occurs in China, particularly most high-end lithium processing. The lack of diversification in lithium processing presents a substantive challenge to US security.

of removing lithium from contaminated water.19 If proven and fielded, this new method could transform the industry.

While the distribution of lithium reserves continues to grow, the global economy’s ability to process lithium remains constrained. Most lithium processing occurs in China, particularly most high-end lithium processing. The lack of diversification in lithium processing presents a substantive challenge to US security. New processing capabilities are emerging globally. However, to date, these new sites are relatively inconsequential.

The world has changed significantly over the last twenty years—and more change is on the way. US interests benefit when national-level policies and strategies orient on the present rather than the past. However, US interests benefit the most when policies and strategies focus on both the present and the future. Currently, US policies and strategies are wholly unfocused on current and future requirements relevant to the global lithium supply. Additionally, the US approach to policy and strategy should consider both near-term and longterm needs. The US must continuously reassess and update policy and strategy to ensure optimal outcomes in concert with this approach.

For the near term, the US should embrace three strategic lines of effort. First, the US should set policies to enable a sizable strategic stockpile of lithium. A strategic stockpile will enable the US to ride out market fluctuations more easily. Additionally, the US will be more resilient to market denial events (i.e., an event where the US is cut off from the world lithium supply by an aggressive actor or by a natural disaster). In addition to creating a strategic stockpile, the US must increase domestic production of lithium. Doing so will further reduce the risk to US interests.

Finally, the US must accelerate research and development to find alternative materials to compete against and potentially outperform the current lithium-based battery market in the near term. US-funded research could enable new and separate energy storage options. Alternatively, USfunded research into energy storage technology could help make better lithium

batteries—configurations requiring less lithium while providing more power.

Over the long term, the US needs to consider two lines of effort. The first is that the US must ensure that it possesses a vertically integrated lithium industry capability. Presently, no such capability exists. The US has minimal mining capacity, limited processing capacity (refining lithium into useable material), and minimal component production capacity (battery production). The US must reduce strategic risk by building and sustaining a domestic capability. The second long-term approach includes attention to US allies and key partners. Assuring that allies and partners have reliable access to lithium will reduce risk to US interest. The US way of national security relies on healthy alliances. Insecure US allies makes for an insecure US. CONCLUSION

Lithium, which economists increasingly refer to as ‘the new oil,’ remains a vital resource for the US, our allies, and our strategic competitors. Modern economies, and the militaries that defend them, cannot function without stable access to lithium-enabled products. World lithium production tripled from 2011 to 2021, mainly due to production increases from China and Australia. Projections for the next ten years indicate that lithium demand will increase between seven-fold and twelve-fold. Consequently, production increases may prove insufficient for projected demand. As with oil in the 20th century, disconnects between the supply and demand of lithium may drive international behavior in the 21st century [i.e., Paraguay-Bolivia 1932, Japan-US 1941, Iraq-Kuwait 1990, etc.].

Australia, a US ally, holds the largest lithium reserve, which reduces risk to US interests. Large lithium reserves exist in several parts of South America, further reducing the risk to US interests. However, risks offset by new lithium mines in South America rebound due to the same countries having joined China’s Belt and Road Initiative (BRI). Regarding Australia, the tyranny of distance and proximity to Chi-

na adds risk, especially in the event of a shooting war involving world powers.

How lithium limits the surge capacity of the DIB is particularly concerning. The negative impact on the DIB’s surge capacity is a present and worsening problem that will degrade further before it can improve.

Policymakers should view risk to the DIB and national security as unacceptable. US policies and corresponding strategies must quickly evolve to address the ongoing and projected challenge to the lithium supply chain and its associated negative impact on US interests. DTJ 1.

Royal Society of Chemistry, “Lithium Fact Page,” ROS.com, available at: https:// www.rsc.org/periodic-table/element/3/ lithium#:~:text=Lithium%20is%20rare%20 in%20the,lithium%20minerals%20to%20 be%20discovered 2. Ibid.

3. Douwe Draaisma, “Lithium: the gripping history of a psychiatric success story,” Nature, August 26, 2019, https://www.nature.com/ articles/d41586-019-02480-0 4. Office of the Secretary of Energy, “National Blueprint for Lithium Batteries – 2021-2030,” Department of Energy, June 2021, https:// www.energy.gov/sites/default/files/2021-06/ FCAB%20National%20Blueprint%20 Lithium%20Batteries%200621_0.pdf 5. US Security & Exchange Commission, “Chemical Plat PFS Demonstrates Exceptional Economics and Optionality of USA Location,” SEC, May 26, 2020, https://www.sec.gov/Archives/edgar/ data/1728205/000172820520000018/ex99_1.htm 6. China’s domination of the lithium market is currently in decline. Most industrial countries are in the processes of expanding lithium component manufacturing. While China’s volume of production as not declined, its overall market share continues to decrease.

7. Annie Lee, “The Battery Metal Really Worrying China Is Lithium, Not Nickel,” Bloomberg, April 4, 2022 https://www.bloomberg.com/ news/articles/2022-04-04/the-battery-metalreally-worrying-china-is-lithium-not-nickel 8. Argonne National Laboratory, “Light Duty Electric Drive Vehicles Monthly Sales Updates,” November 2019, Argonne National Lab website, https://www.anl.gov/es/light-dutyelectric-drive-vehicles-monthly-sales-updates 9. Defense uses 10. Naval-Technology webpage, “Bayraktar Tactical Unmanned Aerial System,” NavalTechnology. com, January 11, 2015, https://www.navaltechnology.com/projects/bayraktar-tactical-

unmanned-aerial-system/ 11. Todd South, “Soldier will test Army’s new robotic combat vehicle in 2022,” Army Times, December 21, 2021, https://www.armytimes. com/news/your-army/2021/12/21/soldiers-willtest-armys-new-robotic-combat-vehicle-in-2022/ and Amit Malewar, “U.S. Navy showcases its new Snakehead unmanned submarine,” Inceptivemind.com, February 21, 2022, https:// www.inceptivemind.com/us-navy-showcasessnakehead-unmanned-submarine/23396/ 12. Textron Systems, “M5 Information page,” Textron Systems, accessed April 4, 2022, https://www.textronsystems.com/products/m5 13. https://www.navalnews.com/navalnews/2022/02/u-s-navy-christens-firstsnakehead-lduuv-prototype/ 14. Front line = Forward Line of Troops [ref. concepts described in Army Publication 3 & Joint Publication 3] 15. IER, “The Environmental Impact of Lithium Batteries,” Institute for Energy Research, November 12, 2020, https://www. instituteforenergyresearch.org/renewable/ the-environmental-impact-of-lithiumbatteries/#:~:text=The%20lithium%20 extraction%20process%20uses%20a%20lot%20 of,and%20pump%20salty%2C%20mineral-rich%20brine%20to%20the%20surface.

16. Vladimir Basov, “The world’s largest lithium producing countries in 2021 – report,” Kitco. com, February 1, 2022, https://www.kitco.com/ news/2022-02-01/Global-lithium-productionup-21-in-2021-as-Australia-solidifies-its-toplithium-producer-status.html 17. M. Garside, “Lithium mine production worldwide form 2010 to 2021,” Statistia, 2022, https://www.statista.com/ statistics/606684/world-production-oflithium/#:~:text=Lithium%20mines%20 produced%20an%20estimated,was%20 just%2028%2C100%20metric%20tons.

18. Robin Bolton, “Lithium mining is booming – here’s how to manage its impact,” GreenBiz, August 11,2021, https://www.greenbiz.com/ article/lithium-mining-booming-heres-howmanage-its-impact 19. UT News, “New Way to Pull Lithium from Water Could Increase Supply, Efficiency,” University of Texas at Austin, September 08, 2021, https://news.utexas.edu/2021/09/08/ new-way-to-pull-lithium-from-water-couldincrease-supply-efficiency/ 20. Flavelle et al., “Climate Change Poses a Widening Threat to National Security,” New York Times, November 1, 2021, https://www.nytimes.com/2021/10/21/ climate/climate-change-national-security. html#:~:text=Intelligence%20and%20 defense%20agencies%20issued,between%20 countries%20and%20spur%20migration. www.ndtahq.com | 17

Department of Defense Strategy Aims to Support Critical Facet of Defense Industrial Base

18 | Defense Transportation Journal | FEBRUARY 2023

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he United States faces unprecpanies that did business with DOD. One ness prime contracting goal for the past edented national security and high-profile example is Moderna, a former eight years, the number of small businesses economic challenges. Strategic small business and Defense Advanced Reparticipating in the defense industrial base competitors seek to displace search Projects Agency (DARPA) grant rehas declined by over 40 percent in the past the US military as the world’s cipient that produced millions of mRNA decade. Over time, a decline in the number preeminent force, the COVID-19 pandemic vaccines to help fight the COVID-19 globof small businesses participating in defense and impacts from climate change have exal pandemic. Without small businesses, the acquisitions will lead to a reduction of inposed fragility in critical supply chains, and vital engine of growth for the United States novative concepts, capabilities, quality of consolidation in the defense marketplace has industrial base would cease to exist. service and increased acquisition costs. undermined the competition and innovation needed to provide the best systems, technolSMALL BUSINESS CHALLENGES DOD ACTIONS & INITIATIVES ogies, services, and products to support the Despite their importance to the DepartThrough recognizing these vulnerabilities warfighter. These vulnerabilities especially ment, small businesses face various obstanow, the Department can respond with threaten capital-strapped small businesses, cles in helping DOD meet its challenges. targeted initiatives that leverage diverse which represent a majority of small business suppliers prime- and sub-tier defense to strengthen our domessuppliers. As part of its eftic supply chains, reduce “Small businesses help ensure that our military has the very best forts to support this critical reliance on single or sole facet of the industry, the Desources of supply, and help capabilities to keep us safe. Some of the most innovative minds partment of Defense (DOD) ensure the United States in the country come from smaller companies, and in an era of has released its Small Busicontinues to lead in instrategic competition small businesses are one of our greatest tools. ness Strategy. This Strategy novation. By adjusting to Despite their significance to the defense mission, the Department of outlines strategic objectives macroeconomic trends and that will enable the DOD understanding that the DeDefense has yet to utilize the full potential of small businesses,” read to expand and strengthen partment must take action a message by Secretary of Defense Lloyd J. Austin III. “This Small its relationship with small to encourage more small Business Strategy outlines a Department-wide plan to harness the businesses and better leverbusinesses to work with power of America’s small, innovative, and agile companies and grow age their capabilities to help the Department, DOD solve the Department’s and can implement appropriate their contributions to the defense mission.” strategies to expand use of our Nation’s most complex small businesses. challenges.

Increasing small busiTHE IMPORTANCE OF Regulations and business practices can be ness participation in defense acquisitions is SMALL BUSINESSES difficult to understand or otherwise create critical. Expanding participation will keep It is imperative for the Department to focus barriers or increase the cost of doing busiDOD at the forefront of innovation, while on small business. These innovative companess with DOD. Larger, better-resourced simultaneously fostering increased compenies account for 43 percent of all high-tech companies are better able to navigate these tition that can reduce costs for high qualjobs in the US and generate sixteen times obstacles and address these costs than ity capabilities. It will also ensure that the more patents than large firms. Small busismaller businesses. Some of these barriDepartment continues to leverage the unnesses spur innovation, represent most new ers include confusing points of entry into tapped potential of disadvantaged-, womentrants into the Defense Industrial Base defense markets, improper bundling and en-, and veteran-owned small businesses (DIB), and through their growth repreconsolidating of contracts, and underthat have historically been underutilized. sent the next generation of suppliers with As the Department aims to maintain the standing complex regulations. These barincreasingly diverse capabilities. Small busitechnological edge, small businesses are key. riers strain the relationship between the nesses are agile and often can implement These small business efforts are a critiDepartment and small businesses. change more quickly than larger firms. cal part of implementing the Department’s In combination with economic condiIn Fiscal Year (FY) 2021, small businesses broader industrial base priorities, which ditions leading to a consolidating DIB, these made up 73 percent of all companies that rectly support and align with the priorities of barriers have contributed to a reduction of did business with DOD and 77 percent of the President. These priorities include ensursmall businesses in the DIB. Although the the research and development (R&D) coming robust domestic capacity and capabiliDepartment has achieved its small busiwww.ndtahq.com | 19

ties to meet our national security challenges, promoting competition in the procurement process to benefit from improved costs, performance, and innovation, and advancing equity and inclusion in defense acquisition to leverage the unique talent and ideas that come from diverse communities from across the country. Success of implementing these priorities relies on small businesses being drivers to generate these outcomes.

DOD’S SMALL BUSINESS STRATEGY

The Department of Defense built its Small Business Strategy around three strategic objectives. First, improve management practices by sharing best practices and creating efficiencies across the enterprise for small business activities and programs. Second, ensuring that small business activities within DOD better support national security priorities. And third, strengthening the Department’s ability to engage and support small businesses. Implementing this strategy will make the DIB more innovative, resilient, and effective, producing a Joint Force that is better equipped to execute its mission.

The strategy heavily relies on the Department’s own continued push for excellence. Numerous existing small business initiatives have made incredible progress in addressing these issues. For example, the Department of the Air Force’s Open Topic Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) Programs have successfully brought first time applicants into the DOD. This strategy seeks to uncover similar pockets of excellence, share best practices, develop policy, distribute guidance, and establish initiatives, as appropriate, to continue to accelerate the Department’s ability to partner with and benefit from America’s small business base.

STRATEGIC OBJECTIVE 1: Implement a Unified Management Approach for Small Business Programs and Activities

The Department’s small business programs, activities, and workforce are distributed across the Military Services, Defense Agencies, and field activities (DOD Components), including Components of the Office of the Secretary of Defense (OSD).

This distribution, although beneficial in some areas, also often leads to confusion for small businesses as to what the entry points are, how programs and initiatives connect to each other, and how a small business can or 20 | Defense Transportation Journal | FEBRUARY 2023

should utilize DOD’s various small business programs to mature their capabilities from prototype to full-scale integration or to diversify the goods and services they provide to DOD. To address these issues, DOD will develop and implement a unified management structure for DOD small business programs and activities, develop a unified small business professional workforce, and streamline entry points, and improve small business access to decision makers.1 STRATEGIC OBJECTIVE 2: Ensure the Department’s Small Business Activities Align with National Security Priorities

National security concerns are a primary force guiding the Department’s military and defense objectives. Accordingly, national security concerns should guide the Department’s activities with respect to the small business industrial base. To build enduring advantages and get the technology we need more quickly, DOD must have access to a healthy small business industrial base with broad capabilities to produce parts and systems, secure supply chains, and access

To address these issues, DOD will develop and implement a unified management structure for DOD small business programs and activities, develop a unified small business professional workforce, and streamline entry points, and improve small business access to decision makers.

a skilled workforce. Presidential executive orders to promote competition,2 foster supply chain resiliency,3 and advance equity4 also put small business at the nexus of the nation’s economic and national security priorities. Attending to commercial trends is critical, as today’s innovative companies have many choices for capital, are not reliant on defense spending, and, therefore, have other options for how to do business.

These trends may lead to adverse incentives that inhibit the Department’s ability to access America’s most innovative minds, and potentially impacting DOD’s ability to achieve national defense priorities. The Department must, therefore, take action to en-

tice small businesses into the defense marketplace, while simultaneously taking into account their commercial growth objectives.

The Department will ensure small business activities are carried out to further national defense priorities through efforts to stabilize and scale existing programs that help small technology and manufacturing businesses deliver capabilities to the warfighter, utilize data tools to understand and expand small business participation and spending, and expand policy and process engagement of small business professionals and senior leaders on small business matters.

STRATEGIC OBJECTIVE 3: Strengthen the Department’s Engagement and Support of Small Businesses

For the Department to effectively support small businesses, DOD must improve its ability to meaningfully engage with small businesses including firms from critical socioeconomic categories and underserved communities. The Department must also ensure that its operational and acquisition leadership continues to recognize the abilities of small business to support the defense mission, and that small businesses can understand and access the Department’s most current initiatives, efforts, and policies. Furthermore, DOD should provide training and other resources to help educate small businesses and enhance their ability to resist cyber threats, IP infringement, and foreign ownership, control, or influence. These efforts help reduce the vulnerability of the DOD’s supply chain. The Department will advance these efforts through strategies to improve outreach and communication with small businesses, provide cybersecurity training and resources to small businesses, and educate small businesses. DTJ 1

2 3 4

Section 4901 of title 10, United States Code (U.S.C.); Section 861(b) of the William M. (Mac) Thornberry National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Public Law 116-283); Department of Defense Instruction (DoDI) 4205.01 “DoD Small Business Programs (SBP)” (August 2018); DoDI 5134.04 “Director of Small Business Programs (SBP)” (December 2017).

Executive Order (E.O.) 14036 “Promoting Competition in the American Economy” (July 2021).

E.O. 14017 “America’s Supply Chains” (February 2021).

E.O. 13985 “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government” (January 2021).

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22 | Defense Transportation Journal | FEBRUARY 2023

Bringing Manufacturing Back to the US Requires Political Will, But Success Hinges on Training American Workers

By Amitrajeet A. Batabyal, Distinguished Professor, Arthur J. Gosnell Professor of Economics, & Interim Head, Department of Sustainability, Rochester Institute of Technology for The Conversation

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upply chain disruptions during COVID-19 brought to light how interdependent nations are when it comes to manufacturing. The inability of the US to produce such needed goods as test kits and personal protective equipment during the pandemic revealed our vulnerabilities as a nation. China’s rise as a global production superpower has further underscored the weaknesses of American manufacturing.

In addition to fixing supply chain disruptions, bringing manufacturing back to the US will benefit national security. Advanced computer chips, for example, are disproportionately made by a single firm, the Taiwan Semiconductor Manufacturing Co. These microchips are critical to smartphones, medical devices and selfdriving cars, as well as military technology. TSMC, from a US national security perspective, is located too close to China. Taiwan’s proximity to China makes it vulnerable because the Chinese government threatens to use force to unify Taiwan with the mainland.

My research and that of others examines how the lack of manufacturing competitiveness in the US leaves the US vulnerable to shortages of critical goods during times of geopolitical disruption and global competition. The strategies the US employs in bringing back manufacturing, along with innovative practices, will be key to ensure national security.

STRENGTHENING NATIONAL SECURITY

President Joe Biden has signed two bills that propose to rebuild American manufacturing. The CHIPS and Science Act of 2022 will provide US$52.7 billion for American semiconductor research, development, manufacturing and workforce development.

The Inflation Reduction Act of 2022 will invest $369 billion to promote a clean energy economy, in part by offering generous incentives for US-made electric cars.

Training workers for new advanced manufacturing is another key factor in strengthening a sector that has become increasingly reliant on technology. In fact, while the number of jobs in American manufacturing fell by 25% after 2000, manufacturing output did not decline. Still, American manufacturing is facing a massive shortage of labor, especially among those workers with skills needed to power a new generation of manufacturing. www.ndtahq.com | 23

This need to train a new group of skilled workers explains why federal funds in the CHIPS Act are set aside for workforce development. Complementing federal legislation are programs such as America’s Cutting Edge, a national initiative that provides free online and in-person training designed to meet the growing need in the US machining and machine tool industry for skilled operators, engineers and designers.

THE POWER OF INNOVATION

It is impractical to bring all manufacturing back to the US. Offshoring is often less expensive. But research shows that certain types of in-country manufacturing can not only help secure national security but also spark innovation.

When research and development (R&D) are conducted close to where the goods are physically made, this proximity can increase the likelihood of collaboration between these two activities. Collaboration can lead to greater efficiencies.

Product development can benefit as well. New research demonstrates that US firms that located their manufacturing and R&D physically close to each other generated more patents than firms that did not.

Even so, the contribution of US manufacturing firms to innovation declined greatly between 1977 and 2016. That’s because the benefits of locating manufacturing and R&D close to each other depends on the nature of the manufacturing itself, researchers have found.

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If firms choose to relocate their companies to benefit from the synergy of R&D, then they must be able to attract the best human resource talent available. This is where US investment can help build a more skilled workforce.

For instance, the design of new drugs often requires manufacturing facilities to be located nearby. In that respect, co-locating manufacturing and research and development makes sense. This can be true for semiconductors as well. World-class chip manufacturers in Taiwan, such as TSMC, are located alongside a growing chip design industry, which permits designers to prototype and test new ideas quickly.

The US and other countries are betting on the same potential benefits from colocation. For instance, to minimize the dependence on TSMC and, more generally, on foreign sources for chips, the European Union is spending 43 billion euros, while Japan is encouraging chip manufacturing at home with a $6.8 billion investment.

PEOPLE ARE THE BOTTOM LINE

In a 2011 op-ed, I argued that while federal legislation to promote US manufacturing could succeed in bringing more

manufacturing back to the US, there was no guarantee that large numbers of jobs would be created—a key point made by those seeking to promote manufacturing.

Governments are generally poor at picking winning technologies and industries.

Governmental mistakes in picking supposedly winning industries or sectors have, generally, led to a great deal of waste of taxpayer dollars.

In fact, market forces and informed company decisions should, I believe, play a larger role picking winners than federal investment. Where that investment comes from, what it supports, and how much money is needed are critical questions.

If firms choose to relocate their companies to benefit from the synergy of R&D, then they must be able to attract the best human resource talent available. This is where US investment can help build a more skilled workforce.

As pointed out by the economist Gary Pisano, many policymakers in the US have long believed that manufacturing is an attractive sector for people with less education and training. Therefore, as a nation, we have not devoted many resources to train people with specialized skills in manufacturing.

This approach stands in stark contrast to the approach followed in Germany. There, practical work is valued by employers and employees and hence apprenticeship programs are routinely used to train workers who are well qualified to work in the manufacturing sector. While the US approach is changing with recently announced investment by the White House through the CHIPS and the Inflation Reduction acts, more is needed.

It is my belief that if the US is to remain an economic powerhouse, then corporations should not separate their workforce, sending cost-saving manufacturing offshore while retaining the innovators. Corporations like Apple have sent nearly all of their production offshore, retaining only the most skilled parts of the supply chain involving activities like R&D. Instead, the US needs to financially support firms wishing to bring manufacturing back by making it easier for such firms to find qualified manufacturing workers at home—and close to innovators when practical. This effort will bolster the US’s ability to be self-sufficient, innovative and secure in times of geopolitical conflicts. DTJ

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Forthcoming Rules Will Necessitate Climate Reporting and Supplier Visibility Across the Supply Chain

By Sharon Lo, Managing Editor, DTJ & The Source

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he importance of environmental, social, and governance (ESG) reporting has increased rapidly in recent years as public expectations shift and these performance measures influence investors’ decisionmaking. According to McKinsey, as of 2019, global sustainable investment topped $30 trillion. This amount constituted a 68% increase since 2014 and a tenfold increase since 2004.1 But, despite increases in interest and investments in ESG, measurement and reporting standards are inconsistent.

To that end, this past May the Securities and Exchange Commission (SEC) released proposed amendments to rules and reporting forms that aimed to “promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of environmental, social, and governance (ESG) factors.”

In short, the SEC will require publicly traded companies to report their total emissions and standardize the metrics by which the reporting is done. But, as we have seen time and time again over the last few years, the interconnected nature of supply chains means that these changes will be felt by companies large and small, across the supply chain, publicly traded or not.

There are three categories of emissions—Scope 1, 2, and 3. Scope 1 are the Green House Gas (GHG) emissions a company makes directly, such

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What is ESG?

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nvironmental: includes issues focused on climate risks, carbon emissions, energy efficiency, use of natural resources, pollution and biodiversity

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ocial: includes issues focused on human capital, labor regulations, diversity, DEI, safety, human rights and community involvement

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overnance: includes issues focused on board diversity, corruption and bribery, business ethics, compensation policies and general risk tolerance 3

as emissions that occur from running boilers at company-owned facilities or fuel used by company-owned vehicles.

Scope 2 covers emissions a company makes indirectly, so emissions that are generated when a company purchases electricity, steam, heat, or cooling from a utility company.

Scope 3 emissions include all emissions associated, not with the company itself, but that the organization is indirectly responsible for, up and down its value chain. This includes tasks such as buying products from suppliers and from products when customers

use them. For many businesses, Scope 3 can account for more than 70% of their carbon footprint.2 Scope 1 and 2 emissions, by and large, can be controlled, tracked, and reported by the company itself. To report Scope 3 emissions companies will have to report on emissions data on the operations and supply chains of their suppliers. This is a daunting task—especially if the company faces penalties or liability for reporting on something so widely out of its control.

Originally these rules were set to take effect as early as March of 2023.

Currently, the SEC is still reviewing public comments and the rules will likely not go into effect until April or perhaps even later. In the interim, companies large and small, publicly traded or not should prepare. And not just for this particular change. This is just one of many instances where sustainability and supplier visibility are shifting from trends to imperatives for those in industry. DTJ 1

2

3

McKinsey & Company. (2023, January 30).

What is ESG? Retrieved from McKinsey. com: www.mckinsey.com/featured-insights/ mckinsey-explainers/what-is-esg Deloitte. (2023, January 30). Scope 1, 2 and 3 emissions What you need to know.

Retrieved from deloitte.com: https:// www2.deloitte.com/uk/en/focus/climatechange/zero-in-on-scope-1-2-and-3emissions.html Ernst & Young. (2023, January 30). ESG Reporting. Retrieved from ey.com: www.ey.com/en_us/esg-reporting

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CHAIRMAN’S CIRCLE

These corporations are a distinctive group of NDTA Members who, through their generous support of the Association, have dedicated themselves to supporting an expansion of NDTA programs to benefit our members and defense transportation preparedness.

AAR CORP. AAT Carriers, Inc. Agility Defense & Government Services Air Transport Services Group (ATSG) AIT Worldwide Logistics, Inc. ALARA Logistics Amazon American President Lines, LLC American Roll-on Roll-off Carrier (ARC) Amtrak Atlas Air Worldwide Holdings Bennett C5MI Carlile Transportation Systems, LLC Cervello Global Corporation CGI Federal Chapman Freeborn Airchartering, Inc. Construction Helicopters, Inc. (d/b/a CHI Aviation) Crane Worldwide Logistics, LLC Crowley Deloitte DHL Express Enterprise Holdings FedEx

Freeman Holdings Group Hapag-Lloyd USA, LLC International Auto Logistics Kalitta Air LLC Landstar System, Inc. Liberty Global Logistics Maersk Line, Limited Matson Microsoft Federal National Air Cargo Omni Air International, LLC Patriot Maritime Reify Solutions, LLC Salesforce SAP Schuyler Line Navigation Company LLC Sixt rent a car Southwest Airlines The Pasha Group TOTE Group Tri-State Motor Transit Co. United Airlines US Ocean, LLC Waterman Logistics

PRESIDENT’S CIRCLE AEG Fuels Air Charter Service American Maritime Partnership Amerijet International, Inc. Berry Aviation, Inc. BNSF Railway Boeing Company Boyle Transportation Bristol Associates Choice Hotels Coleman Worldwide Moving 28 | Defense Transportation Journal | FEBRUARY 2023

CSX Transportation CWTSatoTravel EASE Logistics Echo Global Logistics, Inc. Ernst & Young Global Logistics Providers LLC ICAT Logistics KGL Leidos National Air Carrier Association Norfolk Southern Corporation

SAP Concur Sealift, Inc. Sonesta International Hotels Corporation Telesto Group LLC The Port of Virginia Transportation Institute U.S. Bank Union Pacific Railroad Western Global Airlines Wyndham Hotels & Resorts, Inc.

HONOR ROLL SUSTAINING MEMBERS REGIONAL PATRONS OF

AND

ALL OF THESE FIRMS SUPPORT THE PURPOSES AND OBJECTIVES OF NDTA

SUSTAINING MEMBERS 3Sixty Able Freight Accenture Federal Services Admiral Merchants Motor Freight, Inc. Alacran All Aboard America Holdings American Bureau of Shipping American Maritime Officers American Trucking Associations Apex Logistics International Inc. ArcBest Army & Air Force Exchange Service Arven Services, LLC ATS Specialized, Inc. Avis Budget Group Baggett Transportation Company Beltway Transportation Service Benchmarking Partners, Inc. Bolloré Logistics BWH Hotel Group Cornerstone Systems, Inc. Council for Logistics Research Cypress International, Inc. Delta Air Lines Drury Hotels LLC Duluth Travel, Inc. (DTI) EMO Trans, Inc. Estes Forwarding Worldwide Eyre Bus Service, Inc. FSI Defense, A FlightSafety International Company GeoDecisions Global Secure Shipping Green Valley Transportation Corp.

Guidehouse Hilton Worldwide Hyatt Hotels IHG Army Hotels Intermodal Association of North America (IANA) REGIONAL PATRONS ACME Truck Line, Inc. Amyx Atlas World Group International C5T Corporation CakeBoxx Technologies, LLC CarrierDrive LLC Cartwright International Columbia Helicopters, Inc.

International Association of Movers International Longshoremen’s Association (ILA), AFL-CIO Interstate Moving | Relocation | Logistics Jacksonville Port Authority (JAXPORT) K&L Trailer Sales and Leasing Kansas City Southern Railway Company Keystone Shipping Co. LMI Marine Engineers’ Beneficial Association Martin Logistics Incorporated Mayflower Transit McCollister’s Global Services, Inc. Mercer Transportation Company mLINQS National Charter Bus National Corporate Housing, Inc. National Industries for the Blind (NIB) National Motor Freight Traffic Association, Inc. National Van Lines, Inc. Nika Corporate Housing Northern Air Cargo, LLC Omega World Travel One Network Enterprises, Inc. ORBCOMM PD Systems, Inc. Perfect Logistics, LLC Pilot Freight Services Placemakr Plateau GRP PODS Enterprises LLC Port of Beaumont Port of Corpus Christi Authority Port of San Diego Ports America Prestera Trucking, Inc. Procharter Prosponsive Logistics PTS Worldwide Radiant Global Logistics

Dalko Resources, Inc. Enterprise Management Systems HLI Government Services JAS Forwarding John D. Odegard School of Aerospace Sciences Kalitta Charters, LLC Lineage Logistics LMJ International Logistics, LLC Lynden, Inc.

Ramar Transportation, Inc. Rampart Aviation Red Roof Inn Sabre SAIC Savi SeaCube Containers Seafarers International Union of NA, AGLIW SEKO Logistics Selsi International Inc. Signature Transportation Group Smith Currie & Hancock LLP SSA Marine St. Louis Union Station Hotel a Curio Hotel Collection by Hilton StarForce National Corporation Stevens Global Logistics, Inc. Swan Transportation Services The DeWitt Companies The Flight Lab Aviation Consulting LLC The Hertz Corporation The Suddath Companies TLR – Total Logistics Resource, Inc. TMM, Inc. Toll Group Trailer Bridge Transport Investments, Inc. Transportation Intermediaries Assn. (TIA) Travelport Trinity Shipping Company TTX Company Tucker Company Worldwide, Inc. U.S. Premier Locations Uber for Business UNCOMN United Van Lines, Inc. UPS US1 Logistics Women In Trucking Association, Inc. World Fuel Services – Defense Solutions Yellow Corporation

Move One Logistics NovaVision, LLC Overdrive Logistics, Inc. PITT OHIO Port Canaveral Port of Port Arthur Priority Worldwide Seatac Marine Services TechGuard Security Trans Global Logistics Europe GmbH

UNIVERSITIES Critical Infrastructure Resilience Institute – University of Illinois at Urbana-Champaign McKendree University

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Cont’d from President’s Corner pg. 5 labor, funding. Manufacturers are more interested than ever and may be required to validate subvendor supplier information down six or more levels to ensure the efficacy of manufacturing materials and pedigree. More scrutiny and laws will surely follow regarding foreign investments

We have a new Jobs Board where participating companies are directing you to their hiring sites. We hope this brings additional networking value to our membership. Give us your feedback!

in these areas—including land and other critical infrastructure industries. A reset in the relationship with China will likely take some time and significant political policy breakthroughs.

In 2023, NDTA will remain engaged to educate logisticians and leaders about

issues related to and impacting transportation and logistics. These issues involve “nuts and bolts” matters such as base access and manning needed to operate vessels and financial matters. Also, Joint “theater support” continues to be a focus in exercises throughout the world—to include the defense of our homeland. Our educational programs will continue to “tee up” important discussions, matters and objectives related to the transportation and logistics military and commercial industrial base. This aspect of the overall US industrial base is a key enabler to our nation’s economy and national security.

Mark your calendar—we have a few great engagement opportunities on the horizon! GovTravels (Feb/March), the Surface Force Projection Conference (May) and the 2023 NDTA-USTRANSCOM Fall Meeting (October). The Fall Meeting with USTRANSCOM as co-host will be held in Orlando, Florida, this year. Expect to see some engagement with our ally and partner nations!

Check out a few new items on the NDTA website. We have posted the 2022 Fall Meeting videos. I recommend these

for their outstanding insights, education and professional development value. Also, we have a new Jobs Board where participating companies are directing you to their hiring sites. We hope this brings additional networking value to our membership.

Give us your feedback!

Lastly, I encourage local chapters to continue to meet and draw in new members.

NDTA has much to provide young logisticians, transporters and those working functions such as contracting and finance!

If there is anything I can do to help in this regard, please let me know.

By land, by sea, by air, by space we move!

DTJ INDEX OF ADVERTISERS American President Lines, LLC................................ 25 American Roll-on Roll-off Carrier (ARC).....................2 Bennett Motor Express, LLC..................................... 21 Crowley Logistics, Inc..................................................6 FedEx Government Services.................................... 32 Landstar Transportation Logistics, Inc.................... 31

MAKE AN IMPACT WITH NDTA Join the National Defense Transportation Association’s global association of transportation, logistics and passenger travel professionals.

Experience competitive benefits, rewarding professional development courses, exciting networking opportunities, and create a strong, efficient transportation system for the United States.

JOIN TODAY at ndtahq.com 30 | Defense Transportation Journal | FEBRUARY 2023

THE LANDSTAR ADVANTAGE A RECOGNIZED INDUSTRY LEADER, LANDSTAR PROVIDES SAFE, SECURE, RELIABLE TRANSPORTATION SERVICES DELIVERED BY OUR UNIQUE NETWORK OF INDEPENDENT AGENTS AND CAPACITY PROVIDERS. • One of the industry’s largest van and platform selections with over 102,000 truck capacity providers in network

• Specialty trailers ranging from beam, blade and Schnabels to double drop, stretch and multi-axles

• Expedited cargo vans, straight trucks and tractor-trailers

• Secure, dedicated government services with more than 325 AA&E secret cleared teams

• 18,000 pieces of trailing equipment • 11,800+ owner-operators leased to Landstar with over 1,100 stepdecks and 1,100 flatbed trailers

• Hazmat certified owner-operators • Unit moves with onsite carrier representative

• Drop and hook services

Look to Landstar for safe, on-time, claim-free capacity.

Landstar System, Inc., 13410 Sutton Park Dr. South, Jacksonville, FL 32224 | 800-443-6808 LandstarGotSvcs@landstar.com | www.landstar.com www.linkedin.com/company/Landstar

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The road to success may be different for everyone.

At FedEx, we understand what it takes to deliver when it counts.

We salute those with the drive to never stop pushing forward.

32 | Defense Transportation Journal | FEBRUARY 2023

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