What is contested logistics?

When one considers the headlines that dominated in 2024, one of the key themes was the Houthi campaign of attacks against civilian vessels in the Red Sea. This attack resonated as yet another dire strait for global supply chains, but this flavor of disruption heralded a change in the wind among supply chain threats.

Houthi attacks illustrate one dimension of a new and emerging issue, contested logistics. The Houthi campaign illustrated constraints by a political actor against commercial actors in pursuit of a political outcome. This one dimension does not capture the whole issue of contested logistics. Contested logistics is, rather, a durable competition between parties that seek control and influence over global logistics.

According to Chris Slattery, Global Markets SME at Babel Street, global logistics is merely the strategic “high ground” for parties that seek to shape global supply chains, because every industry depends upon global logistics. Within global logistics, there is also tactical “high ground,” for example, the Suez Canal.

But to understand the problem, we must first recognize that the contest is durable and in pursuit of a strategic aim, and it is not limited to global logistics.

Who’s contesting what and why?

In our webinar on contested logistics, Nataliya Bugayova, Director of Strategic Intelligence at Babel Street, advises us that the first step in mitigating the risks of contested logistics is to define the baseline: who is contesting what and why? We must draw a clear picture of who and what is disrupting our supply chains because, as Ms. Bugayova points out, adversarial intent is acutely present in the domain of logistics.

For the U.S., the “who” of contested logistics can be found in adversarial relationships with Russia, China, Iran, and North Korea. These four countries are working to erode U.S. influence globally as well as diminish the capability of the U.S. to support its partners and allies. Regarding what is contested, Ms. Bugayoga offered the example of the Red Sea and the Northern Sea Route.

Connecting Europe and Asia via the Mediterranean and the Red Sea, the Suez Canal provides a critical trade route for global supply chains. But recent Houthi attacks on shipping disrupted the logistics of that trade route. Between August 2023 and August 2024, cargo ship traffic through the Suez Canal saw a 63% reduction. [1] J.P. Morgan estimates that this disruption to supply chain logistics has increased shipping costs by up to 300%. [2]

In response, companies and governments have considered taking the Northern Sea Route. The northern route also has its drawbacks. Historically inaccessible for many months of the year because of cold and ice, the Northern Sea Route from Asia to Europe has become more open because of climate change. However, Russian authorities control 70% of the route. [3]

Any ship transiting the route must obtain Russia’s permission as well as pay a fee. On top of that, adversaries of Russia may not be welcome in those waters. Supply chains have become a popular target in the global struggle for geopolitical dominance.

In fact, says Ms. Bugayova, this global struggle between the U.S. and its adversaries, carried out through contested logistics will only intensify because there’s no indication the adversarial intent will change.

The U.S. is thus left with two choices: be a passive observer of this growing trend or understand where adversaries are trying to deny the U.S. freedom of movement. Equipped with that understanding, the U.S. can not only compete but also contest.

Where to compete and contest: Foundational industries

Chris Slattery, Global Markets SME at Babel Street, observed in our webinar on contested logistics that there are foundational industries critical to the success of the U.S. economy. Examples of these industries are:

Semiconductors
Rare earth minerals
Electric vehicle batteries
Ship building
Energy

These sectors of the economy drive everything else. They are too important to permit a laissez-faire approach to supply chain logistics. Because adversaries of the U.S. are both military and economic competitors, contesting logistics is a strategy for undermining the U.S. military and its economy.

Given the impact of public policy on private sector initiatives, the panel in our webinar asked a central question: Should private companies care about government policies that affect supply chain logistics?

Why industry should care about contested logistics

Jessica McFate, Senior Director of Intelligence Operations at Babel Street, addresses this question. Industry should care about contested logistics because it is a cascading source of operational risk to every industry. If you thought COVID was bad, try a military blockade of Taiwan.

Rather than hyperbole, this scenario is realistic. China has fused its military and economic policies. The goal of Xi’s Military-Civil Fusion strategy, Ms. McFate points out, is to prosper the Chinese economy and, in turn, fund its military programs.

Chinese shipbuilders manufacture 40% of the global merchant fleet. [4] Should they succeed in selling nuclear-powered commercial vessels to global shipping companies, attractive as means to circumvent the Red Sea for longer routes, China will receive more than an economic boost.

Nuclear propulsion for aircraft carriers is the primary limiting factor prohibiting the Chinese military from executing a military blockade of Taiwan, and from there opening a blue water fleet that can remain at sea. Who would feel that impact? Every company that buys semiconductors from Taiwan Semiconductor Manufacturing Corporation (TSMC) to begin.

Together government and industry can work to effect policies that build resilient supply chains and foster economic growth. First, though, both government and business must recognize where supply chain logistics are being contested.

Using OSINT to mitigate the risk of contested logistics

To arrive at a solution that mitigates the damage done by contested logistics, we must approach the problem in terms of not just averting a crisis but also in creating opportunities. Ms. McFate argues that not only can we understand how and where logistics are being contested, we can also use our understanding of supply chains to compete. To do that, she says, you need to do three things:

Clearly see what’s true
Conduct research securely
Analyze large amounts of data to give you context

OSINT tools and techniques can meet these needs.

Ms. Bugayova offered three examples of how she and her team used Babel Street Insights, an OSINT tool, to analyze contested logistics:

The Panama Canal is a major chokepoint for shipping in the Western hemisphere. The team searched over 3 billion available documents in English, Mandarin, Spanish, and other languages to detect the presence of Chinese companies and entities in the canal zone.
The team used Babel Street Insights to search for and detect the activities of Rosatom, Russia’s atomic energy agency. Rosatom is among key companies executing the Kremlin’s plan to expand its control over the Northern Sea Route. OSINT revealed the many partnerships Rosatom maintains with corporations and other entities in Europe, Africa, and South America.
Shadow fleets are ships that operate outside of maritime regulations [5] and used primarily to circumvent sanctions. The team used OSINT to document shipping owners and managers who are part of the global shadow fleet.

OSINT yields insights that lay bare the tactics employed by adversaries to contest logistics. It also elucidates opportunities where both the public and private sectors can cooperate to advance the U.S. economy in particular, and Western norms in general.