Fully armed with anti-air, anti-surface and anti-submarine weaponry, US Navy Arleigh Burke-class destroyers have been successfully intercepting Houthi missiles and uncrewed aerial vehicles in the Red Sea since late 2023.
Although successful in execution, the unsustainable economical and tactical model hides a strategic problem: hundred-billion-dollar warships are spending more than US$4 million on a single missile to defend against a drone worth a few thousand dollars.
This unbalanced cost-exchange ratio is not only a financial issue but a strategic vulnerability that has significant implications for how the United States and its allies, including Australia, need to shape their naval forces.
The maths of the Red Sea engagements is stark. An Arleigh Burke-class destroyer costs more than US$2 billion to build. US SM-2 and SM-6 missiles remain some of the finest defensive armaments against modern threats. However, deploying these interceptors against a tide of inexpensive, mass-produced Houthi drones, while effective, is not worth the cost.
The US Navy has reportedly already fired far more than 100 of these missiles in the Red Sea. Pentagon budget requests to refill these stocks show a financial strain. The US could bear such costs in a limited contingency, but such a model wouldn’t suffice in a prolonged conflict.
Due to economic asymmetry, a peer adversary such as China could use its vast industrial capacity to swarm Western forces with cheap systems, draining those forces’ limited and costly magazines. The US Navy could run the risk of being priced out of the fight before capital ships ever fire a shot.
The Red Sea experience has shown that the magazine is the most critical and limited resource of a warship. In a future Indo-Pacific contingency, if a ship were to launch a missile against a small drone, it could not fire that again at a high-performance anti-ship missile or aircraft. Deploying these high-end interceptors against low-end threats is a flawed strategy.
An enemy could deliberately employ asymmetric manoeuvres to "empty the bins" of a carrier strike group’s escorts, making these precious assets helpless in the face of a second, more sophisticated attack. The Houthis are showing that this plan will work.
A key lesson for naval planners in Washington and Canberra is that the survivability of our surface fleet will depend not only on the sophistication of its defensive systems, but also on the depth of its magazines. Their goal should be to counter massed, low-cost threats without exhausting their best weapons.
The inescapable conclusion is that reliance on a few large, exquisite, multi-mission platforms isn’t good enough in the emerging security environment. The experience in the Red Sea implies a need to shift towards a more balanced and distributed fleet architecture.
Firstly, navies need larger numbers of smaller and affordable platforms. A high-end destroyer-only force is too valuable and too scarce to use against the persistent, attrition warfare of asymmetric threats. A combination of destroyers, frigates and smaller, optionally crewed vessels would be a more adaptable and resilient force.
Navies should also consider investing in affordable defences. The most promising solution is directed energy weapons. While this technology still presents challenges that must be overcome, its development and integration into the fleet should be prioritised. Such laser weapons could invert the current unfavourable cost-exchange ratio due to their near-zero marginal cost per shot.
It is also important to have layered point-defence systems and inexpensive, shorter-range interceptors with electronic capabilities.
These lessons are relevant to key US allies, including especially Australia as it recapitalises its surface fleet. The Royal Australian Navy’s future destroyers and frigates, built for interoperability with the US, must see their final armament informed by the Red Sea experience. They need cost-effective and deep magazines, and layered defences.
Australia’s procurement of large, optionally crewed vessels brings an important opportunity to add mass and distributed firepower more cheaply.
Despite tactical achievements in the Red Sea, winning the battle but losing the war economically and industrially is not smart. The obvious takeaway is that larger, more distributed, and more affordable fleets capable of meeting the entire array of emerging threats.
Article reprinted with permission from the Australian Strategic Policy Institute's analysis and commentary site The Strategist.
