The Critical Challenge of Titanium Shortages in MRO Supply Chains

The aerospace and aviation industries have been fighting unprecedented supply chain challenges in recent years, and one of the biggest problems has been the shortage of titanium. This shortage has sent a significant shockwave through the Maintenance, Repair, and Overhaul (MRO) sector, creating a dire need for agile supply chain solutions to counteract the impact. Toma Matutyte, CEO of Locatory.com, a leading aircraft parts locator in the aviation aftermarket, shares insights on the reasons behind the titanium shortage, the consequences it has brought, and the potential solutions that MROs must adopt to navigate this challenging landscape.

The Role of Ukraine in Titanium Production

To understand the titanium shortage, it is essential to recognize Ukraine's historical significance as one of the largest producers of titanium in the world. Ukraine's rich titanium resources, particularly the deposits located in the Zaporizhia region, have played a crucial role in global supply. However, the annexation of Crimea by Russia and the war in Ukraine have disrupted this supply chain.

While Ukraine itself does not manufacture metallic titanium or its finished products, the country exports titanium concentrates, which are subsequently processed and utilized in various nations. Throughout the conflict, the Ukrainian state-owned United Mining and Chemical Company (UMCC Titanium) managed to export a substantial 82.2 thousand tons of titanium-containing ores between July 2022 and April 2023. Reports from KyivPost and other investigations carried out by Ukrainian and Western media outlined that a notable portion of these shipments ultimately reached Russia.

The world's most significant titanium producer, the Russian VSMPO-Avisma Corporation, has historically depended on Ukrainian raw materials and continues to do so. Investigators have raised alarms, as VSMPO-Avisma's products are widely used in global aerospace production.

Russia was a significant supplier of titanium to both Boeing and Airbus before the war. Boeing even had established a joint venture with VSMPO-AVISMA, a part of Rostec, a Russian government-owned industrial and defense conglomerate. As recently as November 2021, just three months before the war began, Boeing and VSMPO-AVISMA had extended and expanded their collaboration, with approximately one-third of Boeing's titanium coming from Russia.

In Airbus's case, their reliance on Russian titanium supplies was even more substantial. While they didn't have a joint venture like Boeing, it's estimated that they sourced about half of their required titanium from Russia. However, the war has brought about a significant change.

To illustrate the gravity of the titanium shortage issue, according to KPMG's Aerospace & Defence Outlook 2023, titanium shortages have been identified as one of the top supply chain concerns in the aerospace industry. The Oliver Wyman Global Fleet and MRO Market Forecast Update 2022 report highlighted that the demand for titanium in aviation is expected to grow steadily, with no signs of slowing down.

Meanwhile, AviationPros reported that US aviation supply chain challenges, including parts shortages and rising costs, are partly attributed to the titanium shortage. Ukraine's titanium production has been severely impacted by the Russian invasion leading to a decline in exports and a tightening of global titanium supply. This disruption has had far-reaching consequences, as titanium is a vital material in aerospace manufacturing, known for its exceptional strength-to-weight ratio, corrosion resistance, and high-temperature stability. As CFRP (Carbon Fiber Reinforced Plastic) is becoming more widely used in the production of airframe and engine components, global demand for titanium used in aerospace manufacturing is also rising as the metal is perfectly compatible with CFRP when it comes to coefficient of thermal expansion and even corrosiveness.

In addition to airframe components, titanium alloys find application in modern aircraft engines, including turbofan motors, which power the majority of the world's most popular commercial aircraft. Titanium plays a critical role in the production of key engine components, such as the fan, compressor, combustion chamber, and turbine.

Ukraine's titanium production has decreased significantly, contributing to a global titanium production decrease of approximately 12% over the last five years, as per the Oliver Wyman Global Fleet and MRO Market Forecast Update 2022. The shortage has led to a sharp increase in titanium prices. AviationPros puts down that rising costs are one of the factors pressuring the aviation supply chain, with titanium being a major contributor to these cost escalations.

Numerous indicators suggest that the biggest aerospace manufacturers, like Boeing, Airbus or Embraer were making earnest efforts to reduce its reliance on Russian suppliers ever since the invasion began and even before the majority of Western sanctions on Russian exports were applied. Nonetheless, as challenging as it was already, additional issues were piling up ever since. While Russia stands as the world's third-largest titanium producer, lagging behind China and Japan in terms of material output, it had held the position of the primary supplier of aerospace-grade titanium, contributing to half of the world's aerospace titanium prior to 2022.

Various strategies are being considered to address this issue. One possible solution is to procure titanium from China, which overtook Russia as the world's foremost titanium producer many years ago. However, this approach still presents challenges, as China's titanium production is steadily increasing, and it would essentially shift the West's titanium dependency to another nation.

The shortage has resulted in delays and disruptions in the production of critical aerospace components, impacting aircraft manufacturing and maintenance schedules. ‘MROs are experiencing resource crunches, with access to sufficient titanium materials becoming increasingly difficult. This directly affects their ability to repair and maintain aircraft.

Agile Supply Chain Management As Solutions for MROs

In the face of these challenges, MROs must adopt agile supply chain strategies to mitigate the impact of titanium shortages’ – explains Matutytė. Acknowledging the current state of the MRO industry, outlines the following strategies to offset supply chain risk in MRO.

1. Diversify Suppliers: Reduce dependence on a single source of afterparts by diversifying suppliers and exploring alternative sources. Collaboration with global suppliers is vital to ensure a stable supply of titanium parts.
2. Strategic Stockpiling: Maintain strategic stockpiles of critical titanium compounded materials and parts, to buffer against supply disruptions. This ensures a consistent flow of materials even during shortages.
3. Advanced Forecasting: Utilize advanced forecasting tools and data analytics to predict and plan for material shortages, enabling proactive responses rather than reactive measures.
4. Technology Adoption: Embrace innovative technologies, such as 3D printing and advanced composite materials, as potential substitutes for titanium in certain applications, reducing dependency on traditional materials.
5. Collaborative Partnerships: Foster collaborative partnerships within the aerospace and aviation industry to collectively address supply chain challenges and share best practices.

The titanium shortage, exacerbated by disruptions in Ukraine's production, has presented a formidable challenge to the MRO sector and the broader aerospace and aviation industries. As highlighted by key statistics, the consequences of this shortage are far-reaching, impacting production, costs, and resource availability. Locatory.com as part of the Avia Solutions Group family, the world’s largest ACMI (Aircraft, Crew, Maintenance, and Insurance) provider will continue to deliver solutions in the competitive aviation aftermarket landscape. To navigate this turbulent landscape, MROs must be agile in their supply chain management. Diversifying suppliers, stockpiling critical materials, and embracing innovative technologies are essential steps toward ensuring resilience in the face of ongoing titanium shortages. Collaborative efforts within the industry will play a pivotal role in finding sustainable solutions to this supply chain crisis. By doing so, the aviation industry can continue to soar, even in the face of titanium scarcity.