Information we have from sources with Ukraine’s military shows the Russian army continues to bleed men, tanks, APCs, aircraft, artillery, and even ships and patrol boats to attacks by Ukrainian forces.

On Saturday, we have these figures of Russian losses from just the Donbas and Luhansk regions:

19 tanks,

20 armored combat vehicles,

4 special armored vehicles,

6 soft-skinned vehicles.

1 special engineering vehicle.

We do not assess that the Russians are capable of replacing these losses with their existing industrial capacity for the following reasons.

The most modern tank in the Russian arsenal is the T-14 Armata of which was supposed to go into production in 2020-21.  So far only 20 are known to be built.

The most modern tank that has gone into regular production is the T-90m, of which only a few have been seen on the battlefield.

We reported previously that the Uralvogonzavod tank production plant had shut down due to supply chain shortages and the cost of buying materials overseas when nobody will accept rubles for payment. This means it cannot assemble any of the older T-72 tanks (main tank used now) or the newer T-90m & T-14 tanks (Armata).

We also reported that the May 9th Parade will be about one-third smaller in terms of tanks and vehicles on display. This event it a major propaganda event for Russia, were it fully stocked with vehicles or even increased in size, it would be an ominous sign to the world that Russia could keep up with its losses in Ukraine.

This seems to be born out by the fact that we are not seeing new stocks of these tanks appear in Ukraine. In order to replace lost equipment, Russia is being forced to strip tanks from units stationed elsewhere in Russia or attempt to repair and refurbish derelict tanks in their boneyards. Depending on how long they have been stored and the conditions of storage, they will require seals, gaskets, electronic components and numerous other things to make them operational again.  The Russians could ease a shortage of spare parts by cannibalizing several tanks to make one operational, but this gets harder and harder to do as you proceed.

The numbers below are Ukrainian army estimates of the total losses by Russia so far in the war. In terms of ground forces alone, these losses represent the utter destruction of two entire Armored Divisions and an air force Wing of aircraft and helicopters each.

Russia is believed to have started with war with just three tank divisions in total.

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From what we have seen so far, it is beyond Russia’s ability to replace these losses and maintain their force levels for more than 3 months at the current burn rate of men and equipment.

The Supply and Demand Economics of War

Newsweek asked us yesterday what we thought the war was costing Russia each day for a story they were working on and we came up with $900 million per day. We imagine this is the approximate cost, of pay, food, fuel, bullets, equipment maintenance, and replacement costs of their daily operations.  Wars have an economy all their own.  A nation can build a pretty formidable military on paper that stays in garrison and conducts exercises once or twice a year, but when a war starts and those troops, tanks, planes, and ships start moving and fighting, the sustainment costs can be staggering.

In the Pacific theater in WWII the US built a navy so large that it outstripped our ability to supply it.  Military operations were not postponed or canceled because we didn’t have enough Marines, battleships, planes, and aircraft carriers to do the job, but for another reason.

Fuel. We just couldn’t seem to build enough tankers to supply the task forces with the oil and gasoline they consumed in enormous quantities.  The further we went into the Pacific, the further that oil and gas had to go to refill their tanks with the same amount of fuel.

Russia appears to be having this problem as well.  They cannot supply the troops they have in Ukraine right now adequately which means they can’t increase the number of troops they would need to win.

They cannot replace their losses, so they are forced to strip other units of equipment and move it by train thousands of miles to Ukraine.

The Russian army is stuck in a Logistic loop where the available supply is far less than the demand and they can’t increase the supply because they can’t sustain it once it’s built.

Russia knows this which is why there are reports that Putin wants to nationalize his economy to get it on a war footing.  That won’t work.

Forget clever tactics and lists of destroyed equipment.  Russia will lose this on the economic factors alone. They gambled on a military doctrine that a huge army could win a war in a week with the West and not have to worry about logistics and resupply inventories lasting for weeks or months.


Ukraine’s Maritime Offensive

It is little noticed in the press, but Ukraine seems to have launched a maritime offensive to gain control of the coastal waters of the Sea of Azov in the Black Sea.  In recent weeks, we have seen Ukraine destroy the cruiser Moskva and then the Frigate Makarov which will be out of the war for months if it hasn’t sunk by the time this is written.

We have seen videos of Russian landing craft and other vessels making what appear to be shuttle runs of supplies from Sevastopol naval base to various points along the Ukraine coast.  They are probably doing this because of a shortage of trucks and the general danger of using the roads when Ukraine has so many UAVs that seem to be able to operate with impunity over Russian forces.

Ukraine is now attacking these assets as well, hitting landing craft and patrol boats in recent days. The goal for Ukraine is to further the supply problems of Russia and eventually have the Sea of Azov just be too dangerous for Russia to venture into.  This would give Ukrainian jets on strike missions an open water route to targets along the coast with minimal risk of loss to surface-to-air missiles from the ground.

Turkey has closed the Bosphorus channel from the Mediterranean Sea which prevents Russia from bringing in new ships to reinforce the Black Seas Fleet as Ukraine whittles it down ship by ship. At some point, its remaining assets will have to stay in close waters of Sevastopol to protect their base or be sunk if they get within 50 miles of Ukraine’s coastline. Russia only has about a dozen surface combatant vessels in the Black Sea, and every one lost diminishes Russia’s ability to control that body of water.  The losses to the Russian navy so far probably make an amphibious landing in Odesa by Russian Marines out of the question.

If Ukrainian forces can push within ballistic missile range, Russia will find Sevastopol useless to them as a supply or naval base and have to evacuate any remaining ships they have there or see them sunk at the pier.


The Relief of Mariupol

Neither Russia nor Ukraine is making a big deal about this, but Ukrainian forces seem to be pushing to relieve the garrison still holding out in Mariupol. We see daily reports of Ukrainian troops pushing towards the ruined seaport to relieve the remaining troops fighting in and around the Azovstol Steel plant on the coast.

This facility is a huge complex of buildings and tunnels that spans 4 square miles and represents an urban combat nightmare scenario for any army trying to take it. While the Russians were able to take the outlying town by reducing it to rubble, the steel factory complex has been holding out for 74 days.

For Ukraine, the city has become a symbol of dogged resistance to the Russian invasion and will likely be studied by militaries around the world and remembered by historians as one of the greatest sieges in history.  It is also important to Russia as the only major city they can claim to have subdued, even if not fully occupied.  We have seen reports that Russian troops have cleared the rubble from the main avenue and will conduct a local May 9th Victory Day parade to try and milk some propaganda from all the losses they have taken there so far.

For President Zelensky, being able to break through to the garrison would be a major military and propaganda victory over Putin, so we believe they will try very hard to break its encirclement. We believe that the garrison is also anticipating being relieved as well, which is why they continue to fight.

It is apparent that they are also being resupplied to some extent.  We won’t speculate as to how, but point out that Russian does not control the airspace over Mariupol and the facility on the beach open to the Black Sea.