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March 28, 2024

Baltimore Bridge Collapse: How Will It Impact Supply Chain and Shipping Industry?

Baltimore Bridge Collapse

The catastrophic collapse of the Francis Scott Key Bridge in Baltimore has dealt a severe blow to a major supply chain hub, crippling the operations of the Baltimore port and creating a ripple effect across various industries. The tragedy has forced cargo to be rerouted, creating logistical challenges for industries like – automotive, agriculture, and energy. This incident compounds the existing supply chain woes caused by the recent conflict in the Red Sea and drought conditions in the Panama Canal, further straining global trade networks. 

What Happened? 

The Baltimore bridge collapse occurred around 1:30 a.m. on Tuesday, March 26, when the 985-foot-long (300-meter-long) cargo ship Dali collided with one of the supports of the 1.6-mile (2.6-kilometer) Francis Scott Key Bridge in Baltimore, Maryland. The bridge span broke and collapsed into the water within seconds, causing a tremendous tragedy and significant disruption to the region’s transportation and supply chain infrastructure. 

What is the Impact on Supply Chain and Economy? 

The collapse of the Francis Scott Key Bridge has had an impact on the region’s supply chain and economy, creating a logistical nightmare that is expected to persist for months or even years. 

Baltimore Bridge Collapse

Port Operations and Exports 

In 2023, Baltimore claimed the 9th spot among the largest U.S. ports for international cargo, managing a remarkable 52.3 million tons valued at $80.8 billion. 

Automotive Industry Impact 

According to data from the Maryland Port Administration, the Port of Baltimore is the most active port in the United States for car shipments, managing a minimum of 750,000 vehicles in 2023. Motor vehicles and parts constituted 42 percent of all imports at the Baltimore port.  

The Port of Baltimore stands as a pivotal East Coast centre for shipping, managing both imports and exports for leading automotive giants like Nissan, Toyota, General Motors, Volvo, Jaguar Land Rover, and Volkswagen. This includes the transportation of luxury models from Audi, Lamborghini, and Bentley.  

Strategic Location for Freight 

The port serves as a vital freight hub due to its strategic location, situated within an overnight drive from two-thirds of the U.S. population and boasting closer proximity to the Midwest than any other East Coast port. 

Disruption to Distribution Warehouses 

The distribution warehouses operated by companies such as Amazon and FedEx, situated at the Port of Baltimore, are anticipated to face operational disruptions due to the bridge collapse. 

Agricultural and Construction Machinery Exports 

Last year, it stood as the largest U.S. port by volume for handling farm and construction machinery, alongside agricultural products, with imports of agricultural products totalling 3 million tonnes. 

Coal Exports 

In the initial nine months of 2023, Baltimore ranked as the second-largest port for U.S. coal exports, trailing behind Norfolk, Virginia. It exported approximately 20.3 million short tons of coal, encompassing both steam coal and metallurgical coal. 

Transportation Disruption 

Commuter and Cargo Traffic Snarl 

The bridge served as a vital transportation link, with an estimated 30,000 Marylanders commuting across it daily. The collapse has effectively halted ship traffic at the Port of Baltimore, a significant shipping hub, causing congestion in both cargo and commuter traffic across the region. 

Rerouting of Trucks and Additional Costs 

According to the American Trucking Association, an estimated 4,900 trucks per day, transporting an annual average value of $28 billion worth of goods, would need to be rerouted. This rerouting is expected to incur substantial additional costs for shippers and, ultimately, consumers. 

How are Shipping Companies Responding? 

Force Majeure Declarations 

Following the bridge collapse, numerous major ocean carriers have invoked “force majeure,” notifying logistics firms and U.S. shippers, including retailers, that upon cargo delivery at alternative ports, it becomes their responsibility to arrange for pickup. CMA CGM, COSCO, and Evergreen have all announced that their services will effectively terminate once diverted containers arrive at alternate ports. 

Maersk’s Commitment to Transportation 

Maersk, on the other hand, has committed to providing transportation from nearby ports to the final destination, acknowledging the fluidity of the situation and the need for ongoing customer advisories. 

Maersk’s advisory on the incident read, “Due to the damage and resulting debris from the tragic incident, it is currently not possible to reach the Helen Delich Bentley Port of Baltimore. 

Therefore, at this time, no new bookings into or out of the Port of Baltimore will be accepted. However, we will continue to offer options through alternate USEC ports. We will also continue to provide Store Door service to and from Baltimore and surrounding areas.”  

Economic Impact and Reactions 

Prolonged Supply Chain Impact 

U.S. Secretary of Transportation Pete Buttigieg acknowledged that this incident would have “a major and protracted impact on supply chains,” with no immediate estimates available for the time required to clear the channel and reopen the port. 

Increased Volume at Nearby Ports 

Lars Jensen predicts that nearby ports, such as those in New York-New Jersey and the Port of Virginia in Norfolk, will experience an average 10% increase in volume due to the diversion of cargo from Baltimore. This surge in volume is likely to lead to bottlenecks and increased costs, further exacerbating the strain on supply chains. 

Calls for Resilience and Preparedness 

The incident has highlighted the fragility of infrastructure and the critical need for resilience in supply chain operations. Industry leaders have emphasized the importance of robust risk management, contingency planning, diversified routing options, and the integration of real-time tracking and analytics to mitigate the impacts of unforeseen events. 

“Collapse of the Francis Scott Key Bridge in Baltimore is a stark reminder of the fragility of our infrastructure and the critical need for resilience in the face of unexpected events. As we navigate the aftermath, we are reminded that the container logistics industry centres around the critical need for robust risk management and resilience in supply chain operations.” 

Conclusion 

The incident serves as a stark reminder of the vulnerabilities inherent in aging infrastructure and the need for proactive measures to enhance resilience and preparedness within supply chain networks. As the region grapples with the aftermath of this catastrophic event, collaborative efforts between government agencies, industry stakeholders, and logistics providers will be crucial in mitigating the long-term consequences and ensuring the restoration of efficient and reliable supply chain operations. 

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