The steel frame of the Francis Scott Key Bridge sits atop the container ship Dali after the bridge collapse, Baltimore, Maryland, March 26, 2024.
Robert Schmidt Afp | Getty Images
Logistics companies up and down the East Coast relayed urgent messages back and forth to customers Tuesday about the status of their imports and exports after the Port of Baltimore closed in response to the collapse of the city’s Francis Scott Key Bridge. A major rescue effort was underway Tuesday morning.
“Our first priority is to engage customers to make plans for containers originally destined for Baltimore that will be unloaded at other East Coast ports,” explained Paul Brashier, vice president of transportation and intermodal for ITS Logistics.
“These diverted volumes will impact the ports of New York/New Jersey, Norfolk and the Southeast, and we need to prepare transportation and transshipment capacity to bring this cargo into the intended network,” Brassier said.
The 10,000 container ship Dali was en route from the Port of Baltimore early Tuesday, bound for Colombo, Sri Lanka, when it collided with a bridge pillar. At the time of the collision, the vessel had two pilots from the Port of Baltimore.
The steel frame of the Francis Scott Key Bridge lies in the water after it collapsed in Baltimore, Maryland, on March 26, 2024.
Robert Schmidt Afp | Getty Images
“The immediate impact is with the cargo on board and its accessibility. Other scheduled shipments through Baltimore will likely be rerouted, possibly increasing the flow of cargo to New York, Norfolk and nearby ports,” said Goetz Alebrand, senior vice president and head of ocean. freight to America at DHL Global Forwarding. “Baltimore-dependent bulk and car carriers must evaluate flights in the event of an extended closure.”
More than 52 million tons of foreign cargo worth about $80 billion moved through the port last year, according to Maryland Gov. Wes Moore (D). The nation’s eleventh-largest port, Baltimore handled an average of 207 calls a month last year, according to shipping magazine Lloyd’s List.
Cars were affected
The Port of Baltimore is the leading US port for the import and export of automobiles and light trucks, as well as wheeled agricultural vehicles and construction machinery. Last year, the port handled 847,158 cars and light trucks, according to port data.
2023 was the thirteenth consecutive year that Baltimore led US ports in importing cars and light trucks. Other top imports include sugar and gypsum.
BYD electric cars waiting to be loaded onto a ship are seen stacked at the Taicang Port International Container Terminal in Suzhou, east China’s Jiangsu Province on February 8, 2024.
STR | AFP | Getty Images
Starting with trade, $23 billion of the port’s total imports of $55.2 billion in 2023 were cars and light trucks. About $4.8 billion of the port’s exports were motor vehicles.
“Since Baltimore is primarily a roll-on/roll-off port, this disruption should create potential flatbed volumes from other ports on the East Coast,” said D’Andrae Larry, Uber’s head of intermodal Freight.
After the collapse, Larry said, the bridge and port will likely be out of service for months, forcing shipments to be diverted first to the ports of New York and New Jersey, followed by Norfolk, Virginia.
“Customers will be looking for solutions for their freight that typically goes through Maryland, the mid-Atlantic, the upper Midwest and New England,” he said. “There are fewer combined transportation options in Baltimore, but shippers can now turn to intermodal transportation for domestic movement as an alternative.”
Diversions
Retailers like it Home goods storeBob furniture, IKEA, and Amazon are just some of the companies that use the port to import goods. Other top imports include sugar and gypsum.
“This will have an impact on trade across the East Coast and will continue until we know how quickly” the port can reopen, said Richard Meade, editor-in-chief of shipping magazine Lloyd’s List.
Ships were already diverted to New York and Virginia on Tuesday, Mead said. “There will be dozens of diversions next week and hundreds over the next few months as long as Baltimore is closed.”
A traffic warning sign is displayed on Route 95 after a freighter collided with the Francis Scott Key Bridge causing it to collapse on March 26, 2024 in Northeastern Maryland.
Kena Betancur | Getty Images
There could also be disruptions to gasoline availability in the Baltimore area as some ethanol is imported by barge and rail.
“Gasoline shipped from Gulf Coast refineries by pipeline is blended with 10% ethanol, which is delivered to the Baltimore area via train and barge,” said Andy Lipow, president of Lipow Oil Associates. “The oil industry will have to find alternative supply routes for barge deliveries that in the short term can be covered by trucks from Philadelphia.”
Lipow said supplies of jet fuel and diesel would likely not be affected. However, these diversions will create additional costs in both shipping and trucking once the rerouting is complete.
“It’s going to be expensive, but it’s not a supply chain story like EverGiven (which was stuck in the Suez Canal) because carriers will find alternate routes,” Meade said. “Logistically, carriers and trucks have the ability to be quite adaptable and flexible.”
Dali was chartered by Maerskwhich issued a customer alert on Tuesday.
“It will not be possible to reach the Helen Delich Bentley Port of Baltimore at this time. Accordingly, we are skipping Baltimore on all our services for the foreseeable future until it is deemed safe to transit through that area.” the company said.
“For cargo already in the water, we will skip the port and discharge the entire Baltimore-bound cargo at nearby ports. Please note that for cargo to be discharged in Baltimore, there may be delays as they will have to be discharged at other ports,” Maersk’s advisory said.
exporters
If exporters choose not to wait until the waterway reopens, they could face increased truck and rail fees if volumes are moved by truck or rail to alternative ports such as Norfolk or New York/New Jersey, said Judah Levine , head of research for Freightos.
Top exports from Baltimore include coal, natural gas, aerospace components, construction machinery, agricultural components and soybeans.
“The Baltimore bridge collapse primarily affects coal exports from the CNX and CSX terminals,” said Madeleine Overgaard, dry market data manager for global trade data platform Kpler. “Furthermore, imports of gypsum and sugar into the port of Baltimore will be stopped.”
“The alternate ports will also be used for import arrivals,” said Freightos’ Levine. “They should be able to handle the extra volumes, although the rerouting could lead to congestion or delays for importers, potentially affecting fares on the Asia-US East Coast and transatlantic routes.”
Early cost estimates
Asia-US shipping rates on the East Coast are already up, due to diversions away from the Red Sea following months of Houthi attacks on international shipping vessels.
An aerial view shows the cargo ship Dali after it struck and collapsed on the Francis Scott Key Bridge on March 26, 2024 in Baltimore, Maryland.
Tasos Katopodis | Getty Images
However, they have fallen from their peak as demand has waned and airlines have made adjustments for longer journeys. As of Tuesday, transatlantic prices were about even with 2019 levels at around $1,659/FEU (forty equivalent units).
While trade is nimble and will reroute, in the long run, the bridge will need to be built and rebuilt from foundations, and that will take years.
“It will be over two years,” said Meade, of Lloyd’s List. “There will be significant disruption and cost to this infrastructure project. In 1977 the bridge cost $60 million. Inflation and the rapid pace of redesign and construction will increase procurement premiums. This will be a very expensive project.”
Dali is insured by Britannia Steam Ship Insurance and operated by charter company Synergy Group. The ship is owned by Great Ocean Investment.
“The insurance of the Britannia Steam Ship is mutual [protection and indemnity group] which means the risks are concentrated by the industry,” said Meade.
“Britannia will be responsible for the first $10 million. Collectively, the overflow goes into the pooling mechanism from the industry and then there’s reinsurance,” Meade said.