Industry experts examine the impact of Baltimore bridge collapse on supply chains

Following yesterday’s bridge collision in Baltimore, when the 32,000-ton container ship, Dali, collided into the 1.6-mile Francis Scott Key bridge over the Patapsco River in Baltimore, causing it to collapse and stopping ship traffic at the Port of Baltimore, for an indefinite period, it has created yet another uncertain situation for supply chains.

The Dali containership was operated by AP Moeller Maersk A/S on an international route between the U.S. east coast and Asia, with the collapse blocking the main access to the port of Baltimore and trapping six bulk carriers and two navy vessels, noted S&P Global Market Intelligence.

Various reports have indicated that the current suspension of maritime traffic at the Port of Baltimore has forced supply chain stakeholders to reroute ocean transits to other ports, including the Port of Norfolk, Port of Philadelphia, and the Port of New York and New Jersey, as well as leveraging lessons learned going back to the onset of the pandemic, focusing on resilient supply chains and contingency planning, among other options.

The Port of Baltimore handled a record amount of cargo last year, making it the 11^th-biggest port in the nation ranked by total tons, and also handled a record 52.3 million tons of international cargo, valued at $80.8 billion. The port handled 847,158 autos and light trucks in 2023, representing the most of any U.S. port for the 13th straight year, according to a state of Maryland website. The port also handled large volumes of imported sugar, gypsum and coffee, as well as exported coal.

What’s more, according to San Marcos, Calif.-based lobal supply chain insights and risk analytics company Everstream Analytics, the Port of Baltimore is one of the 10 largest ports in the U.S. U.S. in terms of dollar value of cargo handled, and a critical hub for steel, aluminum, sugar, vehicles, agricultural equipment and containers. And it added that there are roughly 30-to-40 container vessels calling the Port of Baltimore every week, unloading or loading around 21,000 TEU (containers) which it said now have to be diverted to other nearby ports and unload/load cargo. 

Mirko Woitzik, Global Director of Intelligence for Everstream Analytics, said this situation will disrupt vessel schedules and strain labor and handling capacities at other ports like Philadelphia and Norfolk, leading to spill over congestion that could last months.

“Thus far, alternative ports along the US East Coast have indicated that they have the handling capacity to receive the diversions,” Woitzik told LM. “This is likely true in the short term, as East Coast ports have experienced decreased cargo volumes this year, due to global shipping challenges shifting some shipping routes to the U.S. West Coast. However, should the diversions continue long-term, there is a concern of congestion at U.S. East Coast ports amid an impending labor movement this fall. At the moment, it seems unlikely that the Port of Baltimore will be closed long enough to coincide with this.”

In terms of mitigation, or contingency, strategies port stakeholders can use, or consider, to handle cargo that was headed to or leaving the Port of Baltimore, Woitzik explained that most carriers have already decided to divert to nearby ports such as Philadelphia and Norfolk, Virginia, adding that if Philadelphia and Norfolk become congested, carriers may need to divert a bit further away to other U.S. East Coast ports.

“If cargo is bound for the Baltimore market or the surrounding area, this will mean longer delivery times as trucks will have longer transits to make, but while the Port of Baltimore remains closed indefinitely, this remains the best option for mitigating the impacts from the bridge collapse,” he said.

From a risk perspective, Woitzik said the biggest risks are to the automotive and sugar industries, both of which rely on operational continuity at the Port of Baltimore. He observed that more than 850,000 finished vehicles from companies such as General Motors, Ford, Nissan, Toyota, Volkswagen, and Honda transit through the Port of Baltimore each year.

The port is home to one of the largest sugar refineries in the U.S., owned by Domino Foods, he said, with the company relying on inbound shipments of raw materials at the port, and has indicated it has 6-to-8 weeks of raw sugar stockpiles before production will be impacted.

Chris Rogers, Research Director for S&P Global Market Intelligence, wrote in a research note that the bridge collapse is the latest challenge for northeast U.S. supply chains, including access to the Red Sea and Panama Canal, as well as the prospect of port strikes later in mid-2024.

“Both bridge reconstruction and cargo delays are likely to be extensive,” said Rogers. “However, some freight across containerized and bulk modes could reroute to nearby ports in Wilmington, Delaware and Philadelphia, Pennsylvania. The port handled around 3% of all U.S. East and Gulf coast imports and 10% of US northeast imports of containerized freight in the 12 months to Jan. 31, 2024. It is particularly important for the wood (39% of northeast ports’ imports), construction machinery (31%) and steel/aluminum (20%) sectors. Consumer goods exposures including home appliances (16%) and furniture (9%). The port is also one of the largest handlers of specialty wheeled transport shipments (cars and trucks) in the U.S., though one of the major terminals is located oceanside from the bridge and so may face less disruption.”

From an economic impact perspective, Larry Gross, president of Gross Transportation Consulting, said in a LinkedIn post that the Port of Baltimore handled about 302,000 inbound TEU in 2023. For comparison, he said that the Port of New York and New Jersey handled 2.42 million inbound TEU, with Philadelphia at 243,000 TEU, and Norfolk 929,000.

“Collectively, these alternatives handled 3.6 million TEU and the Baltimore volume represents about an additional 8.4%,” said Gross. “So, there should not be any large capacity impacts or congestion resulting from diversions from Baltimore, assuming it is reasonably spread out among these alternatives. Baltimore had 234,000 loaded export TEU in 2023. This also should be easy to absorb as the collective imbalance in the Northeast ports currently is running about 2.5 loaded inbound TEU per loaded outbound. In other words, lots of available outbound capacity. Of course, diverted cargo will incur higher dray costs which certainly could be significant for local Baltimore traffic. From what I've seen, the bigger impact will be on set-up import vehicles where Baltimore is said to be a big player.”