The Closure Of The Port Of Baltimore Due To The Collapse Of The Francis Scott Key Bridge

Tuesday saw the closure of the Port of Baltimore in the United States due to the collapse of the Francis Scott Key Bridge, prompting logistics companies up and down the East Coast to urgently inform their customers about their import and export situations. A massive rescue operation was underway Tuesday morning.

Paul Brashier, Vice President of Transportation and Intermodal at ITS Logistics, explained, "Our primary task is to collaborate with customers to plan for containers originally destined for Baltimore, which will now be unloaded at other ports along the East Coast." Brashier stated, "The diversion of cargo will affect ports in New York/New Jersey, Norfolk, and the Southeast, and we must be prepared with trucking and transshipment capabilities to transport these goods to the designated networks."

In the early hours of Tuesday, the "Dali" cargo vessel, capable of carrying 10,000 containers, collided with a bridge pillar while en route from the Port of Baltimore to Colombo, Sri Lanka. Two pilots from the Port of Baltimore were on board the vessel at the time of the collision.

"The direct impact is on the cargo on board and its accessibility. Other goods planned through Baltimore may be rerouted, potentially increasing cargo volumes at New York, Norfolk, and nearby ports," said Goetz Albrand, Senior Vice President and Head of Ocean Freight Americas at DHL Global Forwarding. "Bulk and automotive transport companies reliant on Baltimore must assess their operations in the event of a prolonged closure."

Maryland Governor Wes Moore noted that last year, the port handled over 52 million tons of foreign cargo, valued at approximately $80 billion. According to data from the shipping magazine Lloyd's List, Baltimore is the 11th largest port in the United States, averaging 207 departures per month last year.

The Port of Baltimore is the largest port in the United States for the import and export of automobiles, light trucks, wheeled agricultural vehicles, and construction machinery.

According to the port's data, last year it processed 847,158 automobiles and light trucks, marking the 13th consecutive year Baltimore led all U.S. ports in automobile and light truck imports. Other major imports include sugar and gypsum.

Trade-wise, the port's $55.2 billion in imports in 2023 included $23 billion in automobiles and light trucks. The port's exports amounted to approximately $4.8 billion in automobiles.

D'andrae Larry, Director of Intermodal at Uber Freight, mentioned, "Since Baltimore is not primarily container-centric but rather a roll-on/roll-off port, this disruption should result in increased flatbed and auto haulage volumes at other East Coast ports."

According to Larry, the collapse could halt bridge and port operations for months, forcing cargo to first be redirected to ports in New York and New Jersey, followed by Norfolk, Virginia. Other ports include those in Georgia and South Carolina.

"Customers will be looking for solutions for their freight that normally travels through Maryland, the Mid-Atlantic, the Upper Midwest, and New England. The Baltimore area has fewer intermodal options, but shippers can now turn to inland intermodal as another alternative," Larry said.

This incident is just one example of companies using the port for imports. Other major import products include sugar and gypsum.

Richard Meade, Editor of Lloyd's List, said, "This will have an impact on trade across the entire East Coast, an effect that will persist until we know how quickly the port can reopen."

According to Meade, ships were already being diverted to New York and Virginia on Tuesday. "As long as Baltimore remains closed, there will be dozens of diversions next week, and hundreds over the coming months."

Matt Cassel, Vice President of Global Forwarding at C.H. Robinson, explained that trucks entering the port area from the north should experience minimal delays. "However, for trucks entering from the south, they must use the I-95 or I-895 tunnels, or bypass the port altogether. This brings them closer to the Baltimore metro area, potentially adding an hour to their journey."

Meade remarked, "It will be costly, but not a supply chain story like Ever Given (stuck in the Suez Canal), as maritime companies will find alternative routes. In terms of logistics, the maritime and trucking industries are capable of adapting and being flexible."

The "Dali" is chartered by Maersk.

The company issued a customer advisory on Tuesday.

"It is currently not possible to reach the Helen Delich Bentley Port of Baltimore. Accordingly, we will omit Baltimore from all services for the foreseeable future, until it is deemed safe to pass through the area," the company stated.

"For cargo already at sea, we will omit the port and offload goods originally bound for Baltimore at nearby ports. Please note that goods offloaded in Baltimore may experience delays as they need to be offloaded at other ports," according to the Maersk advisory.

Energy Delays

Coal and gasoline supplies in the Baltimore area may also be disrupted, as some ethanol is transported via barge and rail.

Andy Lipow,

president of Lipow Oil Associates, stated, "Gasoline transported from Gulf Coast refineries via pipeline is blended with 10% ethanol, then shipped to the Baltimore area by train and barge." "The oil industry will have to find alternative shipping routes for these barge shipments, which can be temporarily transported by truck from Philadelphia in the short term."

Lipow mentioned that supplies of aviation fuel and diesel are likely not to be affected. However, these reroutes will incur additional costs in transportation and trucking once they are completed.

Rail giant CSX said on Tuesday that customers should prepare for possible delays due to the collapse. Most of the coal transported by CSX to the Port of Baltimore arrives by container.

In a statement, the company said it "has the capacity to send additional trains to the coal terminals served by CSX in Baltimore before reaching space limitations."

However, CSX warned, "All international intermodal shipments to Baltimore have been temporarily halted. Containers from other locations destined for Baltimore are being held pending further notice. Domestic intermodal shipments to Baltimore by CSX are not affected."

Impact on Exporters

Judah Levine, research manager at Freightos, said that exporters might face higher trucking and rail rates if they choose not to wait for the waterway to reopen and instead reroute their cargo to alternative ports such as Norfolk or New York/New Jersey via truck or rail.

The most exported products from Baltimore include coal, natural gas, aerospace parts, construction machinery, agricultural parts, and soybeans. It is the second busiest port for coal exports

According to Wolfe Research, the name comes from the Hampton Roads in Virginia.

"The collapse of the Baltimore Bridge primarily affects coal exports at the CNX and CSX terminals," said Madeleine Overgaard, coal market data manager at the global trade data platform Kpler. "Additionally, imports of gypsum and sugar through the Port of Baltimore will also be affected."

"Alternative ports will also be used for the arrival of import goods," Levine said. These vessels should be able to handle the additional freight volumes, but rerouting may cause some congestion or delays for importers, potentially affecting freight rates on the Asia-U.S. East Coast and transatlantic routes."

Early Cost Estimates

Shipping rates on the Asia-U.S. East Coast have already increased due to attacks by Houthi militants on international shipping vessels in recent months.

However, as demand slows and airlines adjust for longer routes, they have fallen from their peaks. As of Tuesday, transatlantic freight rates were roughly at the same level as in 2019, at about $1,659 per FEU (forty-foot equivalent unit).

While trade is flexible and routes will change, the bridge will need a fundamental redesign and reconstruction over the long term, which will take years.

"It will exceed two years," said Meade of Lloyd's Register. "This infrastructure project will be severely disrupted, and the costs will be high. In 1977, the bridge cost $60 million. Considering inflation and the rapid pace of redesign and construction, a procurement premium will be added. It will be a very expensive project."

The "Dali" is insured by the Britannia Steam Ship Insurance Association and operated by the chartering company Synergy Group. The vessel is owned by Ocean Investment Co.

Meade said, "Britannia Steam Ship Insurance is a mutual indemnity and compensation group, meaning the risk is shared across the industry."

"Britannia will pay the first $10 million. Overall, the excess funds will go into the industry's pooled mechanism and then be reinsured."