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How Will the Collapse of the Francis Scott Key Bridge Affect Supply Chains?

Source: wikipedia

The cargo ship crash last week in Baltimore resulted in the collapse of the Francis Scott Key Bridge, which shut down waterways and highways surrounding the bridge. The Dali, a cargo ship chartered by Maersk, hit one of the support beams of the bridge resulting in the complete collapse of the structure. In addition to the loss of life, costs are rising as one of the U.S. most important ports is closed and a major interstate highway has been shut down.

The Francis Scott Key Bridge’s Importance for Logistics

The Francis Scott Key Bridge serves as a bypass route for hazardous materials that cannot be transported through tunnels. Without it, vehicles will now have to take a longer and slower alternate route.  The first priority is reopening the port, but it will be awhile before the city can complete a replacement bridge, which means longer delays and higher costs.

The Key Bridge is an important connection to the Baltimore area According to the Maryland Transportation Authority, 11.3 million vehicles drive over the bridge every year. The area is also home to the Port of Baltimore, was the 17th largest port in the U.S. in 2021 and handled almost $81 billion of cargo in 2023.  Companies like Amazon, Home Depot, FedEx, BMW, and Volkswagen all have distribution centers and warehouses near the bridge.  The Baltimore harbor is known for transporting supplies for automobiles, so most likely there will be disruptions to that industry, including automakers.

Supply Chain Issues are Emerging

The unfortunate incident is a reminder of how vulnerable supply chains can be. The region closest to the port will feel the most impact, although the effects of the collapse could be far-reaching. For more distant locations, the impact could mean potential delays of days or weeks.

While Baltimore Port is not one of the busiest in the U.S. in terms of tonnage volume, it is considered the largest for roll-on/roll-off ships that carry trucks and trailers. In addition to the port itself being affected, railroads, the trucking industry, and the distribution centers and warehouses will be impacted. Maersk, the Danish shipping company that chartered the container ship, said that it was “omitting Baltimore on all our services for the foreseeable future.”  Cargo that was scheduled to discharge in Baltimore will be diverted to other ports.

One of the biggest issue are with ships that are stuck in the port that we scheduled to stop at other ports to load and unload goods and then return overseas. This through not only deliveries to the U.S. but international shipments as well, especially for the following goods:

Automobiles: Baltimore is the top port in the U.S. for automobiles, with the majority being imports like Mazda and Mercedes-Benz. Will this have an impact on the U.S. supply right away?  Most likely not right away as most dealerships have a full lot of inventory.  Down the road, however, there may be disruptions to the industry.

Soybeans: Baltimore is also a niche port for the soybean industry, mostly for soy used in tofu, miso, and organic products. Most of those exports are sent to Asia, however, other East Coast ports also ship this type of soy.

Coal: Coal shipments that are en route will be redirected to other ports, most likely Philadelphia or Norfolk, VA.

Other Goods: Large amounts of everyday goods such as sugar, paper, ice cream, and chocolate are also processed through the port every day, which could affect the market and prices for these goods.

Will the Bridge Collapse Affect Economic Growth of the U.S.?

Economists do not expect that the collapse will have an effect on the U.S. economy or GDP as a whole.  However, Baltimore’s economy will be affected as will certain sectors of the economy. In that region, shipping and trucking costs will be higher but general inflation for the country will remain unchanged. Still, some of the goods that normally go to the port may be delayed until a new schedule is worked out. It is unsure whether East Coast ports will be able to absorb Baltimore’s container volume and some shippers are already looking into shifting volumes from the East Coast to the West Coast. How this will affect the price of freight is still unknown. Industry experts have not dialed back forecasts just yet.

Verizeal for All Your Shipping Needs

If your business has goods shipping through the Baltimore area, Verizeal can answer any questions you may have about the impact on your supply chain.

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