Logistical problems after bridge collapse close the Port of Baltimore

Logistics firms across the East Coast urgently updated customers Tuesday on the status of their imports and exports after the Port of Baltimore closed in response to the Francis Scott Key Bridge collapse. A big-scale rescue operation was launched on Tuesday morning.

“Our first priority is to engage customers in planning for containers that were originally destined for Baltimore that will be offloaded at other ports on the East Coast,” explained Paul Brashier, vp of transportation and intermodality at ITS Logistics.

“These diverted volumes will impact ports in New York/New Jersey, Norfolk and the Southeast, so we must prepare the shipping and handling capacity to deliver this cargo to its intended network,” Brashier said.

The 10,000-container ship Dali was leaving the port of Baltimore sure for Colombo, Sri Lanka, in the early morning hours when it collided with a bridge pillar. There were two pilots from the port of Baltimore on board the ship at the time of the collision.

“The direct impact will be on the cargo on board and its availability. Other planned shipments through Baltimore will likely be diverted, potentially increasing cargo flow to New York, Norfolk and nearby ports,” said Goetz Alebrand, senior vp and head of ocean freight to the Americas at DHL Global Forwarding. “Baltimore-dependent bulk and truckload carriers must evaluate operations in the event of an extended closure.”

According to Maryland Gov. Wes Moore, greater than 52 million tons of foreign cargo value about $80 billion was moved out of the port last yr. Baltimore, the nation’s Eleventh-largest port, handled a mean of 207 calls a month last yr, based on shipping journal Lloyd’s List.

The Port of Baltimore is the most significant U.S. port for the import and export of passenger cars and light-weight trucks, in addition to wheeled agricultural vehicles and construction machinery.

According to the port’s data, last yr the port handled 847,158 passenger cars and light-weight trucks. This was the thirteenth consecutive yr that Baltimore led all U.S. ports in passenger automotive and light-weight truck imports. Other major imports include sugar and gypsum.

After the end of trade, $23 billion of the port’s total 2023 imports of $55.2 billion were passenger cars and light-weight trucks. About $4.8 billion of the port’s exports were motorized vehicles.

“Because Baltimore is less container-centric and primarily a roll-on/roll-off port, this disruption should result in possible transport of flatbeds and vehicles from other ports on the East Coast,” said D’Andrae Larry, director of . intermodality at Uber Freight .

Larry said the bridge and port would likely be out of service for months after the collapse, forcing supplies to be diverted first to the ports of New York and New Jersey after which to Norfolk, Virginia. Other ports include Georgia and South Carolina.

“Customers will be looking for solutions for their cargo, which typically runs through Maryland, the mid-Atlantic, the upper Midwest and New England,” he said. “There are fewer intermodal options available in the Baltimore area, but shippers can now use inland intermodal as an alternative.”

Retailers such as Bob’s Furniture, and IKEA are just some of the companies that use the port to import goods. Other major imports include sugar and gypsum.

“This may have an impact on trade across the entire East Coast and can proceed until we know the way quickly” the port can reopen, said Richard Meade, editor-in-chief of shipping magazine Lloyd’s List.

Meade said ships had already been rerouted to New York and Virginia as of Tuesday. “There will be dozens of detours in the next week and hundreds in the coming months as long as Baltimore stays closed.”

Matt Castle, vice president of global freight forwarding at the company, explained to CNBC that delays for trucks arriving at the port area from the north should be minimal. “But trucks coming into the area from the south will have to use the I-95 or I-895 tunnels or bypass the port. This will put them closer to metro Baltimore and potentially add an hour to their trip.”

There may also be disruptions to gasoline availability in the Baltimore area as some ethanol arrives by barge and rail.

“Gasoline delivered by pipeline from the Gulf Coast refinery is blended with 10% ethanol, which is delivered to the Baltimore area by train and barge,” said Andy Lipow, president of Lipow Oil Associates. “The oil industry will need to find alternative barge delivery routes that can be covered by trucking from Philadelphia in the short term.”

Lipow said jet fuel and diesel supplies would likely remain unaffected. However, all of these detours will result in additional costs for both shipping and trucking once the route is changed.

“It will be expensive, but it won’t be a supply chain story like EverGiven (which got stuck in the Suez Canal) because ocean carriers will find alternative routes,” Meade said. “From a logistics standpoint, ocean carriers and trucking are adaptable and agile.”

Dali was chartered by , which issued a customer advisory on Tuesday.

“Reaching the Helen Delich Bentley Port in Baltimore will not be possible at this time. “As a result, we are omitting Baltimore from all our services for the foreseeable future until it is deemed safe to travel through the area,” the company said.

“For cargo already in the water, we will bypass the port and offload cargo destined for Baltimore at nearby ports. Please note that cargo scheduled to be unloaded in Baltimore may experience delays as it will need to be unloaded at other ports, a Maersk advisor said.

If exporters choose not to wait until the waterway reopens, they could face higher truck and rail rates if goods are redirected by truck or rail to alternative ports such as Norfolk or New York/New Jersey, said Judah Levine, chief of research department at Freightos.

Baltimore’s top exports include coal, natural gas, aircraft parts, construction machinery, agricultural components and soybeans.

“The Baltimore bridge collapse primarily impacts coal exports from the CNX and CSX terminals,” said Madeleine Overgaard, dry goods market data manager at global trade data platform Kpler. “Additionally, the import of gypsum and sugar into the Port of Baltimore will also be disrupted.”

“Alternative ports will also be used to bring in imported goods,” Levine said. “They should be able to handle the additional volumes, although rerouting may lead to some congestion or delays for importers, potentially impacting freight rates on the East Coast of Asia and the United States and on transatlantic routes.”

Shipping rates from Asia to the U.S. East Coast are already elevated due to diversions away from the Red Sea after months of Houthi attacks on international shipping.

However, they have fallen from peak levels as demand has fallen and carriers have made adjustments for longer sailings. On Tuesday, transatlantic rates remained close to 2019 levels at approximately USD 1,659/FEU (40 equivalent units).

While trade is fluid and will change, in the long term the bridge will need to be extensively designed and rebuilt, and this will take years.

“It will be over two years,” said Lloyd’s List’s Meade. “This infrastructure project will require significant disruption and cost. In 1977, the bridge cost $60 million. Taking inflation into account, the rapid pace of redesign and construction will increase purchase fees. 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.

“Britannia steamship insurance is mutual insurance [protection and indemnity group] which means the risk is pooled across the industry,” Meade said.

“Britannia will be responsible for the first $10 million. In total, the surplus will be transferred to the pooling mechanism by the industry and then reinsurance will take place,” Meade said.