The Baltimore disaster and its impact on supply chains

Three weeks after the collapse of a bridge in Baltimore, which occurred as a result of a container ship hitting one of its pillars, investigations are still ongoing to determine the causes of the disaster. There are also ongoing discussions about its effects on local and global supply chains.

Baltimore bridge disaster – what do we know?

The accident occurred on Tuesday, March 26, around 1:30 a.m. local time. The Dali container ship, with a capacity of nearly 10,000 TEU (twenty-feet equivalent unit), owned by Grace Ocean and chartered by Maersk, collided with the pillar of the Francis Scott Key Bridge in Baltimore. The incident was recorded and quickly went viral. It clearly shows that the ship lost power just before the incident. The recording also shows black smoke briefly coming out of the chimneys, and then the collision with the main pillar of the bridge can be noticed. The bridge collapsed onto the ship’s bow in less than 10 seconds, also damaging the ship and many containers.

The ship’s crew managed to report a power failure, thanks to which they managed to stop traffic on the crossing. The number of fatalities from the collision was 6 people. They were employees of a public works company who were filling gaps in the bridge surface at the time of the incident. There is still no full and complete information about the causes of the disaster.

Baltimore Bridge – estimated material and economic losses

In addition to the proceedings aimed at determining the causes of the incident, compensation procedures have also been initiated. It is already said that the bridge collapse may become the most expensive insured maritime loss in history, and compensation from insurance companies may amount to between USD 2 and 4 billion. According to experts, the cost of rebuilding the bridge in Baltimore alone could range from $400 to $800 million, depending on the project. A federal court in Maryland will decide who is responsible for the disaster and how much they will have to pay. The Singaporean companies that own and manage the Deli container ship have submitted an application to limit their liability to approximately USD 43.6 million.

The importance of the port of Baltimore for the US economy

One of the very costly consequences of a bridge collapse is blocking access to the Baltimore Seaport. Last year, this port handled over 52 million tons of foreign cargo with a total value of approximately USD 80 billion. Such turnover generates revenues of USD 3.3 billion and almost USD 400 million in tax revenues.

The Port of Baltimore is the ninth largest port in the United States in terms of transshipment. It handles the largest volume of cars in the country. In 2023, there were as many as 847,000 vehicles. Imports of motor vehicles and auto parts accounted for 42% of all imports handled by the port. Its closure is particularly hard on the auto industry because the second-largest port for motor vehicle shipments is in Brunswick, Georgia – about 700 miles to the south.

In addition, the Port of Baltimore also handles less common consumer products such as coal, plaster and lumber. This is a key port for coal exports and transferring the export of this raw material to another port will not be easy. This requires appropriate infrastructure, and what exists is busy, so the closure of the port in Baltimore will have a serious impact on US coal exports (primarily to India).

Over the years, the Port of Baltimore has become a leading port for U.S. importers of agricultural and construction equipment, including combines, tractors, hay balers, excavators and loaders. These industries are also expected to be affected by the port blockade.

Port closure in Baltimore and supply chains

This year, 438 ships have entered the Port of Baltimore, and currently more than 40 ships are “trapped” there. Those scheduled to call at the port were redirected to other ports on the east coast. It is not known how long the work to reopen traffic on the river will take. The closure of the port in Baltimore will change the direction of goods flow on the US East Coast. Severe and long-lasting impacts on supply chains are expected, but will be concentrated in specific regions and industries. Experts predict that a large portion of U.S. importers will want to ship their cargo through West Coast ports and move it east by train to avoid delays at congested East Coast ports.

About 75% of the goods received at the Port of Baltimore remain in the Mid-Atlantic region. Diverting this freight traffic to other ports causes delays in goods reaching their final destinations and increases freight rates.

According to many experts, the blockade of the port in Baltimore will not be felt globally. Logistics companies that track and help manage global transportation for large companies efficiently redirect shipments that were supposed to go to Baltimore. The global supply chain system has become much more resistant to disruption since the Covid-19 pandemic, and supply chain managers are now coping well with problems at much more important points, including the Suez Canal and the Panama Canal.