Logistics companies scramble after bridge collapse closes Baltimore port

Logistics companies up and down the East Coast were urgently relaying messages to customers about the status of their imports and exports on Tuesday, after the Port of Baltimore was closed in response to the collapse of the city’s Francis Scott Key Bridge. A massive rescue effort was underway Tuesday morning.

“Our first priority is to involve customers in planning containers originally bound for Baltimore that will be unloaded at other East Coast ports,” explained Paul Brashier, vice president of drayage and intermodal for ITS Logistics.

“These diverted volumes will impact ports in New York/New Jersey, Norfolk and the Southeast, and we must prepare trucking and transshipment capacity to get that cargo to the intended network,” Brashier said.

The Dali ship, with a capacity of 10,000 containers, was leaving the Port of Baltimore in the early hours of Tuesday morning, bound for Colombo, Sri Lanka, when it collided with a bridge pylon. At the time of the collision, the vessel had two Baltimore Harbor pilots taking it out of port.

“The immediate impact is on cargo on board and its accessibility. Other shipments planned through Baltimore will likely be rerouted, potentially increasing the flow of cargo to New York, Norfolk and nearby ports,” said Goetz Alebrand, senior vice president and head of ocean freight to the Americas at DHL Global Forwarding. “Bulk and auto carriers that rely on Baltimore must evaluate operations in the event of an extended closure.”

More than 52 million tons of foreign goods, worth about $80 billion, were shipped out of the port last year, according to Maryland Gov. Wes Moore (D). The nation’s 11th largest port, Baltimore served an average of 207 calls a month last year, according to shipping journal Lloyd’s List.

The Port of Baltimore is America’s leading port for the import and export of automobiles and light trucks, as well as wheeled agricultural vehicles and construction equipment. Last year, the port handled 847,158 cars and light trucks, according to port data.

2023 was the thirteenth consecutive year that Baltimore led American ports in imports of cars and light trucks. Other major imports include sugar and chalk.

Breaking down trade, $23 billion of the port’s $55.2 billion in total imports in 2023 were cars and light trucks. About $4.8 billion of the port’s exports were motor vehicles.

“Since Baltimore is primarily a roll-on/roll-off port, this disruption should create possible flatbed volumes coming out of other East Coast ports,” said D’Andrae Larry, head of Uber Freight.

Following the collapse, Larry said, the bridge and port will likely be out of service for months, forcing shipping to reroute first to the ports of New York and New Jersey, followed by Norfolk, Virginia.

“Customers will be looking for solutions for their freight that typically travels through Maryland, the mid-Atlantic, the upper Midwest and New England,” he said. “There are fewer intermodal options around Baltimore, but shippers can now turn to intermodal for inland moves as an alternative.”

Retailers like it Home depotBob’s Furniture, IKEA and Amazon these are just some of the companies that use the port to import goods. Other major imports include sugar and chalk.

“This will impact trade all along the East Coast and will continue until we know how quickly” the port can reopen, said Richard Meade, editor-in-chief of the shipping magazine Lloyd’s List.

By Tuesday, the ships had already been diverted to New York and down to Virginia, Meade said. “There will be dozens of diversions over the next week and hundreds over the next few months as long as Baltimore remains closed.”

There may also be disruptions in gasoline availability in the Baltimore area, as some ethanol is imported via barge and rail.

“Gasoline shipped from Gulf Coast refineries via pipeline is blended with 10% ethanol that is delivered to the Baltimore area via train and barge,” said Andy Lipow, president of Lipow Oil Associates. “The oil industry will have to find alternative supply routes for those barge deliveries that in the short term can be met by transporting them from Philadelphia.”

Lipow said supplies of jet fuel and diesel fuel likely won’t be affected. But all these detours will create additional costs in both shipping and trucking once the alternate route is taken.

“It will be expensive but it’s not a supply chain story like the EverGiven (which was stuck in the Suez Canal) because ocean carriers will find alternative routes,” Meade said. “Logistically, ocean carriers and trucking have the ability to be quite adaptable and agile.”

The Dali was chartered by Maerskwhich issued a warning to customers on Tuesday.

“It will not be possible to reach Baltimore’s Helen Delich Bentley Port for the time being. In line with this, we will omit Baltimore on all our services for the foreseeable future, until it is deemed safe to pass through this area,” he said the society.

“For cargo already in the water, we will omit the port and unload the cargo for Baltimore, at nearby ports. Please note that for cargo that needs to be unloaded in Baltimore, there may be delays, as it will need to be unloaded at other ports,” reads the Maersk notice.

If exporters choose not to wait for waterways to reopen, they could face increased road and rail freight rates if volumes are diverted via truck or rail to alternative ports such as Norfolk or New York/New Jersey, Judah said Levine, head of research for Freightos.

Major exports from Baltimore include coal, natural gas, aerospace parts, construction machinery, agricultural components and soybeans.

“The Baltimore bridge collapse primarily affects coal exports from the CNX and CSX terminals,” said Madeleine Overgaard, head of dry market data for global trade data platform Kpler. “Additionally, gypsum and sugar imports into the Port of Baltimore will also be stopped.”

“Alternative ports will also be used for incoming imports,” he said. “These should be able to handle the additional volumes, although the rerouting could lead to congestion or delays for importers, potentially impacting freight rates on the east coast of Asia and the US and on transatlantic routes “.

Shipping rates between the east coast of Asia and the United States are already high, due to diversions from the Red Sea after months of Houthi attacks on international shipping vessels off the coast of Yemen.

But they have fallen from their peak as demand has fallen and carriers have made changes for longer trips. On Tuesday, transatlantic rates were almost in line with 2019 levels, around $1,659/FEU (forty equivalent units).

Meade says that while commerce is nimble and will change its path, in the long term the bridge will need to be designed and rebuilt on its foundations and will take years.

“It will be more than two years,” Meade said. “There will be significant disruption and expense to this infrastructure project. In 1977 the bridge cost $60 million. Factoring in inflation and the rapid pace of redesign and construction will increase procurement premiums. This will be a very expensive project.”

Dali is insured by Britannia Steam Ship Insurance and managed by charter ship company Synergy Group. The vessel is owned by Great Ocean Investment.

“Britannia Steam Ship Insurance is mutual [protection and indemnity group] which means the risks are shared by the industry,” Meade said.

“Britannia will be responsible for the first $10 million. Collectively, the excess goes into the industry pooling mechanism, and then there’s reinsurance,” Meade said.