Baltimore bridge collapse will strain but not break the international supply chain

The recent collapse of the Francis Scott Key Bridge in Baltimore due to the collision of a container ship, which led to the tragic deaths of six people working on the bridge, has caused some disruption to that part of the international supply chain using the Port of Baltimore.

While the scale of the disruption is not likely to be as significant as other recent events, such as the COVID-19 pandemic, the Russian conflict with Ukraine, the impact of drought on the Panama Canal and the actions by Houthi Rebels in the Red Sea affecting access to the Suez Canal, there are several factors which may have led to the presumption that the events in Baltimore will create more of an adverse outcome than will be the case.

One of the main reasons is the existence of ‘real-time’ video which showed the actual collision taking place and the collapse of the bridge. Another reason is the loss of life and the ability of authorities to close the bridge so quickly that several vehicles were intercepted and kept off the bridge at the time of the collision. There are also 40 ships ‘stuck’ in the port.

National Customs Brokers and Forwarders Association of America alert to members

Soon after the bridge collapse, the National Customs Brokers and Forwarders Association of America (NFCBAA) provided the following alert to their members and its ‘sister’ organisation, the International Forwarders and Customs Brokers Association in Australia (IFCBAA).

The bridge was struck by a containership exiting the nearby marine terminal. The containership, under charter to Maersk, lost power before veering off course and colliding with the bridge. Two nighttime bridge workers were pulled from the water, but six other workers were killed when the bridge collapsed.

The Maryland Port Administration, which oversees the Port of Baltimore, said the Seagirt Marine Terminal stopped export operations until further notice, while vessel traffic into and out of the Port of Baltimore has been suspended until further notice.

Maryland Port Administration Executive Director Jonathan Daniels on Friday, March 29, hosted a call to update local business interests on the status of the channel closing due to the Key Bridge collapse. He emphasized that the top three priorities are to get the shipping channel open, secure the vessel Early Tuesday morning, March 26, the Francis Scott Key Bridge in Baltimore collapsed after it was, and conduct the salvage operation.

At the current time, there are 3,000 to 4,000 tons of the fallen bridge alone sitting on the vessel. Engineers have been on-site and are working to determine how best to cut the steel without causing further damage to the ship or dropping the pieces into the channel.

The containership has been breached, but these breaches are above the water line. There are 56 hazardous material containers on the vessel. There is also a high-pressure gas line beneath the vessel and salvagers must be careful to avoid it, Daniels said.

The Army Corp of Engineers must determine how wide a swath in the channel is necessary to reopen the port to vessel traffic. The agency is also evaluating channel alternatives to possibly allow, at some point, smaller vessels to access the channel. There are three salvage companies on site, including several Corp of Engineers vessels, and on-barge cranes either on-site or on the way. Daniels said it is too early to determine if any draft restrictions will be put in place and what that will entail.

Adverse effect too early to call

Significantly, there are several factors which may mitigate the adverse effect of the collision on the international supply chain.

• As stated, it is only ‘early days’ after the collision and the assessment of works needed to reinstate limited and then full access to the port is still some time away. Any current assessments are unlikely to be accurate, especially given all the resources being allocated towards remedying the consequences of the collision.
• The US Federal Government has already announced that the clearance of the bridge debris and the re–build of the bridge is a national priority and it has already allocated significant resources to those tasks.
• Baltimore is not a crucial US port when considering all tonnage handled by the port. According to US press comments, Baltimore ranks 17th in total tonnage, 10th in dry bulk tonnage, and 15th in TEU volume. Access to one port alone is compromised.
• Alternative East Coast ports include New York, Charleston, Savannah, and Virginia, all of which are larger.
• The port is vital for vehicle shipments including cars, trucks, and farm equipment. This will create some problems for manufacturers moving product to overseas markets. However, these are finished goods, not inputs to manufacture meaning that consequential effects (like those in the EU when parts held up by vessels attacked in the Red Sea stopped production at Tesla and Volvo plants,) are unlikely to create the same production issues. Those manufacturers have other options for export shipments even though they are likely to be more inconvenient.
• Importers in the eastern US may wait a bit longer for imported vehicles to arrive, but again, these are finished goods on their way to customers who already have inventory in stock.
• Some freeway access in and around the port is being re-routed to minimise road access. Again, this causes inconvenience and some additional costs but does not necessarily stop such shipments.
• The captain of the port is moving quickly to establish other channels into and out of the port which could allow ingress and egress from the port, albeit by more limited means.

Learning from recent trade disruptions

The recent lessons from other disruptions to the international supply chain have led to more agile supply chains and more open co-operation between government agencies and the private sector. This experience will assist in necessary ‘work arounds’ to minimise delays and interruptions to trade. Further, in this instance, the impact is limited to the port of Baltimore and the vessel which collided with the bridge and the cargo on that ship.

Notwithstanding the relatively more optimistic view of the consequences of the collision and bridge collapse, several normal steps still need to be taken in relation to the interruption to trade.

• Any party with cargo on the vessel which collided with the bridge will need to advise their clients of likely delays and be alert to claims for additional costs such as a declaration of a ‘general average’. Such a declaration which would require additional charges over and above the original costs of the shipment to be levied against the shipper (and/or the consignee) of the containers on the vessel.
• There will be a lack of clarity on the status of the vessel, the port and surrounding road access. Clients need to be advised of these developments as they take place.
• Reviewing terms and conditions of trade to see whether ‘force majeure’ could be invoked by parties in the supply chain based on the collision.
• Those in the private supply chain should advise their insurers of likely costs of the collision. Those insurers already have direct access to information regarding the cause of the collision and remedial steps which should assist in expediting claims.

Keeping you informed

Together with IFCBAA, we will keep industry advised of developments in Baltimore and are grateful for the assistance of NFCBAA and its members.