Port of Baltimore closes indefinitely after bridge collapse, logistics companies struggle to adapt.

• After the Port of Baltimore was shut down, logistics providers are working quickly to inform clients about the status of their imports and exports.
• A 10,000 container-capacity vessel collided with a bridge pillar on the Francis Scott Key Bridge in the city, causing it to collapse early Tuesday. Rescue efforts are currently underway.
• Richard Meade, editor-in-chief of Lloyd's List, stated that there will be hundreds of diversions in the coming months if Baltimore remains shut down.

The Port of Baltimore was shut down on Tuesday, prompting logistics companies to urgently relay messages to clients about their imports and exports. A massive rescue effort was underway in the morning.

ITS Logistics' vice president of drayage and intermodal, Paul Brashier, stated that our top priority is to engage clients to make plans for containers originally destined for Baltimore that will be discharged at other ports on the Eastern Seaboard.

Brashier stated that the diverted volumes will affect the ports of New York/New Jersey, Norfolk, and the Southeast, and we must prepare trucking and transload capacity to transport the freight to its intended network.

On Tuesday morning, the 10,000 container-capacity vessel Dali, which was leaving the Port of Baltimore for Colombo, Sri Lanka, collided with a bridge pillar while two pilots from the port were on board.

"DHL Global Forwarding's senior vice president and head of ocean freight for the Americas, Goetz Alebrand, stated that the immediate impact of the cargo on board and its accessibility is likely to result in rerouting of other planned shipments through Baltimore, potentially increasing cargo flow to New York, Norfolk, and nearby ports. Bulk and car carriers that are reliant on Baltimore must assess their operations in the event of a prolonged closure."

Last year, Maryland Gov. Wes Moore (D) stated that over 52 million tons of foreign cargo, valued at $80 billion, were transported out of the port. Baltimore, the eleventh largest port in the country, served an average of 207 calls per month, according to Lloyd's List.

Autos impacted

The Port of Baltimore ranks as the top American port for the import and export of autos, light trucks, wheeled farm vehicles, and construction machinery, with a record of 847,158 cars and light trucks handled last year, according to port data.

In 2023, Baltimore ranked first in the US for the thirteenth year in a row in the import of cars and light trucks. Additionally, sugar and gypsum were also among the top imports.

In 2023, the port's total imports of $55.2 billion included $23 billion of autos and light trucks, while its exports of $4.8 billion consisted mainly of motor vehicles.

Uber Freight's head, D'Andrae Larry, stated that the disruption in Baltimore, being a roll-on/roll-off port, could result in flatbed volumes for other East Coast ports.

Larry said that the bridge and port are likely to be out of service for months, forcing shipments to divert first to ports in New York and New Jersey, followed by Norfolk, Virginia.

""Intermodal options are becoming increasingly popular for inland moves in the mid Atlantic, upper Midwest, and New England regions, as customers seek solutions for their freight that typically goes through Maryland," he said."

Diversions

Some of the companies that use the port to import goods include Bob's Furniture, IKEA, and others. Among the top imports are sugar and gypsum.

Richard Meade, editor-in-chief of Lloyd's List, stated that the port's re-opening will have a significant impact on trade along the East Coast and it will last until we know how quickly the port can reopen.

Meade stated that vessels were already being diverted to New York and Virginia on Tuesday. He added that there would be dozens of diversions in the next week and hundreds in the coming months as long as Baltimore remains shut down.

The Baltimore area may experience disruptions in gasoline availability due to the importation of ethanol by barge and rail.

"According to Andy Lipow, president of Lipow Oil Associates, gasoline that is shipped from Gulf Coast refineries by pipeline is blended with 10% ethanol and delivered into the Baltimore area via train and barge. However, the oil industry will need to find alternate supply routes for those barge deliveries in the short term, which can be met by trucking it in from Philadelphia."

The re-routing of these diversions will result in additional costs for shipping and trucking, despite Lipow stating that jet fuel and diesel fuel supplies would remain unchanged.

""Although it will be costly, it is not a supply chain story like EverGiven because ocean carriers can find alternative routes, and both ocean carriers and trucking are adaptable and agile logistically," said Meade."

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

The company announced that it will not be able to reach the Helen Delich Bentley port of Baltimore for the time being. As a result, Baltimore will be excluded from all their services until it is deemed safe to travel through the area.

The Maersk advisory stated that for cargo already on water, we will exclude the port and discharge cargo intended for Baltimore in nearby ports. However, please be aware that delays may occur for cargo set to discharge in Baltimore, as they will need to do so in other ports.

Exporters

If exporters do not wait for the waterway to reopen, they may face higher trucking and rail rates if volumes are rerouted to alternate ports such as Norfolk or New York/New Jersey, according to Judah Levine, head of research for Freightos.

The top exports from Baltimore are coal, natural gas, aerospace parts, construction machinery, agricultural components, and soybeans.

"The collapse of the Baltimore bridge will disrupt coal exports from CNX and CSX terminals, as well as gypsum and sugar imports into the port of Baltimore, according to Madeleine Overgaard, dry market data manager for the global trade data platform Kpler."

"Freightos' Levine stated that the alternate ports will also be utilized for incoming imports. Although these ports should be capable of handling the additional volumes, re-routing may cause congestion or delays for importers, which could affect freight rates on the Asia-U.S. East Coast and transatlantic routes."

Early cost estimates

The Red Sea diversions have caused an increase in shipping rates between Asia and the U.S. East Coast.

Transatlantic rates have stabilized at around $1,659/FEU, despite a decrease in demand and adjustments made by carriers for longer voyages.

Over the long-term, the bridge will need to be fundamentally rebuilt, which will take years.

"The infrastructure project will face significant disruption and cost, with procurement premiums increasing due to the rapid pace of redesign and construction. In 1977, the bridge cost $60 million, but with inflation, the cost will be much higher. Meade, of Lloyd's List, stated that the project will take more than two years to complete."

The charter vessel company Synergy Group operates the Dali, which is insured by Britannia Steam Ship Insurance and owned by Great Ocean Investment.

Meade stated that Britannia Steam Ship insurance is a mutual protection and indemnity group, where industry risks are pooled.

Meade stated that Britannia will be responsible for the initial $10 million, and the excess will be pooled by the industry before being reinsured.