The Port of Baltimore's new rail line has seen its first diverted cargo shipments from CSX.

• The first shipments have been completed on the new CSX freight rail route that diverts containers from New York to Baltimore due to the Key Bridge collapse.
• At Ports America Chesapeake Terminal, containers will either be unloaded and transported by truck to nearby warehouses or sent to Chicago.
• On Wednesday, Norfolk Southern declared that it would introduce a new rail service to manage diverted freight traffic between New York and Baltimore.

In response to the Port of Baltimore closure, CSX recently announced a new rail line. However, just days after the announcement, the containers that were diverted to the Port of New York and New Jersey are now being unloaded in Baltimore.

Mark Schmidt, vice president and general manager of Ports America Chesapeake, stated that they will maintain the plan in effect during the port closure. Ports America Chesapeake is one of the port operations of Ports America, North America's largest marine terminal operator, which is owned by the Canada Pension Plan Investment Board. Schmidt explained that they have visibility into the teams working on the wreckage out on the water through their daily calls.

Ports America discussions were initiated last week to explore effective methods for handling diverted cargo. Although the volume of containers arriving may remain the same, the touchpoints in the handling process have been altered. "Established supply chain touchpoints in logistics make it challenging to manage exports and imports when one is disrupted, as it affects where containers enter and exit," Schmidt explained.

The diverted cargo's train route includes Chicago, Kearney, New Jersey, and Baltimore.

Project44 reports that containers originally intended for the Port of Baltimore have been redirected to the Ports of Norfolk (43%), New York (26%), Wilmington (13%), and Newark-Elizabeth, New Jersey (10%), with an additional 8% diverted to other ports.

Railroads are preferred by shippers, including retailers, due to their cost-effectiveness. Although rail transport is slower, trucking is more expensive. Additionally, rail is an appealing option for environmentally conscious shippers as it is four times more fuel-efficient than trucks and emits approximately 75% fewer greenhouse gases.

On Wednesday, it was announced that Norfolk Southern will launch a dedicated service to facilitate the flow of diverted freight between the Elizabeth Marine Terminal at the Port of New York and New Jersey and the Seagirt Marine Terminal in Baltimore. The service will start on April 5. Additionally, Norfolk is in discussions with Ports America to extend this service directly on-dock at their Seagirt Intermodal Container Transfer Facility. Norfolk Southern's Triple Crown Services network will assist in the dedicated intermodal service and will work with cargo owners who need door-to-door service.

During the Port of Baltimore crisis, several significant ocean carriers invoked contract provisions that shifted responsibility for transporting cargo from diverted ports to their clients.

Despite the shutdown of marine container ship operations at the Port of Baltimore, land operations continue uninterrupted.

"Schmidt stated that the result of good cooperation with the International Longshoremen's Association and the Port of Baltimore is that their labor has remained the same. However, they are now training their water crews, including crane operators, clerking staff, and dock bosses, to improve their land skills."

The ILA, which represents longshoremen at East Coast and Gulf ports, including the Great Lakes, major U.S. rivers, Puerto Rico, and Eastern Canada, is currently engaged in labor negotiations over a contract that will expire on September 31.

The International Longshoremen's Association Local 333 president, Scott Cowan, stated that 85% of his members are "daily hires," meaning they only work when a ship is in dock.

Despite the halt in new container unloading from vessels, the trucking community is carrying on with business as usual at the port, working through the existing containers in the yard. According to Schmidt, there are currently less than 500 import containers in the yard, which is significantly lower than the normal range of 3,000-5,000 containers. Despite this, trucking turn times are still normal at 60 minutes, indicating that the port is operating efficiently.

To aid in staffing decisions, Schmidt stated that there is a four-week window at terminals to monitor incoming containers.

""We are diverting empties back to the Port of New York and New Jersey as they return, while exports are not entering our terminal," Schmidt stated."

Currently, there are ten vessels stranded at the Port of Baltimore, including a roll-on/roll-off vessel loaded with cars, farm equipment, and trucks. Schmidt confirms that there are no plans to unload the RORO vessel and reroute the vehicles to another port.

The Port of Baltimore is the largest in the country for importing and exporting auto/farm equipment/light trucks. In 2023, the port processed $36 billion of the nation's international vehicles trade, according to data from Dun & Bradstreet. The port's weekly economic impact is estimated to be $700 million related to vehicles, with an overall direct economic impact of approximately $1.7 billion based on the average weekly value of goods processed through the port in 2023. The indirect impact due to the disruption in cross-border flow of goods through the Port of Baltimore is estimated to be $6.6 billion per month.

The Supply Chain Stress Index by Oxford Economics indicates that while supply chain conditions have improved since the pandemic, there is a risk of renewed stress due to ongoing conflict in the Middle East, drought-related issues at the Panama Canal, and the recent collapse of the Key Bridge in Baltimore, which will impact trade, inventories, and inflation.