By — Hannah Grabenstein Hannah Grabenstein Leave your feedback Share Copy URL https://www.pbs.org/newshour/nation/how-baltimores-key-bridge-collapse-will-affect-supply-chains-and-the-economy Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter How Baltimore’s Key Bridge collapse will affect supply chains and the economy Nation Mar 28, 2024 5:22 PM EDT The Francis Scott Key Bridge, once the second-longest continuous truss bridge in the U.S., now lies partially submerged in the Patapsco River after a catastrophic cargo ship collision this week. Two people were injured, and six others presumed dead. The ship and mangled debris from the bridge have formed a wall in the water, indefinitely blocking access in and out of the Port of Baltimore, the top domestic port for cars and a major hub for other goods, such as forest products, farm equipment and sugar. WATCH: Baltimore crews recover bodies of 2 killed in bridge collapse Among the questions around what happens now is what the accident means for shipping and the economy. The port handled a record amount of cargo last year. While President Joe Biden has said he intends for the federal government to rebuild the bridge, and called on Congress to support that effort, the port is directly responsible for about 15,000 jobs and generated $4.7 billion in economic value to the state of Maryland. The bridge’s collapse stranded at least 10 vessels in the water and ships outside the blockage have had to reroute to other East Coast ports, such as Norfolk and New Jersey. For global shipping, this comes at a time when companies are contending with route disruptions along the Suez and Panama canals. Here’s how the Key Bridge collapse may affect the port’s operation, the local economy and international supply chains. What role does the Port of Baltimore play? Along with being the top U.S. port for autos, Baltimore is also the nation’s furthest inland port, said Houston Mason, adjunct professor of supply chain management at Loyola and Georgetown universities. Companies may have to spend an extra day traveling up the Chesapeake Bay and into Baltimore’s harbor, but once their product is unloaded, it’s closer to the Midwest than it would be at any other East Coast port. In the last decade, after increasing the depth of berths at its primary cargo terminal, Baltimore has been able to handle substantially larger ships than other East Coast ports, Mason said. The port is also a major source of employment across the region. A 2018 report found that along with 15,000 direct jobs there were nearly 22,000 other jobs either supported by or indirectly related to activities at the port. How long will shipping be suspended? Though the port remains open to ground vehicles, it is largely impassable for water vessels. Work can still be done at the port, but ships can’t enter or leave and new cargo cannot be loaded or unloaded. At the moment, experts predict it will take at least a couple of months to clear wreckage from the crashed cargo ship and the bridge from the harbor, effectively preventing all maritime traffic from coming or going during that period. Will supply chains be interrupted? For cars, it would make sense to expect some degree of disruption with the No. 1 port out of commission, at least along the East Coast, said Mason, who is also a director of logistics for a large manufacturing firm. To the extent that the average American notices supply chains, interruptions will be minimal to nonexistent, experts interviewed for this story said. There will be added costs and delays in diverting traffic to other ports, but logistics professionals are likely scrambling to minimize the impacts. In the near future, ships are likely to be diverted to other major ports on the East Coast, all of which are larger than Baltimore’s and have the capacity to handle an increase in traffic, Emily Stausboll, an analyst at international shipping analytics platform Xeneta, told the NewsHour. READ MORE: Key Bridge is not the first bridge collapse in the U.S. from a ship collision The Port Authority of New York and New Jersey “stand[s] ready to assist with emergency resources and any other assistance that may be needed,” its director, Bethann Rooney, said in a statement. “The Port of New York and New Jersey is proactively working with our industry partners to respond as needed and ensure supply chain continuity along the East Coast.” Rooney noted that in 2021, New York and New Jersey’s ports handled about 20 percent more cargo than they’re currently seeing. Those ports likely wouldn’t have been able to operate at that level pre-pandemic, Mason said, but as supply chains were battered, they ramped up capacity and can now handle increased traffic. The pandemic also changed how many companies handle supply chains. Pre-pandemic, “just-in-time” deliveries were the norm, which reduced inventory and shipping costs, said Lisa Anderson, president of LMA Consulting Group. But when that created massive shortages and disruptions during lockdowns, companies began to stock up on inventory slightly more. Now, Anderson said, inventories have broadly been brought back down, so kinks in the supply chain could cause additional delays. Smaller companies are more susceptible to complications than larger companies, which often have cushions. What are potential long-term effects? The Key Bridge collapse comes at a time when other international routes are under pressure, Anderson said. Extreme drought has forced the Panama Canal to limit the number of ships passing through and snarled agricultural exports along the Mississippi River. Meanwhile, Houthi rebels have been attacking ships crossing the Red Sea, so many companies are choosing to avoid that route, instead traveling around the southern tip of Africa — often adding 10 or more days to the trip. “Will this Baltimore situation add a bunch of cost to the global supply chain? Well, no,” Anderson said. But with additional global complications, costs could compound. WATCH: Houthis vow revenge after U.S. and U.K. airstrikes in response to Red Sea attacks “People who are in supply chain are good at being resilient, or they’ve become good at being resilient since the pandemic, at least. So they’ll continue to move it around until they find a way to go without a problem. However, each of these steps is going to add cost. And so it is one more disruption,” Anderson said. Capacity at ports nationwide dropped precipitously during the pandemic, and companies — especially those in northeast Asia — might prefer to ship across the Pacific Ocean to the U.S. West Coast, which has the ability to handle significantly more volume as post-pandemic operations have ramped back up, Anderson added. For Baltimore, it’s possible that being out of commission for a while might have a long-term effect on the port’s use and traffic, with former customers preferring to stick to workarounds they develop during the effective closure. It may turn out that companies find shipping to the West Coast to be more effective in the long run, Anderson said. What about local and regional effects? The Key Bridge was an important link along Interstate 95, the major overland shipping corridor that runs the length of the East Coast. It was also one of three links connecting the south side of Baltimore to the north. The remaining two are tunnels, which have height, width and material restrictions; hazardous materials are prohibited. Now, Mason said, companies can still traverse the coast, but their options will likely add time, traffic and money, and may require travel along smaller roads. All of those factors are likely to cause additional bottlenecks and chokepoints, leading to shipping delays. Anderson said she believes that the effects will be particularly felt regionally, as well as along the East Coast, where trucking will be most affected. “For sure it’s going to affect the region, specifically the smaller businesses because it’ll be harder to get things,” Anderson said. “Any business, even a large business, can be affected if you have some critical item that’s not going to come.” Amazon, Under Armour and Home Depot are among companies with distribution centers right near the ports; there are also local shops that serve employees of the port and warehouse district. All of those businesses could feel indirect impacts, Mason said. “If you have a downturn in activity, you can just see the ripple effect of not having as many transactions and work,” he said. By — Hannah Grabenstein Hannah Grabenstein @hgrabenstein
The Francis Scott Key Bridge, once the second-longest continuous truss bridge in the U.S., now lies partially submerged in the Patapsco River after a catastrophic cargo ship collision this week. Two people were injured, and six others presumed dead. The ship and mangled debris from the bridge have formed a wall in the water, indefinitely blocking access in and out of the Port of Baltimore, the top domestic port for cars and a major hub for other goods, such as forest products, farm equipment and sugar. WATCH: Baltimore crews recover bodies of 2 killed in bridge collapse Among the questions around what happens now is what the accident means for shipping and the economy. The port handled a record amount of cargo last year. While President Joe Biden has said he intends for the federal government to rebuild the bridge, and called on Congress to support that effort, the port is directly responsible for about 15,000 jobs and generated $4.7 billion in economic value to the state of Maryland. The bridge’s collapse stranded at least 10 vessels in the water and ships outside the blockage have had to reroute to other East Coast ports, such as Norfolk and New Jersey. For global shipping, this comes at a time when companies are contending with route disruptions along the Suez and Panama canals. Here’s how the Key Bridge collapse may affect the port’s operation, the local economy and international supply chains. What role does the Port of Baltimore play? Along with being the top U.S. port for autos, Baltimore is also the nation’s furthest inland port, said Houston Mason, adjunct professor of supply chain management at Loyola and Georgetown universities. Companies may have to spend an extra day traveling up the Chesapeake Bay and into Baltimore’s harbor, but once their product is unloaded, it’s closer to the Midwest than it would be at any other East Coast port. In the last decade, after increasing the depth of berths at its primary cargo terminal, Baltimore has been able to handle substantially larger ships than other East Coast ports, Mason said. The port is also a major source of employment across the region. A 2018 report found that along with 15,000 direct jobs there were nearly 22,000 other jobs either supported by or indirectly related to activities at the port. How long will shipping be suspended? Though the port remains open to ground vehicles, it is largely impassable for water vessels. Work can still be done at the port, but ships can’t enter or leave and new cargo cannot be loaded or unloaded. At the moment, experts predict it will take at least a couple of months to clear wreckage from the crashed cargo ship and the bridge from the harbor, effectively preventing all maritime traffic from coming or going during that period. Will supply chains be interrupted? For cars, it would make sense to expect some degree of disruption with the No. 1 port out of commission, at least along the East Coast, said Mason, who is also a director of logistics for a large manufacturing firm. To the extent that the average American notices supply chains, interruptions will be minimal to nonexistent, experts interviewed for this story said. There will be added costs and delays in diverting traffic to other ports, but logistics professionals are likely scrambling to minimize the impacts. In the near future, ships are likely to be diverted to other major ports on the East Coast, all of which are larger than Baltimore’s and have the capacity to handle an increase in traffic, Emily Stausboll, an analyst at international shipping analytics platform Xeneta, told the NewsHour. READ MORE: Key Bridge is not the first bridge collapse in the U.S. from a ship collision The Port Authority of New York and New Jersey “stand[s] ready to assist with emergency resources and any other assistance that may be needed,” its director, Bethann Rooney, said in a statement. “The Port of New York and New Jersey is proactively working with our industry partners to respond as needed and ensure supply chain continuity along the East Coast.” Rooney noted that in 2021, New York and New Jersey’s ports handled about 20 percent more cargo than they’re currently seeing. Those ports likely wouldn’t have been able to operate at that level pre-pandemic, Mason said, but as supply chains were battered, they ramped up capacity and can now handle increased traffic. The pandemic also changed how many companies handle supply chains. Pre-pandemic, “just-in-time” deliveries were the norm, which reduced inventory and shipping costs, said Lisa Anderson, president of LMA Consulting Group. But when that created massive shortages and disruptions during lockdowns, companies began to stock up on inventory slightly more. Now, Anderson said, inventories have broadly been brought back down, so kinks in the supply chain could cause additional delays. Smaller companies are more susceptible to complications than larger companies, which often have cushions. What are potential long-term effects? The Key Bridge collapse comes at a time when other international routes are under pressure, Anderson said. Extreme drought has forced the Panama Canal to limit the number of ships passing through and snarled agricultural exports along the Mississippi River. Meanwhile, Houthi rebels have been attacking ships crossing the Red Sea, so many companies are choosing to avoid that route, instead traveling around the southern tip of Africa — often adding 10 or more days to the trip. “Will this Baltimore situation add a bunch of cost to the global supply chain? Well, no,” Anderson said. But with additional global complications, costs could compound. WATCH: Houthis vow revenge after U.S. and U.K. airstrikes in response to Red Sea attacks “People who are in supply chain are good at being resilient, or they’ve become good at being resilient since the pandemic, at least. So they’ll continue to move it around until they find a way to go without a problem. However, each of these steps is going to add cost. And so it is one more disruption,” Anderson said. Capacity at ports nationwide dropped precipitously during the pandemic, and companies — especially those in northeast Asia — might prefer to ship across the Pacific Ocean to the U.S. West Coast, which has the ability to handle significantly more volume as post-pandemic operations have ramped back up, Anderson added. For Baltimore, it’s possible that being out of commission for a while might have a long-term effect on the port’s use and traffic, with former customers preferring to stick to workarounds they develop during the effective closure. It may turn out that companies find shipping to the West Coast to be more effective in the long run, Anderson said. What about local and regional effects? The Key Bridge was an important link along Interstate 95, the major overland shipping corridor that runs the length of the East Coast. It was also one of three links connecting the south side of Baltimore to the north. The remaining two are tunnels, which have height, width and material restrictions; hazardous materials are prohibited. Now, Mason said, companies can still traverse the coast, but their options will likely add time, traffic and money, and may require travel along smaller roads. All of those factors are likely to cause additional bottlenecks and chokepoints, leading to shipping delays. Anderson said she believes that the effects will be particularly felt regionally, as well as along the East Coast, where trucking will be most affected. “For sure it’s going to affect the region, specifically the smaller businesses because it’ll be harder to get things,” Anderson said. “Any business, even a large business, can be affected if you have some critical item that’s not going to come.” Amazon, Under Armour and Home Depot are among companies with distribution centers right near the ports; there are also local shops that serve employees of the port and warehouse district. All of those businesses could feel indirect impacts, Mason said. “If you have a downturn in activity, you can just see the ripple effect of not having as many transactions and work,” he said.