Impacts From the Francis Scott Key Bridge

Last week, early on Tuesday morning the container ship Dali struck and destroyed the Francis Scott Key Bridge, making the Port of Baltimore inaccessible.

What does this mean to our supply chain?

The Port of Baltimore was the 11^th busiest port in the US in 2023, handling roughly 3% of domestic volume of all East and Gulf ports.

To put it in perspective, NY/NJ handles eight times that volume, Philadelphia handles about the same, and Norfolk handles about three times the volume.

This doesn’t sound like much in comparison, but it is what Baltimore handles that matters. In 2023, Baltimore led the nation in imports of passenger vehicles; plywood and laminated wood; certain types of construction equipment; commercial vehicles; tractors, gypsum; zinc; stainless steel; lead; particle board; tin; and nickel. The port also handles the most asphalt of any US port (4,000 barrels per day) mostly originating in Canada.

The port also handles a lot of aluminum and steel products and Domino Foods has one of the largest domestic sugar refineries in the port and relies on imports.

The port also is the leading exporter of coal.

Should I start hoarding toilet paper?

No.

Plans are already underway to remove debris and reopen the port. This won’t be quick, but the impacts are expected only to be short term. Naval vessels are trapped in the port and major commodities like sugar rely on this port. Expect that there is a limited shock to inflation figures based on the availability of cars, light duty vehicles, and sugar that will increase on speculation of less supply and a growing demand.

Other East Coast ports have capacity in the ports and on the rails to receive the diverted volume. Delivery times will increase, but the effects of the port’s closure will be mostly mitigated. This extra capacity in other East Coast ports is a result of several factors.

The East Coast Longshoremen’s contract expires this year. Negotiations are expected to seek the same or higher increases that the West Coast Longshoremen were able to get last year (32% over six years, retroactive to 2022 with a one-time bonus for the pandemic). Shipping has increased on the West Coast on the speculation there may be work disruptions if negotiations get bogged down.

The ongoing drought and low water levels in the Panama Canal have slowed the flow of ships into the Gulf and East Coast, as have disruptions to shipping in the Red Sea.

To summarize, impacts should be minimal and short lived. The port should be back online in a couple of months. Adequate capacity at surrounding ports exists, even if it means additional transit times and costs. This event looks to be a local shock, unless you are in the market for a new car or light truck.