What would be the impact of the Baltimore bridge collapse?

How will the workers in the port be affected by the collapse of the Francis Scott Key Bridge? What are the other factors affecting supply chains across the world?

The collapse of the Francis Scott Key Bridge on March 26 has put a spotlight on the Port of Baltimore, one of the busiest harbours in the U.S., which paused shipping and immediately halted all vessel traffic in and out.

The port remained open to trucks following the incident, but the loss of maritime traffic is expected to cost $9 million a day. The overall economic toll is likely to be higher as billions of dollars of goods are rerouted amid the prospect of supply chains being snarled for months. It will also mean a loss of tax revenue for the city and state.

Here, a supply chain and logistics expert from the University of Montana explains the shortand longterm impacts of the crash on supply chains.

How important is the Port of Baltimore?

The Port of Baltimore is the ninth largest U.S. port by overall trade volume. In 2023 alone, it moved around 50 million tonnes of goods between the U.S. and other countries, much of it in large shipping containers, like those stacked on the ship that rammed into the bridge. Although it’s smaller than other ports on the East Coast and in the Gulf of Mexico, it still plays a critical role in processing U.S. international trade traffic. That’s especially true for some products, such as automobiles, heavy machinery and coal. It also handles a large share of U.S. sugar imports.

What’s the shortterm impact of its closure on supply chains?

The immediate impact will be felt by the 15,000 or so workers in the port and about 1,40,000 others who depend on it. It doesn’t mean they’ll be laid off, but drastically less traffic would mean less work to go around. Companies and consumers should expect some delays for packages that would have otherwise been processed by the port. How long depends on how much time it takes for ships to be rerouted to other terminals, but it should only add a matter of days or up to a week or two. Baltimore accounts for only 4% of overall East Coast trade, so it shouldn’t have a major impact. Dealers will probably experience some delays receiving imported cars and light trucks, but things should be resolved within days or weeks.

What’s the longterm impact?

The problem is that supply chains have been under stress from multiple directions lately.

Houthi attacks on ships in the Red Sea and Panama Canal bottlenecks have lengthened delivery times and increased costs for companies that rely on East Coast ports. The pause in maritime traffic at the Port of Baltimore adds one more point of pressure for trade in the region. This may lead more shippers that have a choice to send more freight through West Coast ports, which have not suffered much from the Red Sea attacks and Panama problems. This could also mean more business for trucking and rail companies if it means they have to transport more goods from the West to East Coast.

How does this supply chain shock compare with other recent ones?

From a supply chain perspective, this was a freak accident. It’s dramatic, it’s graphic, and it forces people to pay attention to the issue. But unlike the Red Sea attacks or the impact from the COVID19 pandemic, which have led to lingering supply chain problems, fallout from the bridge collapse will be temporary. That said, we’ll likely see public pressure on companies to try to prevent such a thing from happening again — even though the risk of ships striking bridges is very low.

The author is Professor of Marketing, University of Montana. This article has been republished from The Conversation.

The Port of Baltimore is the ninth largest U.S. port by overall trade volume. In 2023 alone, it moved around 50 million tonnes of goods between the U.S. and other countries.

The immediate impact of the collapse will be felt by the 15,000 or so workers in the port and about 1,40,000 others who depend on it.

Houthi attacks on ships in the Red Sea and Panama Canal bottlenecks have lengthened delivery times and increased costs for companies that rely on East Coast ports.