Baltimore bridge collapse, closure of port adds another snag to recovering supply chains

BALTIMORE (TND) — The collapse of the Francis Scott Key Bridge last week in Baltimore has shut down the port indefinitely while crews work to remove pieces of the bridge off the massive cargo ship that caused its downfall, causing disruptions to supply chains that are still being reset from the coronavirus pandemic and hitting snags in the Red Sea.

The Port of Baltimore is a major shipping hub for the East Coast and one of the top U.S. ports in trade volume. It is the busiest port for automobiles, light trucks, heavy farm and construction machinery in the country and the second-busiest for the exporting of coal, while also handling other commodities like soybean products, salt and sugar.

The area around the port is also a major industrial hub that will have its operations scrambled by the combination of the port’s closure and the loss of the bridge for transports.

While many of the COVID-era issues have been resolved and supply chains have been changed to be more resilient in the face of trouble, shipping is still a challenge in a global economy. Changing water levels, geopolitical issues, the war in Ukraine and Houthi attacks on ships in the Red Sea are still creating problems for the supply chain.

“This is just one additional issue that's adding to the ongoing list of supply chain challenges that exist for anybody in the business,” said Kevin Ketels, assistant professor of teaching in global supply chain management at Wayne State University.

Crews began work to remove pieces of the fallen bridge over the weekend to get the port reopened to marine traffic and receiving shipments again, but the process is going to take weeks. The work is only in the beginning stages to remove thousands of tons of steel from the bridge’s frame hanging over it in a complicated process that has engineers from across the country trying to figure out the best plan to move forward.

“When you have a chance to see that wreckage up close, you fully understand the enormity of the challenge,” Maryland Gov. Wes Moore said on Saturday. “Our timeline will be long.”

The federal government has already started rushing resources to Baltimore to help get the port reopened and laying the groundwork to rebuilding the bridge.

The White House announced on Monday that the Small Business Administration would be opening two business recovery centers to help qualifying businesses apply for disaster loans to deal with losses stemming from the bridge collapse. Federal agencies will also be fully covering the costs of clearing the channel and have already approved $60 million in emergency funds to start work on rebuilding the bridge.

But in the meantime, suppliers and shipping companies are working to rearrange their operations that will have ripple effects across the country. Shipments will have to be absorbed by other ports that are already operating at high capacities, creating logistical headaches and potentially driving up costs for companies that could be passed onto consumers.

“Ultimately everything gets passed on to the consumer,” said Anita Carson, a professor of operations management at Boston University’s Questrom School of Business. “It's a question of is it going to be a big enough impact overall that we'll see it on everything?”

Experts said many of the ships will likely be rerouted to other nearby ports along the East Coast like Philadelphia and Norfolk. How broad any economic impacts could be from the port and bridge being out of commission will depend on how quickly and frequently other ports will be able to handle goods that flowed through Baltimore prior to the collapse.

While products can be moved around to other ports, that is still likely to form some kind of delays as they will be further away from their final destinations by being rerouted. Those delays, along with the additional costs of shipping, are likely to be passed onto consumers, though it’s not expected to have a widespread impact.

“Getting the products off of the cargo ships is one thing, but then it needs to be transported to trucks and sent to wherever the ultimate destination is,” Carson said. “It’s just going to incur delays and additional costs to get the products trucked to where they need to be trucked to.”

The collapse of the bridge is also adding another hurdle onto the supply chain that is still recovering and evolving after the coronavirus pandemic caused all kinds of bottlenecks and snags that helped fuel inflation to record levels and forced U.S. businesses and the federal government to recalibrate how they would operate moving forward.

“What we're realizing is that we have to be we have to build supply chains that are more resilient and are more flexible, and that we're not going to have extremely lean supply chains that we that we aspired to in the past,” Ketels said.