The economic wreckage from the destruction of the Francis Scott Key Bridge is staggering. Consider the following mushroom cloud of losses:
The entire Port of Baltimore is closed until the channel can be cleared, halting about $15-million in daily activity in the Baltimore region.
A critical highway has been severed for much longer than the channel will be closed with a cost in lost business, slowed business, and higher expenses that is incalculable and widespread.
The combination of the two closures will impact railways, trucking, regional distribution centers, to name some of the most obvious transportation industries impacted. It is estimated the losses to those industries will add tens of millions daily to the $15-million mentioned above.
The port alone is responsible for 140,000 jobs that will be impacted until the channel is cleared with the downstream affect from any unemployment diminishing revenue to other industries as people tighten their belts.
With forty ships that were already in route to Baltimore that have to be diverted plus those that would be coming in the weeks ahead, the delay of products into other parts of the country will cause spot shortages around the nation and will increase the cost of shipping wherever those products that are rerouted are slated to go. The port handles “over a million TEUs," said one logistics CEO, referring to the number of containers Baltimore handles in a year. "It's not marginal." He alone had 800 containers already in route that are already being rerouted.
East Coast ports may not even have enough residual capacity to handle the extra shipping traffic, forcing reroutes to go through the choked Panama Canal or, at least, to the gulf or through Canada to find entry into the country. Some businesses with shipping facilities that span the nation are already rerouting some shipments to the West Coast that are not ultimately destined for West Coast business. Those will backtrack to the Midwest.
Vehicles hauling hazardous materials that are not allowed to go through Baltimore or through tunnels will now have a longer, slower route to make to get around Baltimore.
Baltimore was in rough shape economically to begin with. Now it will sink to the bottom of its own channel without a huge amount of national support.
The costs of all the rerouting and delays will be mostly borne by the businesses receiving the goods that are being rerouted, as some shipping companies are already declaring force majeure, “telling shippers including U.S. retailers, that once cargo is dropped at alternate ports, it’s no longer their responsibility.”
So, the ocean-freight companies will get the cargo to another port, but the costs of finding warehousing that will suddenly be in short supply at those ports and transport out of those ports will be up to the retailers, shipping companies and other businesses downstream from the ocean freight companies. This could include intentionally expensive port penalties (detention and demurrage) for shipments that get stored on the port site because an alternative shipper and warehousing are not found right away. Said one shipper: “Those (containers) on the water will be discharged at an alternate port where they will be made available for pick-up, and CMA CGM’s bill of lading will terminate.” COSCO and Evergreen this morning also announced their services would “be concluded” once the diverted container arrives at the alternate port. They’ll get you that far, but then you’re on your own.
In the process of all that, there will be a lot of confusion about what went where, things getting lost sitting in some back corner of some port facility where they got stashed in the overflow and the rush and not well recorded, and a lot of competition for the alternate shipping suddenly needed.
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