The collapse of the Francis Scott Key Bridge and the closure of the Port of Baltimore this week may have far-reaching implications all the way in which throughout the nation for the ports of Los Angeles and Lengthy Seashore, based on a number of specialists.
The bridge collapsed Tuesday about 1:30 a.m. when the Dali, a 985-foot-long cargo ship en path to Sri Lanka, crashed into one of many bridge’s help pillars shortly after dropping energy. It despatched a majority of the bridge plummeting into the 50-foot-deep Patapsco River beneath, claiming the lives of at the least two building crew staff on the bridge; 4 others are lacking and presumed lifeless.
Within the brief time period, the closure of the Baltimore port will improve prices for companies and customers on the East Coast, mentioned Lisa Anderson, founding father of LMA Consulting Group, which makes a speciality of provide chains and manufacturing. That’s as a result of the container ships on their method to Baltimore can be diverted to close by New Jersey, Pennsylvania and Virginia ports, and the merchandise they’re carrying must change the preparations beforehand made to be transported to wherever they should go, Anderson mentioned.
The closure will even have an effect on warehouses and different logistics companies, which must resolve whether or not they need to change to different amenities whereas officers work on reconstructing the bridge and reopening the port, Anderson mentioned. Vans will even need to be diverted from the Key bridge, which means they’ll both need to go across the metropolis or go by tunnels, which have top, width and dangerous supplies restrictions.
Long term, ports in Los Angeles and Lengthy Seashore may see extra exercise, particularly with drought situations lowering the capability of the Panama Canal, Anderson mentioned. The delivery route from northeast Asia by the Suez Canal and to the East Coast of the U.S. has additionally turn out to be perilous due to the struggle in Gaza. The Iran-backed Houthis in Yemen have been attacking industrial ships going by the Suez Canal, leading to delivery strains having to divert their vessels across the southern tip of Africa.
What meaning is that the ports of Los Angeles and Lengthy Seashore will see a rise of quantity, translating to extra exercise for trucking firms in addition to for warehousing and rail methods, Anderson mentioned.
“That’s a optimistic, however we additionally want to verify it’s not gonna turn out to be a brand new bottleneck,” she mentioned. “These people are including time to their orders so that they have to search out new routes and we wanna be sure we’re ready to service this extra quantity.”
The closure of the Baltimore port may additionally result in a “nominal” uptick in prices for the merchandise that usually arrive there, akin to automobiles and lightweight vans, Anderson mentioned. The prices of diverted transportation will finally be handed on to prospects, but it surely’s not anticipated to be important throughout the U.S., she mentioned.
Costs may additionally go up as a result of it’s at the moment the contract negotiation season for giant retailers and logistics firms, and contracts for the entire yr can be finalized within the subsequent two to 3 weeks, mentioned Robert Khachatryan, chief government of Freight Proper in La Crescenta.
Disruption provides pricing energy to the delivery firms, which may result in larger charges within the contracts, Khachatryan mentioned. As a result of the port closure additionally resulted in vessels being caught and diverted, there’s additionally a shortage of vessel house.
“The carriers had a stronger hand negotiating in the previous few weeks. Walmart, Goal, they have been pushing again on not signing larger charges, however the Baltimore disruption will pressure their hand to agree,” he added. “It’s not gonna be something like COVID but it surely may be a number of hundred {dollars} extra per container, which is a couple of 10% to fifteen% elevated price in freight.”
The disruption may additionally imply that shippers would possibly rethink their import methods for the subsequent six months to a yr, particularly as a result of it may take a number of months to greater than a yr to get the Port of Baltimore again into fee, based on Alex Cherin, former Port of Lengthy Seashore managing director for commerce.
“Relying on gas costs, if it’s coming from Europe by the Suez Canal, they could save extra if different East Coast ports can accommodate cargo, or the rail charges from the West Coast might be a greater discount,” he mentioned. “It’s a fairly fluid state of affairs. Within the subsequent three to 6 months, you’ll see some trickle-down into the Gulf Coast and West Coast ports.”
It’ll additionally rely on the kind of cargo that’s being shipped, Cherin mentioned. As a result of Baltimore dealt with a whole lot of cars, some East Coast ports may not have the infrastructure or capability to deal with these merchandise. Baltimore has been the highest U.S. port for passenger autos, dealing with 11% of these imports in 2023, Forbes reported.
Gulf Coast and western ports, akin to these in Los Angeles and Lengthy Seashore, have extra capability for specialty containers and bulk items, Cherin mentioned. Shippers would possibly decide to go along with them as a result of they’ll deal with roll-on/roll-off ships — as Baltimore may — that are designed to hold automobiles, vans, buses, trailers and different autos.
