| Baltimore Bridge Crash: Insurance Companies Could Pay Up to $4 Billion Baltimore Bridge Collapse Raises Concerns About Global Supply Chains |
The Dali was sailing to Colombo when the disaster struck. Initial fears were confirmed that half a dozen people had died in the accident. The port of Baltimore was closed, stranding millions of tons of coal, hundreds of cars and shipments of timber and plaster. About 40 ships were ready to depart on March 26, and a large number of Atlantic-bound ships were unable to dock “until further notice”.
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| The Singapore-flagged Dali, carrying 5,000 containers, crashed into Baltimore's Francis Scott Key Bridge, causing the 2.5km-long bridge to collapse in seconds. Photo: AP |
Financial markets reacted quickly to the bridge collapse, with shares in global shipping giant Maersk plunging 2.6% in Copenhagen on March 27. But an analyst at online broker Nordnet said that in the long term, the event is unlikely to be a major catalyst for share prices unless something untoward happens, such as signs of serious negligence behind the accident.
Transportation Secretary Pete Buttigieg warned of “significant and lasting impacts to supply chains” following the closure of the Port of Baltimore. It is too early to estimate what it will take to get the port back online and open. The bridge is one of the “cathedrals of American infrastructure,” and rebuilding it will take time. The road back to normal will not be easy, nor will it be quick.
US President Joe Biden called the bridge collapse a "terrible accident" and pledged to reopen the port and rebuild the bridge, with the federal government expected to cover the entire cost of rebuilding the bridge.
The cost of rebuilding the bridge is estimated at $500 million to $1.2 billion, with construction taking at least two years. The Port of Baltimore is particularly important for the import and export of automobiles and light trucks. About 850,000 vehicles are transported there each year, supporting about 15,000 jobs. In addition, the Francis Scott Key Bridge is a vital artery on the East Coast, with about 30,000 vehicles crossing it each day.
European automakers including Mercedes, Volkswagen and BMW maintain extensive infrastructure in the Baltimore area to ship vehicles. A spokesperson for German luxury automaker BMW said the company does not expect any immediate impact beyond short-term traffic congestion. The company uses the Port of Baltimore to import cars, but the car terminal is located at the port entrance, in front of the bridge, and is still accessible.
However, US auto giant Ford will have to “relocate parts to other ports,” which will impact its supply chain. Ford CFO John Lawler said the group has secured alternative shipping solutions when an alternative is needed at short notice.
With Baltimore handling just 1.1 million containers in 2023, any impact on container rates and shipping costs from the disruption will be much less than the increase in cargo diverted by the Houthi rebel group’s attack in the Red Sea, said Ryan Peterson, founder and CEO of logistics platform Flexport. East Coast volumes are down, and those ports have the flexibility to accommodate that.
However, there have been warnings of traffic congestion and delays as a sudden increase in port traffic of 10% to 20% would be enough to cause all sorts of delays.
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