Baltimore Bridge Collapse

Summary:

  • Early estimates in demurrage charges on the containers rerouting is $3.9 million weekly.
  • Shipments originally destined for Baltimore are now being rerouted primarily to New York (41%), Norfolk (30%), and Newark-Elizabeth (10%). Overall port dwell has not increased at these ports, but dwell of rerouted containers is trending up to 85% higher than overall dwell.
  • Two alternative channels have been set up to transport vessels to the port of Baltimore, with a 3rd estimated to open in April. This has led to a 90% reduction in containers being rerouted to neighboring ports. On April 29th, the first container vessel since the crash was able to enter the Port of Baltimore.

Vessel Dali Strikes Francis Scott Key Bridge

Early on Tuesday, March 26th, 2024, the Dali, operated by the Synergy Group while being chartered by Maersk, collided with the Francis Scott Key Bridge in Baltimore (part of I-695), causing it to collapse. Video footage reveals that the vessel, owned by the Singapore-based group Grace Ocean, lost power, resulting in a loss of control. A comprehensive investigation is currently underway, with a current focus on Dali’s circuit breakers and electrical system.

Four temporary channels have been opened since the bridge’s collapse including a 35’ channel that was open for just a few days to allow vessels like the Saimaagracht to exit the port. The MSC Passion III was also able to enter the port through this channel, marking the first container vessel that entered
the port since the collapse. While this channel was temporary and has already closed, the port is expected to be back up to full vessel transit by May 31.

Impacted Shipments

New ports of discharge have been assigned to many of the containers aboard vessels that were supposed to call on the Port of Baltimore. Below is the breakdown of where these containers are now going to be discharged at. Unless it is a Maersk container, customers are required to arrange transportation from these places, so there will likely be increased spot rates for both truck and rail in these areas as outbound dray demand increases from these ports.

Breakdown of rerouted containers destined for Baltimore

As the port remains closed, carriers are working to update these ports as quickly as possible. Taking a zoomed in look at the breakdown above, there is a trend of PODs being updated prior to being enroute to Baltimore. This is ideal for both carriers and shippers, as it makes sure carriers have clear instructions on where to go instead of needing to anchor and wait for directions, while shippers have more time to arrange transportation from the new port. As containers are being rerouted to other ports, the ETAs are being updated accordingly. On average, rerouted containers are scheduled to arrive 4 hours prior to their ETA to the port of Baltimore.

Breakdown of new port of discharge assignments

These ports are predicted to be equipped to handle the additional volume that’s incoming from Baltimore, but project44 continues to closely monitor import dwell rates at these ports. The chart below shows current dwell rates at these ports, and we can see that there has not been significant impact to these ports as they take on the incremental Baltimore volume.

Baltimore is running out of freight to pick up due to the lack of inbound shipments, so the containers at port have been sitting for a while. This is not necessarily due to the bridge collapse, but it is likely that Baltimore will either have high dwell or no containers being processed as the port remains closed.

Median weekly import dwell for East Coast ports

Despite dwell being stable at the ports handling the additional volume, the rerouted containers are seeing higher dwell rates than the port median. The chart below shows that last week, rerouted containers in New York sat a median time of 4.1 days, while the overall median dwell was around 2.75 days, meaning rerouted containers in New York are sitting for 50% longer.

Median weekly import dwell for New York

Containers rerouted to Norfolk show an even larger gap between dwell, with the rerouted containers still around that 5-day mark, but the rest of the containers are right around 2.7 days, meaning rerouted containers are waiting 85% longer to depart the port.

Median weekly import dwell for Norfolk

This is not indicative of port operations, but points to shippers struggling to find carriers to pick up the containers from their new ports. Generally, shippers have contracted rates with carriers for commonly used trade lanes, but if a shipper does not often receive shipments in these ports, it can be difficult to find someone within their existing carrier network to pick them up. Even if their carriers do have the fleets to cover this area, since these are not contracted lanes, shippers are forced to pay higher rates for these loads. While the rerouted containers are continuing to dwell longer, the dwell is decreasing, pointing to shippers being able to find coverage on the new lanes.

On top of the higher rates to move the loads, shippers also run the risk of incurring demurrage on these containers if they are not picked up quickly. When a container arrives to a port, there is an allotted number of days that shippers have to pick the container up. This is generally 3-5 days. If the shipper does not pick up the container prior to this window, they must pay a daily rate until the container is picked up. This rate can range from anywhere between $75-$300. Rates and the amount of free time vary by shipper, often outlined in their contracts with ocean carriers. The chart below shows an estimate assuming a daily rate of $150/day that the average rerouted container will accrue based on the dwell times project44 is seeing.

Average estimated demurrage per container

If the containers have 5 free days, on average a rerouted container is estimated to accrue $188 in demurrage. This number increases if there are fewer free days available. While $188 doesn’t seem like a ton, in 2023 Baltimore handled 1.1 million TEU containers, which averages out to roughly 21,000 per week. This could equate to $3.9 million in demurrage weekly, causing an astounding unexpected increase in transportation costs. Please note that this estimation is based off the average number of free days contracted. While ocean carriers are not obligated to increase free days or absorb detention fees due to the invoking of force majeure, some carriers may opt to grant extra free days to customers given the circumstances of the bridge collapse

Expected Supply Chain Impacts

Automobile Industry

Baltimore is a key city for automobile manufacturing in the United States, with the Port of Baltimore being the #1 handler in the US for car imports and exports. The Port of Baltimore handles freight from major automakers including, but not limited to, Nissan, Toyota, General Motors, and Volvo. Expect disruptions to manufacturing in the automobile market until companies can establish dray networks through neighboring ports. The automobile industry is notoriously lean, meaning any disruptions will have ripple effects throughout the manufacturing process.

Gypsum Supply

Alongside automobiles, the Port of Baltimore is the largest importer of gypsum. Gypsum is a mineral used in a wide variety of goods including fertilizer, toothpaste, shampoo, and even sidewalk chalk. Interruptions to the supply of gypsum could have ripple effects in multiple industries, but the most concerning is the construction industry.

Gypsum is a key ingredient in drywall, plasters, ceiling tiles, building blocks, and multiple other construction materials. If the gypsum supply is limited, there could be shortages in building materials, which could result in construction costs increasing. This would be similar to what occurred during the pandemic when lumber shortages were surging.

For project44 customers

project44 has made three custom views available in our platform, Movement, to help customers navigate the crisis. All project44 customers can now view all shipments and orders for both upcoming arrivals into Baltimore and upcoming departures out of Baltimore, as well as when the port of discharge is updated. In addition, we have notified all customers with impacted containers on the vessel involved in the incident.

Concern for Safety

While project44 has made it a priority to provide frequent updates on the Baltimore bridge collapse, the safety of the impacted people remains top priority in these challenging times. They and their families are in our thoughts.

For questions or comments:

press@project44.com

Disclaimer: The information conveyed herein, shared solely for summary and not contractual purposes, comes from both project44 and third-party reporting. The project44 data does not include all available market information, and project44 has not undertaken to independently verify the third-party reporting. Similarly, this type of data changes from day-to-day. Accordingly, the reader should not rely on this reporting to make any business decisions, and project44 expressly disavows any liability arising from any such reliance.

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