The Bridge, The Boat, The Barge – Economic Update on Baltimore’s Port
In this video from The Franklin Partnership, contributing author Omar Nashashibi summarizes how the federal government is responding to the Key Bridge collapse in Baltimore on March 26th.
Supply Chain Impacted by Baltimore Bridge Collapse
On April 5th, President Biden took an aerial tour of the accident site that caused a tragic loss of life where he gave remarks in Baltimore.
Here we will review the impact of the Port of Baltimore and the Key Bridge to supply chains, the timeline for reopening the various transitways, and potential federal government support, including financial.
The Port of Baltimore is one of the few in the nation which ranks in the top twenty busiest in three major categories: total tonnage rank, dry bulk rank, and overall container traffic. It is the closest Atlantic port of entry for the Midwest and thousands of manufacturers in supply chains supporting virtually every sector of the economy.
The Port is a major thoroughfare for commodities, components, and finished products heading in and out of the U.S. As widely reported, Baltimore is the top entry point for $27 billion in motor vehicles and parts being imported into the U.S. and $8 billion of autos and parts exported overseas. The Port of Baltimore also ranks top in the U.S. for transporting roll-on/roll-off heavy farm and construction equipment and machinery and also handles more than $2 billion each in chemicals and aluminum, $1 billion for iron and steel, nickel, wood, electronics, and furniture.
Baltimore is critical for coal exports as few other terminals in the U.S. have the storage and loading capabilities. As the second largest exporting hub in the country, coal exports from this Port accounted for 28% of the total shipped from the U.S., reaching a high of 28 million short tons in 2023. The disruption will impact India as the largest recipient for U.S. steam coal, followed by Japan, China, and Brazil which receive each millions of short tons of metallurgical coal from the Port of Baltimore.
Some port traffic could temporarily shift to New York/New Jersey and Norfolk, Virginia, but especially in the case of coal, specific storage requirements exist as there are for onloading and off-loading vehicles and large machinery.
On April 4th, the U.S. Army Corps of Engineers provided an aggressive timeline for reopening the Fort McHenry Channel, allowing the Port of Baltimore to return to full operating status. The Corps said that by the end of April, it expects to open a 280 feet wide by 35 feet deep limited access channel. The goal is to allow one-way traffic for barge containers and some of the roll-on/roll-off for autos and farm machinery and equipment.
The Army Corps of Engineers in the April 4 statement also said that they are targeting the end of May of this year to fully restore normal capacity for the Port of Baltimore. Many consider this an aggressive timeline, but the return to normalcy roughly sixty day after the incident would come as welcome news for much of the U.S. and global supply chains.
On April 7th, response crews began removing containers from the ship that struck the bridge as officials coordinating efforts noted on their official website created, keybridgeresponse2024.com.
Baltimore Port, Bridge Supply Chain Disruption Timelines Released
While much of the focus is on the Port of Baltimore, officials expect that vessel activity will return to normal much more quickly than traffic reliant on the Key Bridge. In 2023, roughly 12.5 million vehicles crossed over the bridge, averaging 34,000 vehicles a day. Government transportation officials stated that “diverted traffic would add 18 percent to the combined volumes for the Fort McHenry and Harbor Tunnels.”
The Maryland Department of Transportation created a website to help direct traffic patterns to avoid the southeast corridor of I-95, directing harbor crossings alternate routes as I-95 or I-895 tunnels.
In addition to volume control, the Baltimore Key Bridge is central to mid-Atlantic hazardous cargo, much of which is barred from passage through the two Harbor tunnels.
Thus far, the state of Maryland has requested and received $60 million through the Federal Highway Administration’s Emergency Relief program.
The Infrastructure Investment and Jobs Act, known as the Bipartisan Infrastructure Law signed in 2022, authorizes $100 million annually for the Emergency Relief from 2001 to 2026. The law is built on a previous program and allows the Secretary of Transportation to use the funds for emergency repairs due to external causes resulting in catastrophic failure. And while the bridge itself appears to clearly fall within the intention of the law, funding for the port of Baltimore itself and other cleanup, remediation, and construction activities will likely need other federal sources.
There are also limits as to how far this Emergency Relief fund can go as Congress clearly intended the $100 million in annual spending to address projects and incidents throughout the U.S. Currently, the account contains roughly $950 million as the Biden administration looks to the quickest option to deploy resources.
As to timing of any relief from the U.S. Congress, which is where the bulk of funding must originate, Senate Majority Leader Charles Schumer is starting the process.
In October 2023, the Biden administration sent to lawmakers a $634 million domestic supplemental funding request to repair federal highway and roads damaged during disasters. While Capitol Hill did not act at the time, there is talk in Washington about possibly including the Baltimore bridge funding in a broader supplemental spending measure this spring or early summer.
There remain many moving parts, including objections from some over how the federal government would pay for the unexpected spending as some House Republicans indicate they would like conditions attached to any funding measure. We are also hearing from sources in Washington, that rebuilding the bridge with federal dollars would also include the Buy America and Buy American funding for any procurement or government financial assistance. This means U.S. manufactured products, including iron and steel, being produced domestically.
Moving this through Congress will take some time as while most will consider this a must-pass bill, it will take bipartisan votes in both the House and Senate to clear a number of hurdles expected in the coming weeks and months.
We will be keeping an eye the developments for both the Port and Bridge closely as officials in Washington, D.C. decide how much and where to spend any emergency spending and how that will impact supply chains and trade flows.
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Jennifer Clement is an executive sales and marketing leader specializing in value creation for the C-suite. In her current role at CLA, Jennifer collaborates on strategy with executives of global manufacturing and distribution companies to accelerate results. Previously Jennifer served as a Global Business Acceleration Leader for Complete Manufacturing and Distribution (CMD). During her time with CMD, Jennifer lived and worked in Asia from 2015-2019. Prior to CMD, she spent 10 years in senior care technology. Jennifer started her career at Johnson Controls (JCI) and spent nine years in leadership roles; followed by five years at Rockwell Automation (ROK) leading c-suite strategy and marketing operations.