Bridge Collapse Ripples Include Hits to U.S. Trade, Local Jobs and Businesses

The bustling Port of Baltimore is at a near-standstill today. The stunning collapse of the Francis Scott Key Bridge over the Patapsco River on Tuesday halted all ship traffic in and out, and shut down a portion of Interstate 695 indefinitely.

The port handled a record 52.3 billion tons of foreign cargo worth $80 billion in 2023, and consistently ranks No. 1 in the nation for cars and light trucks, heavy farm and construction machinery, and imported sugar. Its closure has dealt a blow to U.S. commerce, said Philip T. Evers, associate professor of supply chain management at the University of Maryland’s Robert H. Smith School of Business.

He explains the immediate and possible long-term economic effects, which industries will be the hardest hit, and what shipping companies can learn from this tragic incident.

How does the Port of Baltimore fit into the nation’s supply chain?
It’s not in the category of the largest ports, like Los Angeles or New York/New Jersey, but it is a very important midsize port. A lot of what the port handles is more industrial rather than consumer goods. If you’re going through a grocery store, the Port of Baltimore is probably not handling a lot of those types of items. But it does handle a lot of automotives, farm machinery, lumber and pulpwood.

What areas of the economy will see the impact of the closure first?
Baltimore is a big coal export facility. There are only a handful of major coal piers in the country, so diverting a lot of those shipments might be difficult. It just depends on the capacity of other piers around the country.

I suspect for a lot of items, there will be some hiccups and some added costs because other ports may not have the capacity to accept all these additional shipments. I see a lot of these as short-term hiccups for a lot of companies, but a long-term issue for the Port of Baltimore and how they go forward. Baltimore’s done a good job of building niches so that it doesn’t compete directly with the Port of Virginia in Norfolk—for example, with automobiles, farm implements and lumber. Those industries will take more time to recover.

Will consumers see the impact of the closure directly?
In terms of prices, I don’t think there will be much immediate impact. The bigger economic impacts are the cost of the bridge, and also the impact on employment in and around the port. The port has really been at the center of the distribution boom in the mid-Atlantic. In general, the economy of the state has changed from a manufacturing focus to distribution. There’s no better place to see that than Sparrows Point, which used to be a steel mill but is now where all the new distribution centers (Amazon, Home Depot) are popping up. It’s also one of the first exits once you get over the Key Bridge. I could see it being very challenging for all those new distribution centers that are over there, and for any employees who live on the other side of the Patapsco River, and any shipments coming up from the south and up I-95. The closure has made it a lot harder to get to that location.

What happens to all of the thousands of containers trapped in the port now?
That’s a good question. Any cargo that’s at the port, or on a ship, I assume could be diverted out of the port. A lot of SUVs and combines are exported out of Baltimore; that would be a lot of money to move those vehicles somewhere else. We really don’t know when they can start to remove the bridge itself or when they can open up that channel. All those boxes sitting on the Dali—who knows when that stuff’s coming off.

What lessons can the shipping industry learn from this event?
Especially with COVID and the port issues that occurred in L.A. in 2021, firms really started to get serious about the resiliency of their supply chain. They started to think about where the risks are and whether they have risk mitigation plans. The first thing that happens is plans go awry, but at least firms are thinking about these things. Companies aren’t thinking, “Gee, that bridge is going to collapse,” but I’m sure a lot of firms have thought about and have in place plans for if there’s a disruption at some point and how that will affect them and what they might do. I think firms might be a bit more agile in terms of their ability to respond than in the past.