The Domino Effect: The Potential Impact of the Francis Scott Key Bridge Destruction on the U.S. Supply Chain
Photo Credit: Reuters
In the intricate web of the United States' supply chain, every link plays a crucial role in ensuring the seamless flow of goods across the nation. However, what if one of these vital links were suddenly severed? On Tuesday, March 26, 2024, a Maryland port link was severed. The Francis Scott Key Bridge, spanning the Patapsco River in Maryland, stands as one such critical connection. While we can go into all sorts of speculation as to what actually was the cause of the crash (as so many others are doing already), let's instead delve into the potential ramifications of its destruction on the entire U.S. supply chain.
The Backbone of Transportation:
The Francis Scott Key Bridge served as a vital artery for transportation by carrying a significant volume of freight traffic daily. Its strategic location facilitated the movement of goods between the Mid-Atlantic region and beyond. This bridge wasn't merely a structure of concrete and steel; it was the lifeline of commerce, connecting businesses to markets and consumers to products.
More than 52 million tons of foreign cargo, worth some $80 billion were transported out of the port last year, according to Maryland Gov. Wes Moore. The 11th largest port in the nation, Baltimore served an average of 207 calls a month last year, according to the shipping journal Lloyd’s List.
The waterway underneath the bridge serves as an important connection to The Port of Baltimore. The Port of Baltimore serves as a crucial gateway for international trade, handling a diverse range of cargo to include:
Autos and Roll-on/Roll-off (RoRo): The Port of Baltimore consistently ranks number one in the United States for handling finished vehicles like cars and light trucks. It also excels in RoRo cargo, which includes farm and construction machinery.
Last year, the port handled 847,158 cars and light trucks, according to data from the port. It was the 13th consecutive year that Baltimore led all U.S. ports in the import of cars and light trucks. Other top imports include sugar and gypsum.
Containers: This category represents a significant portion of the port's business, containing a wide variety of manufactured goods from electronics and clothing to machinery and household items.
Forest Products: Wood pulp, lumber, and other wood products are a major import for the port.
Break Bulk Cargo: This refers to general cargo that isn't containerized. It can include anything from steel coils to large machinery.
Dry Bulk Commodities: The bridge likely saw transportation of dry bulk commodities like coal used in steel production or grain shipments for export.
Disruption at the Heart:
When critical infrastructure is suddenly taken out of commission, long-lasting ripple effects will ensue despite the cause whether due to a natural disaster, a terrorist/cyber attack, or structural failure. The immediate impact will be felt by businesses relying on efficient transportation to move raw materials, finished products, and everything in between. Supply chains dependent on just-in-time delivery systems will face significant disruptions, leading to delays, increased costs, and potentially empty shelves.
“These diverted volumes will impact the ports of New York/New Jersey, Norfolk and the Southeast and we have to prepare trucking and transload capacity to get that freight to its intended network,” - Paul Brashier, Vice President of Drayage and Intermodal for ITS Logistics
Prior to the Francis Scott Key Bridge collapse, the United States was already facing shipping backlogs at two major waterways:
The Panama Canal - drought forced restrictions on water usage, limiting the canal’s ability to raise ships to their full capacity. The maximum number of ships passing through the canal daily is still below pre-drought levels.
The Red Sea - has been significantly disrupted due to security concerns posed by the Houthi attacks.
Houthi Attacks: Yemeni rebels, known as Houthis, have been launching drone and missile attacks on commercial vessels in the Red Sea, targeting some ships believed to be linked to Israel. Oftentimes, they fire missiles indiscriminately as they’ve hit ‘friendly’ nations ships as well.
Shipping Company Rerouting: Major shipping companies have chosen to reroute their vessels around the Horn of Africa to avoid the risk of attacks. This adds significant distance and time to journeys.
Delays and Increased Costs: The disruptions have caused delays in shipping and increased transportation costs for goods traveling through the Red Sea.
1975 Building of the Francis Scott Key Bridge - Photo Credit: MTA Archives
Cost and Time to Rebuild:
While trade is nimble and will reroute, over the long term the bridge will need to be fundamentally engineered and rebuilt, and that will take years.
“It will be in excess of two years,” said Meade, of Lloyd’s List. “There will be significant disruption and cost to this infrastructure project. In 1977, the bridge cost $60 million. Take in inflation and the rapid pace to redesign and build will increase procurement premiums. This will be a very expensive project.”
Regional and National Fallout:
The repercussions won't be confined to Maryland or even the Mid-Atlantic region. The ripple effect will reverberate across the entire country. Manufacturers, retailers, and distributors nationwide are going to struggle to cope with the sudden loss of a critical transportation route. Industries reliant on timely deliveries, such as automotive, retail, and manufacturing, will bear the brunt of the fallout, facing production slowdowns and increased expenses. Prior to the bridge collapse, I was reading daily reports about different shortages in the grocery stores that are already impacting shoppers. Grocery stores are attempting to mask the shortages by fronting products, widening aisles, and placing ‘filler’ products on the shelves such as lawn chairs.
Alternative Routes, Limited Solutions:
While alternative transportation routes exist, they will quickly become overwhelmed by the sudden surge in both land and water traffic diverted from the now-unusable bridge. Roads and highways already congested will experience unprecedented gridlock, further exacerbating delivery delays and logistical nightmares. Rerouting shipments via longer, more circuitous paths will not only incur additional costs but also strain already stretched supply chain networks.
Photo Credit: Matt York/AP
Crumbling United States Infrastructure:
While congress is voting on the next $1.2 trillion war funding plans for other countries, a significant portion of the United States’ infrastructure is in major need of repair. According to the American Society of Civil Engineers (ASCE) and their associate Infrastructure Report Card website:
American Society of Civil Engineers (ASCE) Grade: In their 2021 Infrastructure Report Card, the ASCE gave the overall infrastructure a D+ grade, highlighting the need for significant investment.
Roads and Bridges: The Federal Highway Administration reports that over 42% of major roads and highways, and 7.5% of bridges, are in poor or mediocre condition.
“A recent estimate for the nation’s backlog of bridge repair needs is $125 billion. We need to increase spending on bridge rehabilitation from $14.4 billion annually to $22.7 billion annually, or by 58%, if we are to improve the condition. At the current rate of investment, it will take until 2071 to make all of the repairs that are currently necessary, and the additional deterioration over the next 50 years will become overwhelming.”
Public Transit: The ASCE assigns a D- to public transit systems, with a significant portion of vehicles and infrastructure in need of upgrades.
“Over a 10-year period across the country, 19% of transit vehicles, and 6% of fixed guideway elements like tracks and tunnels were rated in “poor” condition. Currently, there is a $176 billion transit backlog, a deficit that is expected to grow to more than $270 billion through 2029.”
Water Infrastructure: Lead pipes are still present in many water distribution systems, posing health risks. Additionally, investment is needed for improvements to wastewater treatment facilities. According to the infrastructure report card, there is a water main break every two minutes.
So much for that wonderful “Build Back Better” infrastructure bill.
Economic Fallout and Long-Term Consequences:
The economic ramifications of such a disruption will be profound. The slowdown in freight movement will not only impact businesses directly but also reverberate throughout the broader economy. Reduced productivity, lost sales, and increased transportation costs will erode profit margins and stifle economic growth amid an economy already looming in recession territory. Moreover, the psychological impact (given we seem to be facing ever increasing number of enemies on a global scale) of such an event will undermine investor confidence and consumer sentiment, further dampening economic prospects. Stock prices of several companies have already taken a hit.
Stock Prices Tumble:
Maersk DK:MAERSK.B stock slid over 6% in Copenhagen. Shares of the Danish shipping and logistics giant A.P. Moeller Maersk tumbled on Tuesday as the company said it chartered the ship that crashed into the Francis Scott Key Bridge in Baltimore. Maersk shares were already down 25% year-to-date, through Monday, because of turmoil in the Red Sea and a decrease in freight demand post-pandemic.
Consol Energy, a coal-mining company that uses the Baltimore Marine Terminal to load coal into large ocean-going ships, slipped as much as 10%.
CSX Transportation, which serves Consol's terminal, fell 3% at intraday lows. Norfolk Southern, a transport company affiliated with the terminal, slid 1% before rebounding. - Business Insider
Photo Credit: SHTFPreparedness
Resilience through Preparedness:
Every day it is becoming more apparent the United States’ infrastructure & supply chains are crumbling even without the ‘help’ of let’s say ‘freak’ events.
War activities, sanctions, & climate events are already impacting the supply chain. Therefore, we must fortify our own supply chain while we still can. While it's impossible to predict and prevent every potential disruption, proactive measures can mitigate their impact on your personal life. It is apparent that despite the “infrastructure bills” on paper, the government isn’t going to be of massive help anytime soon. Let’s just say the head honchos in the White House are too busy playing war games to focus on our homeland.
My fellow Warriors, I may sound like a broken record but these events are accumulating. I don’t want to seem like a Debbie Downer but I don’t see things getting any better. We must take advantage of the ability to prepare while things are still available. Even if it’s just a matter of buying one extra of everything you & your family use on a daily basis to begin building a stockpile, it’s a start. Check out my Ideas List for some inspiration. I personally picked this list from my extensive preparedness research over the past two years.
Until next time my fellow Warriors, stay informed, stay vigilant, Ever Forward!