Baltimore Bridge Collapse, Port Closure Pressures UAN
The Singapore-flagged Dali, a 984-foot container ship bound for Sri Lanka, slammed into Baltimore’s Francis Scott Key Bridge and brought down the entire structure within seconds on March 26. The accident killed six people and shut down Baltimore’s port, threatening to disrupt global supply chains and the livelihoods of thousands of workers.
Federal officials told Maryland lawmakers that replacing the 1.6-mile bridge would cost at least $2 billion including cleanup, said a person familiar with the matter.
“Consistent with the president’s direction to get the port up and running as soon as possible, the Coast Guard’s highest priority now is restoring the waterway for shipping, stabilizing the motor vessel Dali and removing it,” US Coast Guard Vice Admiral Peter Gautier said at a March 27 White House press conference.
The Coast Guard is working with the Army Corps of Engineers, which is leading the salvage effort, and both have moved “aggressively” to board the vessel and ensure it remains stable since it holds more than 1.5 million gallons of fuel and lube oil on board, said Gautier. He said the vessel was carrying about 4,700 cargo containers including 56 that contained hazardous materials.
A portion of the bridge remains on the bow of the ship, which is sitting at the bottom of the channel but doesn’t appear to have any flooding, he said. That debris needs to be removed first before the ship can be re-floated. Salvage firm Resolve Marine has started mobilizing resources to re-float and remove the ship.
It’s too soon to set a timeline for the port’s reopening, according to US Transportation Secretary Pete Buttigieg, but outside estimates range from a couple weeks to more than a month. The closure is threatening the livelihoods of thousands of workers, while a dozen large ships are stuck inside Baltimore’s harbor and trade is being rerouted to other ports.
“This isn’t going to happen overnight,” Buttigieg said in an interview with Bloomberg Television. “This isn’t going to be cheap either.” Buttigieg said that rebuilding a smaller Minnesota bridge that collapsed in 2007 cost around $260 million, but warned the Key Bridge reconstruction would be pricier. “This is a larger span of a bridge, likely in many ways a more complex project,” he said. “We just don’t know the full scope yet.”
The Francis Scott Key Bridge took five years to build and was completed in 1977 at a cost of around $141 million, according to one estimate. “We rely on our infrastructure systems for our daily needs, for a huge amount of goods that we get in the US from overseas and to have it cut off so suddenly, it’s a huge crisis,” said Yonah Freemark, a researcher at the Urban Institute, who said the bridge rebuild would likely cost “several billions.”
President Joe Biden said he wants the federal government to pay and vowed “to move heaven and earth to reopen the port and rebuild the bridge.”
The aftermath of the bridge’s collapse throws another spotlight on the fragile nature of global supply chains that have already been strained by drought in Panama and missile attacks on Red Sea shipping by Yemen-based Houthi militants. Docks in New Jersey and Virginia face the threat of being overwhelmed by traffic that is being forced away from Baltimore, one of the busiest ports on the US East Coast.
“It’s a large port with a lot of flow through it, so it’s going to have an impact,” Ford CFO John Lawler, told Bloomberg TV. “We’ll work on the workarounds. We’ll have to divert parts to other ports along the East Coast or elsewhere in the country.”
There are concerns that diverted cargoes will overwhelm nearby East Coast ports. A sudden 10-20% increase in volumes through a port is enough to cause massive backlogs and congestion, according to Ryan Petersen, the founder and CEO of Flexport Inc., a digital freight platform based in San Francisco. He expects to see a shift in cargoes to as far away as the West Coast.
Baltimore is the number one US port for car imports and is also the second-largest terminal for US exports of coal. Baltimore is also a fertilizer hub, with UAN most significantly affected, according to Alexis Maxwell, Green Markets Director of Research. Maxwell estimated that the port handles about one-third of the East Coast UAN trade.
She noted that CF Industries Holdings Inc. ships to the East Coast ports from New Orleans, though UAN is mostly consumed in the Cornbelt. Yara North America and other fertilizer companies also participate in the Baltimore market. CF and Yara had not responded to inquiries at press time.
“It has been a real challenge getting prices this week with the bridge collapse in Baltimore,” one fertilizer industry contact told Green Markets. “At this time, we can’t even purchase UAN let alone get prices.”
“Most UAN terminals have pulled offers at this time as most of those players had resupply vessels scheduled to arrive in the coming days and weeks, so their vessels are now stranded and they will be scrambling to try and find alternative options,” added another source.
Baltimore is also one of the nation’s leading gateways for farm equipment and construction machines like combines, tractors, hay balers, excavators, and backhoes, according to Dean Croke, a principal industry analyst at DAT Freight & Analytics. March “is the peak import month in Baltimore for farming equipment ahead of planting season in the Midwest,” he said.
About 35,000 people used the bridge every day. The annual value of goods going over is about $28 billion, according to the American Trucking Associations.