Industry experts weigh in on Baltimore bridge collapse and subsequent supply chain implications

With only a few days having passed since the tragic events related to the Francis Scott Key Bridge in Baltimore, there has been no shortage of feedback and commentary, from a supply chain and logistics perspective.

As previously reported, the collapse of the 47-year-old, 1.6-mile Francis Scott Key Bridge is going to have supply chain repercussions for months, if not longer, supply chain experts are saying. And vessel traffic at the Port of Baltimore, an important East Coast trade hub, is suspended “until further notice,” the port said. The Port of Baltimore handled a record 52.3 million tons of international cargo, valued at $80.8 billion last year. It’s the 11^th-largest port in the country, and it tops in number of new vehicles coming in and out of America.

This unfortunate situation has again amplified the theme of need for supply chain resilience, in the form of things mitigation or contingency strategies when the unexpected occurs. Fortunately, though there is no shortage of advice and guidance for supply chain stakeholders when dealing with adverse and unexpected conditions and events.

In commentary provided to Newsroom Notes, Kristian O’Meara, SVP Strategic Initiatives, for JAGGAER, a global procurement technology company, and Dean Alms, Chief Product Officer, for Aravo, a provider of third-party risk and resilience services, offered up their respective takes on the current situation at the Port of Baltimore.

When asked about some examples of mitigation, or contingency, strategies, that supply chain stakeholders should be using, or at least considering, to handle cargo that was headed to or leaving the Port of Baltimore, Alms explained that the collapse of the Francis Scott Key Bridge underscores the need for organizations to have business continuity plans in place to minimize disruptions and drive operational resilience.

“Companies that use the port or bridge need to conduct business impact assessments by surveying their suppliers to identify those that cannot meet their obligations,” he said. “This allows companies to search for alternative suppliers. As part of their third-party risk assessment for transportation companies, business leaders should determine if their logistics providers have a communication strategy and point of contact for disasters like this. They should also consider having an expert evaluate the sophistication of their re-routing software to minimize downtime and disruption. If a company provides their own transportation, they will need to assess the same capabilities internally and have backup transportation providers ready.”

And O’Meara pointed the need for supply chain stakeholders to hone their ability to respond quickly to potential disruptions and diversify transportation modes and have alternative routes at the ready.

“Companies can centralize their access to rate, route and carrier alternatives, which enhances visibility into their options during disruptive events and the impact of these events on their shipments,” said O’Meara. “The centralization also creates a dynamic environment where they can collaborate with their suppliers and carriers and respond to disruptions faster.”

He also noted that companies can prioritize critical shipments and work closely with carriers to expedite deliveries or proactively reroute shipments through less impacted areas. But he observed that comes with the caveat that only organizations that are equipped with real-time visibility capabilities can swiftly identify the disruption’s impact on shipments and make adjustments to routes or modes before the situation worsens.

In terms of disrupted vessel schedules, coupled with strained labor and handling capacities at other ports like Philadelphia and Norfolk, which could lead to spill over congestion that could last months, both Alms and O’Meara observed the impact the bridge collapse is already having on global trade.

Alms noted that the bridge collapse is already disrupting global trade and stakeholders are just beginning to see the first-order effects, making it vital for port authorities and carriers to already have emergency points of contact and good relationships with their partners, including other ports, carriers, and third-party logistics providers, to locate critical shipments that have been lost, delayed, or damaged.

“For cargo ships that are currently in transit, carriers will have sophisticated routing software to re-route shipments in the most economical and/or fastest way,” he said. “It may add days or potentially weeks to shipments, but they’ll make the best of an unfortunate situation. For shipments that haven’t left ports, contingency plans should be executed including routing through alternative transportation methods, such as air or rail to deliver goods and products.”

From O’Meara’s perspective, he said that visibility and communication are key, and it requires industry stakeholders to take proactive measures.

As an example, he cited how the port congestion in Los Angeles during the pandemic showed that over-relying on one port can be catastrophic.

“Exploring alternative transportation modes, collaborating with port authorities and suppliers, and leveraging technology are critical actions to keep supply chains moving efficiently and more prepared to pivot,” he said.

Subsequent supply chain impacts, stemming from the collapse of the bridge, are already apparent.

O’Meara explained that the immediate consequences of this event are two-fold: disruptions in maritime traffic and challenges for land transportation. He said pausing all vessel movement at the port will significantly delay maritime import and export activity and cargo offloading and loading, which will create scheduling backlogs, adding that the Key Bridge collapse also severs a critical link on I-695 which is a major highway for landside trucking transportation.

“Shipping of everything from auto parts to consumer goods could be impacted,” he said. “Organizations will need to re-route shipments which will elongate delivery times and could drive up transportation costs. Companies that haven’t invested in the capabilities to identify and secure alternative suppliers and transportation capacity could experience significant shortages and delays that lead to stockouts, and production slowdowns. Limited supply could also increase prices for consumers. This situation tests organizations' agility and supply chain resilience, highlighting the importance of proactive planning and investment in response capabilities.”

Supply chain disruptions are unpredictable in terms of when, where, and how long they last, according to Alms.

“But the biggest supply chain issues will be the delays and damage to product delivery schedules, which will ultimately increase the cost of goods,” he said. “With most companies still relying on lean manufacturing, inventory to produce end-products will run out quickly. The cost to reroute materials will increase production costs in the short and medium term as alternative routes will be stressed and delayed until the bridge can be rebuilt and returned to use. These production-cost increases will in turn increase the price of products for consumers.”

Both O’Meara and Alms make some very good points in their respective observations. This tragic event is not something anyone would ever expect or plan for, but since it happened there has been a flurry of activity, with a focus on a return to normal in a safe and fluid way. That will take some time, to be sure, but it will get done and cargo movements in and out of the Port of Baltimore will eventually resume. But until then things will be different, to be sure.