project44 analyzes the aftermath of the bridge collapse in Baltimore

The visibility platform project44 analyzes the consequences of the bridge collapse in Baltimore for the supply chain. On Tuesday, March 26, 2024, the container ship MS Dali, operated by the Synergy Group and chartered by Maersk, collided with the Francis Scott Key Bridge in Baltimore (part I-695). The bridge subsequently collapsed. Video footage shows that the ship, owned by the Singapore-based group Grace Ocean, lost control. Comprehensive investigations are currently underway.

(Munich/Baltimore) Two alternative channels have already been opened for shipping traffic. Another channel is expected to be operational later this month. These three routes are intended to accommodate a large portion of the shipping traffic to the Port of Baltimore. The reopening of the main channel is planned for the end of May.

Affected deliveries and dwell times

Many containers that were supposed to call at the port have been assigned a new discharge port. The following graphic (Fig. 1) shows where these containers are now to be unloaded. Unless they are Maersk containers, customers will have to arrange for further transport themselves. This is likely to lead to an increase in demand and thus also in prices for truck and rail transport in these regions.

As the Port of Baltimore remains closed, shippers are working to update the alternative ports as quickly as possible. The breakdown (Fig. 2) shows that the PODs are generally updated before they depart for Baltimore. This is ideal for both shippers and loaders. There are clear instructions on where they need to go, rather than having to anchor and wait for instructions. Loaders also have more time to organize transport from the new port. On average, the diverted containers will arrive at the Port of Baltimore 4 hours before their expected arrival time.

It is assumed that the respective ports can handle the additional volume. Project44 continues to closely monitor the dwell times of imports at these ports. The following chart (Fig. 3) shows the current dwell times at the respective ports. The increase on Monday, April 1, 2024, is primarily attributed to the Easter holidays. In Norfolk, dwell times have increased on several consecutive days. However, they remain stable at the other ports.

Dwell times of diverted containers above average

Although the dwell time in the ports handling the additional volume remains stable, the dwell times of the diverted containers are above the average for the ports. The chart (Fig. 4) shows that diverted containers spent an average of 5 days in the past week, while the overall average dwell time was about 3 days. Containers diverted to New York have a dwell time that is 66 percent longer.

For containers diverted to Norfolk, the difference in dwell time is even greater. The diverted containers stay in the port for about five days, while the other containers remain for only about two and a half days. This means that the diverted containers wait twice as long for their clearance.

With an availability of 5 free days, an average of 200 euros in demurrage is charged for a diverted container. This amount increases as fewer free days are available. Although 200 euros may not seem like much at first glance, in 2023, 1.1 million TEU containers were handled in Baltimore, averaging about 21,000 per week. This could mean weekly demurrage fees of 4 million euros, leading to an unexpected increase in transport costs.

This does not indicate problems in port operations, but rather that loaders are having difficulty finding carriers to pick up the containers at their new ports. Typically, loaders have agreements with carriers for frequently traveled trade routes. However, if a loader does not regularly receive shipments to these ports, it can be challenging to find a carrier within their existing shipping network. Even if their carriers have an appropriate fleet, loaders are forced to pay higher rates for these shipments, as they are not on contractually agreed routes.

Increased freight costs and risk of container storage fees

In addition to increased freight costs, loaders also face the risk of paying storage fees for these containers if they do not leave the port in time. Once a container arrives at a port, loaders have a certain period to pick it up, usually between 3 and 5 days. If the container is not picked up within this timeframe, daily fees apply, typically ranging from 75 to 300 euros. Freight costs and the number of free days vary by loader and are often stipulated in contracts. The chart “Average Estimated Demurrage Fees per Container” shows a forecast based on a daily rate of 150 euros, which was determined for a diverted container in New York and Norfolk based on the average dwell time, as indicated by project44.

Photo: © Loginfo24/Adobe Stock / Caption: The Francis Scott Key Bridge in Baltimore with a view of the port behind it before the collapse