Key Bridge Collapse Impacts U.S. Trade

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Cassidy Levy Kent

Contributor

Cassidy Levy Kent is an international law firm with offices in Ottawa and Washington DC. We help clients address international trade and investment issues — whether they involve trade controls, trade remedy litigation, dispute settlement, negotiations or policy efforts. Our lawyers have decades of experience in government and as partners at some of the largest and most prestigious US and Canadian law firms.
Last week the Dali, a Singaporean-flagged container ship, struck the Francis Scott Key Bridge, an iconic landmark of the Baltimore City skyline and a vital artery for U.S. trade...
United States International Law
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Last week the Dali, a Singaporean-flagged container ship, struck the Francis Scott Key Bridge, an iconic landmark of the Baltimore City skyline and a vital artery for U.S. trade, causing the bridge to collapse into the Baltimore Harbor. The Key Bridge has been an essential link between the Baltimore metropolitan area and the global market, facilitating both land transport across the Patapsco River and vessel movement to and from the 13th largest container port in the United States. The collapse has abruptly halted vessel traffic, with widespread implications for importers, exporters, and the global market.

CURRENT SITUATION

Currently, bridge debris obstructs access to the Port of Baltimore, leaving approximately 30 ships destined for Baltimore and 40 ships inside the Port unable to navigate in or out. Although the Port is still processing trucks, the absence of the Key Bridge also poses a significant challenge for the movement of goods via land transport. Opening in 1977 with the intended purpose of facilitating trade over the Patapsco, the Key Bridge's collapse has forced trucks to utilize alternative routes. However, the most direct alternative route, transportation to the Port via the Baltimore Harbor Tunnel, poses challenges to truck drivers due to regulations on vehicle size and prohibitions on hazardous materials. These restrictions have forced drivers to reroute around Interstate 695, circumventing Baltimore City entirely, thereby increasing travel time and exacerbating traffic congestion, which could lead to further import and export delays.

IMPLICATIONS OF THE KEY BRIDGE COLLAPSE

As a direct consequence of the Key Bridge collapse and the partial closure of the Port of Baltimore, shippers are now faced with the challenging task of redirecting their shipments to other ports along the Eastern Seaboard. The redirection of these imports will inevitably result in additional expenses for shippers while further exacerbating the backlog at ports and straining logistics capacity. CBP issued guidance on March 29, advising vessels arriving in Baltimore to consider a different U.S. port until further notice. Vessels currently trapped in the Port of Baltimore can either hold cargo onboard or discharge the cargo in Baltimore. If an importer chooses to discharge goods that were not originally intended for Baltimore, manifests must be updated and either entry or in-bonds must be filed in order to move the cargo from Baltimore via truck or rail to the subsequent destination. For perishable and agricultural goods that require a USDA permit, importers and Customs Brokers are encouraged to review their import permits, as they may need to contact the USDA Permit Unit to update the approved arrival ports. For export cargo, it is up to the discretion of the vessel agents/operators to determine if unloading cargo from vessels is preferred and/or feasible. In the meantime, the Captain of the Port is preparing to establish a temporary alternative in the northeast of the main channel for commercially essential vehicles.

The Port of Baltimore is a primary gateway for numerous critical imports and exports, solidifying its position as the 13th largest port for container shipments in the United States. This status is largely attributed to the Port's strategic access to the Atlantic Ocean, Interstate 95, and extensive rail networks. An estimated $15 million in daily economic activity can be attributed to the Port, which in 2023 processed $59 billion in imports and $22 billion in exports. The Port also leads the United States in specialized "roll on/roll off" cargo, which permits the movement of large wheeled goods such as vehicles and construction equipment. For certain key industries, the closure of the Port creates uncertainty about how and where they can import and export their goods.

Notably, Baltimore is the leading entry point for U.S. automobile imports, having processed nearly 850,000 autos and light trucks in 2023 from automakers such as Toyota, Nissan, GM, Volkswagen, and more. Susannah Serrano, manager of automotive business development at Maryland Department of Transportation port administration, has also stated that the Port has been actively engaged in discussions to accommodate more electric vehicles.

Furthermore, as the East Coast port closest to the Midwest, the Port of Baltimore also plays a crucial role in handling substantial imports of farm machinery. It also processes approximately 3 million tons of agricultural products annually, including sugar, salt, gypsum, and more.

In terms of exports, the Port of Baltimore is the second largest coal exporter in the United States, exporting 28 million tons of coal in 2023 and representing nearly 28 percent of all U.S. coal exports in 2023. It has been reported that at least two ships trapped inside the Port are carrying coal, and at least 14 ships were to arrive in the coming days to load coal exports. Because the coal industry in the United States has been facing a decrease in domestic demand, the closure of the coal terminals in the Port of Baltimore is poised to be a large setback to an already struggling industry.

AN UNCERTAIN FUTURE AHEAD

The collapse of the Key Bridge has triggered unprecedented repercussions for U.S. trade, striking at a particularly unfortunate moment amidst instability in the Red Sea and droughts in Panama, further complicating the global trade landscape. Over the next few weeks and months, importers and exporters should expect port processing delays for both land and sea facilitated trade. In order to mitigate risk, importers and exporters should pivot to utilizing ports other than Baltimore. For cargo already on the water, importers should redirect their shipments to an alternative port until CBP issues guidance stating otherwise.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Key Bridge Collapse Impacts U.S. Trade

United States International Law

Contributor

Cassidy Levy Kent is an international law firm with offices in Ottawa and Washington DC. We help clients address international trade and investment issues — whether they involve trade controls, trade remedy litigation, dispute settlement, negotiations or policy efforts. Our lawyers have decades of experience in government and as partners at some of the largest and most prestigious US and Canadian law firms.
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