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Baltimore bridge collapse sparks trade disruption as port shut indefinitely – what impact will it have?

The Singapore-flagged Dali container ship has shut down the Port of Baltimore indefinitely after it collapsed the 1.6 mile long Francis Scott Key bridge on the east US coast.

It has been reported that 10 ships are stuck inside the port unable to leave as the bridge spans the only route in and out of the harbor where the port is located. Another 30 small small cargo ships, tug boats and pleasure craft are also in the port, while about 40 heading for Baltimore have been forced to divert

Maryland officials have declined to comment on the restoration of the port while the “exclusive focus” is on saving the lives of eight people believed to be missing in the Patapsco River.

But experts have warned that there could be long-term impacts on global trade and insurance premiums as a result of the incident.

Baltimore handled 52.3 million tons of foreign cargo last year worth about $80.8 billion. The port was the second busiest for coal exports last year, with its eight dry bulk terminals exporting 22 million tonnes of coal last year and small amounts of other metals and minerals.

Andrew Tettenborn, Professor of Commercial Law at Swansea University, said the only “temporary” impact on global trade could relate to the coal industry, but he added that the “US are good at diverting” coal exports.

“A lot of the trade will be picked up elsewhere,” he said.

Asked about the indefinite blocking of the port, he said: “Even if it is blocked for a time, I wouldn’t think it would have an enormous effect.”

Zaili Yang, Professor of Maritime Transport at Liverpool John Moores University, said the impact on global trade would be minimal as it isn’t as integral to trading lines as the likes of the Suez Canal.

“As per its effects on global trade, I think it is less likely compared to the Suez Canal blockage given the locations of the two are different,” he said.

“My personal opinion is its effects in the maritime sector shall be more on safety than economy and  unlikely to be cascaded to the associated maritime supply chains.”

He added that the real impact of the crash will be on the inspection and protective measures for avoiding any other similar bridge collapse by ship collisions.

A container ship rests against wreckage of the Francis Scott Key Bridge

(Copyright 2024 The Associated Press. All rights reserved.)

“It will and shall be done through a two-way solution, ship anti-collision by regulatory bodies such as the IMO (international Maritime Organization) and bridge structure reinforcement by domestic transport authorities,” he said.

“Anti collision measures could be developed from operational (improved safer procedures for marine officers), engineering (anti-collision poles surrounding the supports of the bridges on the main navigational channels) and technological (early detection and warning by advanced technologies such as AI).”

The cost of the damage caused to the bridge and any loss of life could be paid through a liability pay-out from a P&I club, a non-for-profit association in which member shipowners pool their insurance premiums to pay claims on a mutual basis.

When a claim exceeds $10m, it is shared between the 12 International Group of P&I Clubs.

Parts of the Francis Scott Key Bridge remain after a container ship collided with one of the bridge’s support

(AP)

Just like with car insurance, if there is a major claim, or a high number, the renewal for members can go up.

Speaking to The Independent, David Walton, director of UK-based commercial insurance brokers Bromwell Ltd, said the industry was well equipped to deal with such incidents, although he said the cost of freight could rise as a result through an increase in insurance premiums.

And Mr Walton said it was a similar picture for insurance policies for marine cargo, with container damage and delays likely to also lead to claims.

He said: “It is bad what has happened, people may have died, and it is quite severe, but when you look the amount of cargo that is being moved it is quite a big market so it will have repercussions but not necessary as severe as you may think because the insurance policies are underwritten to have large losses.”

(AP)

Asked if it could lead to a rise in costs for consumers receiving goods like cars exported by vessels around the world, he said: “It is too early to say. Potentially a rise in premiums could pass along the line but I think with liability insurance the way it is underwritten, both marine cargo and marine liability, they are underwritten to absorb quite large claims.

“So quite often it will have an impact on the account of that claim, but it is not necessary going to have a huge impact on that part of the industry. It’s not necessarily disastrous. It’s going expensive but insurance is there to underwrite to the correct level to be able to absorb a large claim. It couldn’t take a lot of large claims, but it could take a large claim.”

The Dali, owned by Grace Ocean Ptd Ltd, comes under the Britannia P&I Club.

A spokesperson for the club told The Independent: “We are working closely with the ship manager and relevant authorities to establish the facts and to help ensure that this situation is dealt with quickly and professionally.“In the meantime, our thoughts are with everyone affected by this incident.”


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