When Size does Matter: Baltimore Accident highlights the Risks of large Vessels to critical Infrastructure
On March, 26th, the container ship Dali - under charter to Maersk - collided with a pylon of the Francis Scott Key Bridge in Baltimore, causing its destruction and tragically resulting in loss of life.
The vessel evidently experienced a loss of power and control. Sometimes, such events happen when control systems fail or when fuel types are being switched between the ECA zone, where low sulfur is required, and high seas without this restriction, where heavy fuel oil (HFO) is used.
This incident adds to an ongoing list of recent maritime accidents where large ships have caused significant and catastrophic damage.
Just last week, on March 16th, 2024, the YM Witness knocked over three of the four Ship to Shore Gantry cranes at the Evyapport terminal in Kocaeli Port, Türkiye. The cause was likely human error, as the approach speed was too high and attempts to slow down the enormous ship were unsuccessful.
On December 25th, 2023, an HMM vessel damaged cranes in the port of Antwerp, and on June 4th, 2023, another container ship toppled a crane in the port of Kaohsiung in Taiwan.
In all these cases, critical infrastructure was damaged or destroyed. The impact on shipping is significant. These incidents have severely hampered the handling capacity of the affected terminals, resulting in vessels being rerouted or facing reduced handling capacity and speed.
In Baltimore, the ports upstream of the destroyed bridge, where debris is blocking the channel, are inoperable and will remain unreachable for a considerable period. Currently, 1.5 million TEU of handling capacity is off the market (Source: Alphaliner). In addition, vessels in port are immobilized. Automobiles are especially affected as Baltimore is the US largest volume import site (see graph below). In 2023, Baltimore port, including its private and public terminals, processed the highest number of autos and light trucks in the U.S., totaling 847,158 (Source: Maryland government website). Alternative solutions may include rerouting automotive parts to different ports in the country or on the East Coast.
Ship count by category at Baltimore Port in 2024 (YTD)
Source: Bloomberg, own illustration
Evyapport in Türkiye, with a handling capacity of 855,000 TEU, approximately 7% of the country’s annual container throughput, is currently out of operation. Once the debris from the toppled cranes is cleared away, the port will be left with only one operational STS crane out of four. Depending on the width of the vessels they service, temporarily replacing them with mobile Gottwald-type cranes could allow them to service ships, albeit at a reduced speed.
In all these events, ships are damaged, resulting in losses for the shipping line, and infrastructure is damaged, resulting in losses for the terminals or public infrastructure. Furthermore, Beneficial Cargo Owners (BCO’s) are impacted through reduced capacity in certain locations and the possibility of cargo blockages.
Additionally, the shipping line may declare General Average (a maritime procedure for fairly distributing significant losses and expenses during a casualty) making the BCO’s jointly responsible for saving the ship and the costs incurred. It would be wise to have marine cargo insurance.
In summary, these incidents underscore the vulnerability of supply chains in an already disturbed market, and the need for shippers to have agile contingency planning. This involves having alternative shipping options, holding safety stock, diversifying supply sources, and maintaining good relationships with multiple carriers.