Baltimore bridge collapse poses little threat to U.S. economic growth, experts say

The
collapse
of
Baltimore’s

Francis
Scott
Key
Bridge
was
a
maritime
disaster
but
not
an
economic
crisis,
experts
said
Tuesday.

“It’s
a
real
human
tragedy
what’s
happened,
because
there
are
people
in
the
water,”
RSM
Chief
Economist
Joseph
Brusuelas
said. “In
terms
of
economics,
it
will
cause
barely
a
ripple
in
the
national
macro
economy.”

The
Singapore-flagged
DALI
container
ship
collided
with
a
pillar
of
the
bridge
in
the
early
hours
Tuesday,
causing
it
to
immediately
collapse.

An
all-hands
rescue
effort
was
underway
late
Tuesday.
President
Joe
Biden
said
he
would
visit
Baltimore
as
soon
as
he
could.

The
collapse
of
the
bridge
shut
down
the
Port
of
Baltimore
until
further
notice,
effectively
halting
shipping
operations
at
the
nation’s
eleventh
largest
port
and
one
that
serves
as
the
auto
industry’s
top
destination
for
exports.

In
2023,
the
Port
of
Baltimore
handled
over
847,000
cars
and
light
trucks,
more
than
any
other
port
in
the
United
States.

“It
flies
under
the
radar
for
most
Americans,
given
its
location,”
said
Brusuelas. “It’s
not
sexy,
like
the
Port
of
LA,
but
it
plays
a
critical
role
in
the
American
supply
chain.”

Auto
companies
like


BMW
and


Volkswagen
will
likely
be
hit
hardest
at
first,
he
added,
given
their
heavy
reliance
on
the
Baltimore
port.
Consumers
looking
to
buy
new
vehicles
might
see
temporary
shortages,
meaning
they
could
have
to
wait
a
few
extra
weeks
to
purchase
their
desired
model.

Retailers
like


Under
Armour,


Home
Depot,
IKEA
and
shipper


FedEx
could
also
feel
near-term
impacts,
Brusuelas
said.
Home
Depot’s
distribution
centers
in
the
Baltimore
area
are “open
and
operating,”
a
company
spokesperson
told
CNBC
Tuesday.

“There’s
going
to
be
a
lot
of
adjusting
to
do,”
Moody’s
Chief
Economist
Mark
Zandi
told
CNBC. “But
I
don’t
think
it’s
going
to
show
up
in
the
macroeconomic
data.”

For
the
city
of
Baltimore,
though,
the
economic
impacts
of
the
bridge
collapse
will
hit
harder
and
last
longer.

The
Baltimore
port
directly
employs
over
15,000
workers
and
indirectly
supports
nearly
140,000
jobs
via
other
port
activities,
according
to
Maryland Gov.
Wes
Moore.

Baltimore
port
employees
could
be
temporarily
furloughed,
or
see
disruption
in
their
work
hours
amid
the
shutdown.

In
the
meantime,
without
the
bridge,
employees
will
likely
face
longer
commute
times
in
an
already
heavily
congested
traffic
zone.

Spread
over
an
entire
working
region,
this “weighs
on
productivity,”
Zandi
added.

Supply
chain
capacity

After
years
of
dealing
with
pandemic-era
supply
chain
snarls,
ports
across
the
country
have
increased
their
efficiency
and
capacity
in
order
to
clear
massive
backlogs,
according
to
Brusuelas.
That
extra
shipping
capacity
provides
a
safety
net
in
the
event
of
a
logistical
emergency.

“The
bridge
collapse
is
the
latest
challenge
for
Northeast
U.S.
supply
chains,”
said
S&P
Global
Head
of
Supply
Chain
Research
Chris
Rogers.
Others,
he
said,
include “access
to
the
Red
Sea
and
Panama
Canal,
as
well
as
the
prospect
of
port
strikes
later
in
mid-2024.”

But
overall,
any
economic
disruption
from
Tuesday’s
bridge
collapse
will
likely
cycle
through
the
economy
in
the
next
few
weeks,
and
be
unnoticeable
by
late
April.

“It’s
not
an
economic
event,”
said
Zandi. “It’s
just
going
to
take
more
patience.
It’s
just
going
to
take
longer
to
get
from
one
place
to
the
next.”

Still,
this
incident
highlights
the
fragility
of
America’s
transportation
infrastructure.

“There’s
no
cushion
left
so
if
something
else
were
to
happen,
we’ve
got
a
problem,”
Zandi
said.

Once
the
Baltimore
port
can
reopen,
state
and
federal
officials
will
then
face
another
massive
challenge:
rebuilding
the
Key
Bridge.

“I
expect
the
administration,
the
state
of
Maryland
to
really
kick
into
high
gear,”
Zandi
said. “I
think
we
are
going
to
get
a
very
aggressive
policy
response.”

Biden
on
Tuesday
said
he
expects
the
federal
government
to
pay
for “the
entire
cost”
of
reconstruction
with
congressional
authorization.

Paying
for
the
bridge
reconstruction
will
likely
require
a
myriad
of
funding
sources,
including
municipal
bonds
and
money
from
the
$1
trillion

Bipartisan
Infrastructure
Law.

“This
is
going
to
take
some
time,”
Biden
said
Tuesday. “The
people
of
Baltimore
can
count
on
us,
though,
to
stick
with
them
until
the
port
is
reopened
and
the
bridge
is
rebuilt.”

—

CNBC’s
Lori
Ann
LaRocco
contributed
to
this
report.