Experts say the port of Baltimore alone contributes $15 million to the economy each day, and that other disruptions will push the losses even higher.
REUTERS/Nathan Howard and Tom Brenner
Hour after Baltimore's Francis Scott Key Bridge collapsed on Tuesday morning, the scale of the economic toll is beginning to emerge.
In addition to any loss of life and property, costs are mounting as one of the nation's most critical ports is closed and a major interstate highway connection is severed.
Experts told Business Insider that the port alone contributes $15 million in daily economic activity, which will come to a near standstill "until further notice."
And that's just the beginning.
"It's not just the Port of Baltimore that has been compromised," economist Anirban Basu, founder and CEO of Baltimore-based Sage Policy Group, told BI. "It's also the railroads, the trucking industry, the regional distribution centers, commuters, and other segments of the economy."
Basu said those factors will push daily losses into the tens of millions of dollars until the shipping lane is reopened.
"The tentacles here are far-reaching," he added. "And they're all negative."
Although it's far from the largest port in the US, Baltimore is one of the more specialized terminals for autos and agriculture equipment, known as roll-on/roll-off cargo, as well as some bulk commodities, like coal.
Daraius Irani, chief economist for the Regional Economic Studies Institute (RESI) at Towson University, told BI that the port is responsible for some 140,000 jobs, though he doesn't anticipate those will be at significant risk, so long as operations can resume quickly.
"If it takes 60 days or 90 days, then it might have a longer-term and more deleterious effect," he said.
While some cargo will have to wait, container ships can largely be rerouted to other east coast locations.
Ryan Peterson, the CEO of global logistics firm Flexport, told Business Insider that 800 containers of his were destined for Baltimore, and are now being rerouted. Two containers were on the ship that crashed into the bridge.
"It's over a million TEUs," he said, referring to the number of containers Baltimore handles. "It's not marginal."
And it's unclear whether East Coast ports will have enough available capacity to absorb Baltimore's container volume, Petersen said.
"It's still too early to say if this is gonna affect the price of freight, but we're already having conversations with customers about shifting volumes from the East Coast to the West Coast," he said.
A risk for Baltimore will be whether those route changes are temporary, or if they'll have a lasting impact on the port's business.
"Baltimore has been fighting very hard to get that traffic," said Martin Dresner, a professor of logistics at the University of Maryland's Smith School of Business.
Meanwhile, on land, the costs will be harder to compute, though arguably no less disruptive to the local economy, he said.
When the Key Bridge opened in 1977, it completed the circle of I-695 around Baltimore and provided a crucial bypass route for hazardous materials which can't be transported through tunnels. That link is now broken, requiring vehicles to take a longer, slower alternate route.
Given that the first economic priority is reopening the port — and keeping it open — it will likely be a long time before a replacement bridge is completed. This will translate to longer delays and higher costs for moving people and goods through the region.
"Baltimore didn't have a great outlook coming into this, period," Basu said. "Now, with its number one economic asset compromised, its outlook has sank to the bottom."
