The Francis Scott Key Bridge tragically collapsed on March 26 after being struck by a cargo ship, triggering concern in the promotional products market that supply chain disruption, higher importing costs and upheaval for industry businesses in the Baltimore area could ensue.

So far, however, those feared ills haven’t manifested for promo companies, though there have been challenges with which to contend, industry executives tell ASI Media.

Salvage efforts were underway at the collapsed Francis Scott Key Bridge in Baltimore.

And, while the specter of a possible strike by East Coast port workers later this year remains a considerable concern to sourcing pros in promo and beyond, industry executives note there have been some key positive developments of late on the supply chain front. Here’s a look at where things stand.

Baltimore Promo Businesses Adapt

Some Baltimore-area promo companies with which ASI Media spoke say they’re experiencing little to no operational impacts from the bridge collapse.

“We don’t seem to be affected and supply has been fine,” shares Ayme Lederman, office manager and sales consultant at Badges, Buttons...Plus!! Specialties (asi/129600), northwest of the city. 

Still, other firms have been facing challenges – but not unmanageable ones, they say.

Brian Sommers, general manager of Baltimore’s BGD Promo (asi/37720), tells ASI Media that increased traffic/congestion resulting from detours tied to the bridge collapse have lengthened commute times for some employees by up to 30%. That’s contributed to trouble with tardiness.

Where possible, “we may resort again to remote employment options to maintain proper operations and employee morale,” Sommers says.

“This whole situation will definitely involve adjustments to the standard day-to-day doing business.”Brian Sommers, BGD Promo

Still, Sommers emphasizes that the issue hasn’t led to drops in efficiency or productivity. He does have concerns about what may lie ahead if the company’s trucking/distribution partners consistently get stuck in traffic snares.

“A vast majority of products that we produce are time sensitive and event driven,” Sommers shares. “We rely heavily on our trucking/distribution partners for daily pickups. I see potential for late or missed pickups due to rush hour traffic.”

He pledges that BGD Promo will remain nimble and adapt. “This whole situation will definitely involve adjustments to the standard day-to-day doing business,” Sommers notes. “We need to stay ahead of it, as this is likely a long-term issue for years.”

The Current Supply Chain Picture

The Francis Scott Key Bridge’s collapse compelled the closure of the Port of Baltimore, as the 1.6-mile-long steel crossing spanned the Patapsco River and approach into the port. The closure means that ship-loaded cargo that would have come into or been exported out of Baltimore has to be routed to other ports.

In the immediate aftermath of the collapse, some supply chain analysts thought this could lead to a spike in shipping costs, havoc on routing and congestion at ports that would, among other things, lengthen the time it takes to get imported product off ships and stocked in domestic warehouses.

While promo companies that would have used Baltimore have had to, like other importers, divert their cargo to different ports and arrange for modified ground transportation once it’s landed, no major issues are being experienced as of this writing, they say.

“Our supply chain is uninterrupted, as we are receiving inventory from other ports,” says Murray Siegel, marketing director at Baltimore-based Towel Specialties (asi/91605).

Baltimore-destined cargo is primarily being diverted north to New York/New Jersey and south to Norfolk. East Coast-based promo suppliers that move product through those entry points say they haven’t experienced bottlenecks to date.

“We have not seen any immediate impacts in our supply chain over the last few weeks,” shares Tim Behling, vice president of supply chain at Massachusetts-based Top 40 supplier Gemline (asi/56070). “We will continue to monitor the adjacent ports (Norfolk and New York) where the volume is being discharged, but at this moment we haven’t seen any direct impacts.”

“I want to assure everyone that the Port of New York and New Jersey has the capacity to handle all Baltimore cargo temporarily diverted here.”Bethann Rooney, Port Authority of New York and New Jersey

Bethann Rooney, director of the port department at the Port Authority of New York and New Jersey, tells ASI Media that arrangements have been made for a large percentage of the Baltimore-bound containerized and roll-on roll-off cargo currently on the water to be handled at other East Coast ports.

Rooney notes that, in 2021, the Port of New York and New Jersey handled approximately 20% more cargo than it does now, which means that port has the capability to provide additional East Coast capacity as needed. Rooney shares, too, that most large container ships go on what’s known as a “milk run,” calling at multiple East Coast ports on one journey. This means the Port of New York and New Jersey likely won’t see additional ship traffic, just additional cargo offloaded from ships that already stop there.

“I want to assure everyone that the Port of New York and New Jersey has the capacity to handle all Baltimore cargo temporarily diverted here and that our gateway is committed to providing the same quality, service, reliability and efficiency that our current customers experience,” Rooney says.

For sure, importers and port authorities are hopeful that the Baltimore port closure won’t last long. There was recently good news on that front.

“We are working quickly and safely to clear the channel and restore full service at (the Baltimore) port.”Lt. Gen. Scott A. Spellmon, U.S. Army Corps of Engineers

The U.S. Army Corps of Engineers said on April 4 that it expects to open a limited access channel, 280 feet wide and 35 feet deep, to the Port of Baltimore by the end of April. This channel would support one-way traffic in and out of the Port of Baltimore for barge container service and some roll-on/roll-off vessels that move automobiles and farm equipment to and from the port.

The engineers aim to reopen the permanent 700-foot-wide-by-50-foot-deep channel by the end of May, restoring port access to normal capacity.

“These are ambitious timelines that may still be impacted by significant adverse weather conditions or changes in the complexity of the wreckage,” says Lt. Gen. Scott A. Spellmon, USACE commanding general. “We are working quickly and safely to clear the channel and restore full service at this port.”

Meanwhile, the sharp increase in container/shipping prices some feared hasn’t materialized – to the contrary, so far.

3%
Drop in prices for shipping containers bound from East Asia to U.S. East Coast ports since the collapse of the Francis Scott Key Bridge (Xeneta)

After a swift spike in container pricing earlier in 2024 that stemmed from factors like China’s Lunar New Year, a drought at the Panama Canal and commercial vessel-rerouting resulting from terrorist attacks in the Red Sea, prices for containers going to the East Coast have actually decelerated in recent weeks, according to new data from Xeneta, an ocean and air freight rate benchmarking and market analytics platform.

Xeneta revealed this week that average spot rates from the Far East into the U.S. Northeast Coast (including Baltimore) have fallen slightly (-1%) since the bridge collapse and currently stand at $5,421 per standard 40-foot shipping container. When including other U.S. East Coast ports, rates from the Far East have decreased by 3% in the same period.

Meanwhile, average spot rates from North Europe to the U.S. Northeast Coast have fallen by a larger 8% in the same period to stand to $2,357 per container, according to Xeneta. When including other U.S. East Coast ports, rates have decreased by 4%.

There’s also some positive news for importers regarding the Panama Canal, which allows ships to pass from the Pacific Ocean into the Atlantic Ocean – and vice versa. It’s generally considered the most efficient way to move cargo by ship from major overseas manufacturing nations in Asia, like China and Taiwan, to the U.S. East Coast and Gulf Coast.

27
Number of daily ship transits currently allowed at the Panama Canal

Drought in the region has reduced the number of vessels that can pass through on a daily basis, causing what executives have described as surmountable minor delays for importers in promo that use the canal. Even so, things are looking up, according to the authority that operates the system in Panama.

The authority recently increased the number of allowed daily ship transits to 27 per day – closer to the typical 36 or so. Also, it says that current forecasts indicate that Panama’s rainy season will arrive in earnest in late April and that steady rainfall could continue for months. While that could change, the forecast has canal operators hopeful they can progressively increase daily ship pass-throughs back to 36 daily transits.

“The situation in the Panama Canal seems better at the moment,” says Jeffrey Nanus, president of New York-based hard goods supplier AAA Innovations (asi/30023).

Despite such developments, supply chain leaders in promo and beyond aren’t short on potential flashpoints to watch. Among those worries: the still-unsettled negotiations over a new contract for East Coast port workers.

“The threat of labor strikes on the East Coast has the potential to cause far more disruption to ocean freight shipping than the collapse of the Francis Scott Key Bridge.”Peter Sand, Xeneta.

The International Longshoremen’s Association’s six-year contract with the United States Maritime Alliance, which represents port terminal operators and ocean carriers on the East Coast, expires Sept. 31. There’s worry that if a new contract isn’t reached, there could be work slowdowns or outright stoppages at pivotal eastern ports, and that cargo could be rerouted en masse to West Coast destinations, causing congestion, offloading backlogs and higher prices for shippers, such as promo suppliers.

“The threat of labor strikes on the East Coast has the potential to cause far more disruption to ocean freight shipping than the collapse of the Francis Scott Key Bridge,” says Peter Sand, chief analyst at Xeneta.

Sand continues: “The clock is ticking, and if no agreement is reached then the implications will be significant and widespread disruption at U.S. East Coast ports. This would almost certainly see rates increase for ocean freight container services and could see some shippers choosing to head back to the U.S. West Coast or Mexico for imports.”