The Francis Scott Key Bridge collapsed after a containership ran into it in Baltimore, Md., on March 26. (Credit: Shutterstock/Andrew Leyden )
By Sabrina Brigance, managing director marine practice, Hylant
On March 26, 2024, tragedy struck the Francis Scott Key Bridge in Baltimore, Md., as it collapsed following a devastating allision with the Singapore-flagged containership, chartered by Maersk, the M/V Dali. This incident not only claimed six lives among the construction workers conducting routine maintenance but also cast a harsh spotlight on the urgent need for robust infrastructure to accommodate the ever-growing size of container vessels.
The aftermath of this catastrophe reverberates across multiple sectors, particularly in maritime and insurance. As investigations into the causes continue, complex legal and insurance ramifications unfold, promising prolonged and intricate proceedings. As reported, the FBI’s criminal investigation is homing in on whether the ship’s crew departed port despite awareness of significant system issues, which raises pertinent questions about operational protocols and safety measures.
From an insurance standpoint, the response is substantial. As reported, Chubb, the insurer of the Francis Scott Key Bridge, is set to make a significant payout of $350 million to Maryland, representing the entirety of the coverage, to expedite the rebuilding process. However, this marks just the beginning of a likely protracted negotiation over the $1 billion-plus costs associated with the collapse.
Legal battles are underway on multiple fronts, with Grace Ocean, the ship’s owner, and its manager Synergy Marine, maneuvering in federal court to try to limit their liability under a long standing, and often criticized provision of U.S. admiralty law. This move has sparked contention, with Baltimore’s mayor and city council filing a petition in the case opposing any cap on liability, citing negligence in the lead-up to the allision.
Cargo owners also face the challenge of absorbing immediate costs associated with retrieving stranded containers and conducting salvage operations, all while preparing to seek legal redress against the ship’s owner for liability. This process, known as General Average.
The economic significance of U.S. ports cannot be overstated. According to the “AAPA Seaports 2024 Economic Impact Study,” the industry generates over $124 billion in economic activity annually, supporting $100 billion in wages and benefits. This underscores the pivotal role of ports in facilitating trade and driving national economic prosperity.
For example, the impressive growth of the Port of Jacksonville’s economic impact can be attributed to ongoing expansion initiatives and key infrastructure projects. Over the past few years, the port’s annual contribution to the economy has surged to nearly $33 billion, representing a remarkable increase in economic output compared to figures from 2018. Additionally, the workforce supported by the port, both directly and indirectly, has grown by 7.27%, demonstrating the job creation and employment opportunities generated by the port’s expansion. This expansion not only bolsters the regional economy but also highlights the critical role of maritime infrastructure in driving economic development and fostering employment growth within the Jacksonville area.
Recognizing the urgent need for infrastructure investments, the Infrastructure Investment and Jobs Act of 2021 allocated significant funds to enhance port infrastructure, including dredging operations, terminal upgrades, and improved intermodal connectivity. These investments are critical to addressing challenges faced by ports in accommodating ever-larger vessels exceeding 20,000 TEUs.
The Francis Scott Key Bridge incident serves as a cautionary tale, highlighting the importance of infrastructure readiness and risk management amidst escalating maritime demands. The mega-ship trend necessitates substantial upgrades across ports and waterways, from dredging projects to terminal facilities.
As containerships grow larger and maritime traffic increases, infrastructure and risk management strategies must evolve in tandem to mitigate potential risk and ensure operational resilience. Bigger ships present logistical challenges for port operations and amplify the consequences of accidents or disruptions. The collapse of the Key Bridge disrupted maritime traffic and had significant ramifications for port operations, cargo movement, and supply chains. The 10-day closure of the waterway underscored the need for robust risk management strategies to address business interruptions and mitigate financial losses associated with such events.
For instance, the Port of New York and New Jersey recently underwent a major dredging project to deepen its channels, enabling larger vessels to navigate efficiently. Similar initiatives are underway nationwide, fueled by government infrastructure investments, to ensure ports can accommodate modern shipping demands.
Modernizing terminal facilities requires investments in new cranes, expanded storage yards, and state-of-the-art equipment to manage heightened cargo volumes. Technological integration is pivotal in optimizing port operations, with advanced technologies like automated cranes and RFID tracking systems enhancing efficiency and reducing congestion.
Looking ahead, collaborative partnerships between port authorities, terminal operators, insurers, and regulatory bodies are indispensable. Regular risk assessments, bolstered by innovative technology and robust training programs will foster a culture of safety and resilience within ports.
The tragic incident at the Francis Scott Key Bridge underscores the urgent need for proactive adaptation, innovation, and safety within the maritime sector. By embracing transformative initiatives and leveraging marine insurance solutions, U.S. ports can navigate the complexities of modern shipping with resilience and confidence, ensuring sustained growth and prosperity for years to come. As U.S. ports continue to evolve in response to escalating shipping demands, collaborative partnerships and strategic investments are paramount to ensure the resilience and competitiveness of the maritime industry in the face of growing challenges.
This incident serves as a sobering reminder of the critical need for a comprehensive and proactive response to accommodate the growing demands of modern shipping. By strengthening infrastructure, embracing innovation, and enhancing risk management practices, US ports and terminals can adapt and thrive amidst the evolving dynamics of the maritime industry, ultimately ensuring the resilience and competitiveness of the nation’s maritime infrastructure for years to come.