News Roundup: The Baltimore Bridge Collapse and the Battle for Oceanic Resources

Witness the ripple effects of a maritime catastrophe as we unpack the collision that brought the Port of Baltimore—and its web of global supply chains—to a sudden halt. The recent disaster involving the motor vessel Dali has shaken the very foundations of international trade, with far-reaching consequences for major companies like General Motors, Ford, and beyond. This episode promises a thorough exploration into the aftermath of the bridge collapse that has both businesses and government officials scrambling for solutions, ensuring you understand the full scope of this logistical nightmare.

Join us as we also chart a course through the murky waters of deep-sea mineral mining, where the treasure trove of resources vital for the electric vehicle revolution lies hidden. As nations and environmental groups like Greenpeace clash over the future of our oceans, we analyze the delicate balance of industry growth and ecological preservation.  Bindiya Vakil, CEO of Resilinc, lends her expertise on the subject, offering invaluable insights into the potential shifts in shipping dynamics and the road to recovery from this unprecedented supply chain disruption. Tune in for an enlightening discussion on how the fate of our seas is intertwined with the wheels of industry and the charge towards sustainable technology.

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Transcript

Tony Hines: 0:02

Hello, tony Hines, here You're listening to the Chain Reaction Podcast, all about supply chain advantage. This is the News Roundup all things impacting global supply chains this week. Well, the big news story of the week was the motor vessel Darli losing its steering and power and hitting the Francis Scott Quay Bridge in Baltimore, where a number of people lost their lives. There were construction workers working on the bridge, apparently filling potholes, and they fell into the river below. Two people were rescued, one was seriously injured and our thoughts go with the families at this sad time. And it shows how dangerous container shipping can be. These are very large ships some 10 000 container boxes on this particular ship, I think and it lost its steering and ran into a bridge, and the force with which they hit the bridge is very powerful and obviously it disintegrated in a very short time. It happened about about 1.35 on Tuesday morning, early hours of the morning, dark, difficult for emergency services to operate. It was a ship on its way from Baltimore to Sri Lanka and the East Coast port of Baltimore will be out of action for some considerable time as a result. The ships in the harbour already in the port already will be locked in because they can't get past the bridge now and ships going to the port will have to be diverted elsewhere. The ship is a 10,000 TEU, 20 equivalent unit sized vessel, so it's not the biggest ship. I mean, many of the container ships are double that size with 20,000 TEUs but it's still got some force on impact, obviously, with the weight these ships are very large.

Tony Hines: 2:17

Baltimore, of course, is not the largest port on the East Coast, but nevertheless it carries around 1 million containers through that port, importing and exporting every year. So it's a very important port and, of course, car companies such as General Motors and Ford send their cars via that port, so it's likely to be disruptive. New York, new Jersey and Virginia ports have extra capacity and it's likely that many ships destined originally for Baltimore will be diverted to those ports while the ongoing problem continues. Now, when we look at the port of Baltimore in 2023, the port handled 52.3 million tons and the value of the cargo was about 80.3 billion US dollars, and it's the ninth biggest port in the United States and it's a top United States roll-on roll-off port. That's according to the Maryland State Archives. Baltimore is the biggest port for car exports, so you can see it's quite significant with a port of that size out of action.

Tony Hines: 3:32

The Coast Guard suspended its search and rescue operations on Tuesday evening. It's unlikely that anybody else will be found alive. There are still six people missing and they're presumed dead at this point. 47 million tons of foreign cargo passed through the port last year. Over 750,000 cars and vehicles transited through Baltimore last year. General Motors and Ford, nissan, fiat and Audi all passed through that port and, of course, with Ford, jag, jaguar, land Rovers involved there too.

Tony Hines: 4:06

Baltimore is also an exporter of liquid natural gas, lng, and that might have implications for the United Kingdom and the European Union. A million tonnes of LNG leave Baltimore every month. 15,000 people are said to be employed in jobs, either directly and a further 140,000 in supporting roles. After the accident, the Danish shipping company Maersk, whose cargo the Dali was carrying, said it wouldn't be travelling to Baltimore on any of the services in the foreseeable future. Well, I think we can say that will go for many other ships too, because they can't get in.

Tony Hines: 4:47

It's also thought that coal exports could be disrupted. The US Secretary of Transportation, pete Buttigieg, said there was no question that this will be a major and protracted impact to supply chains. Too early to estimate how long it will take to repair the damage or get the sea lanes open yet, but President Biden has said that they'd move heaven and earth to reopen the port and rebuild the bridge as soon as humanly possible, but it's likely to take time. The crew on the ship there were around 20 people, I think, and two pilots guiding the ship out of port. They're all said to be safe 22 people in total.

Tony Hines: 5:26

Now, one of the things I've seen speculated upon with regard to the problem of the ship running into problems with its engine and its steerage. Some people have pointed the finger towards dirty fuel, and I'm sure that will be investigated whether that had a part to play in making the engine inoperable, and I think I read that in the Wall Street Journal. Of course, there's lots of speculation when something like this happens and it's best not to jump to conclusions, but if that is found to be the case, then that could be quite a serious issue. Many companies, of course, will be affected by this bridge collapse and the disruption it's caused, not just to the port but to the motorway network surrounding the port as well, and people will have to travel longer routes to get to the other side of the bridge area. Amazon has a large distribution centre nearby the bridge and they're still assessing the impact that this is going to have on their operations. Many are of the opinion, of course, that it will have limited impact because there are a large number of alternate highways and seaports along the densely populated eastern coastline, so the disruption is likely to be focused locally around the bridge area. A spokesman for Everstream Analytics, Mirko Woitzik, who comments on risk in relation to supply chain issues, said that they should be able to reroute shipments through Norfolk and the port of New York and New Jersey.

Tony Hines: 6:56

Baltimore is the busiest port in the country for autos and light trucks, and it ships heavy farm construction machinery and other goods. It handled about 847,000 cars and light trucks in the past year, according to the Maryland Port Administration. It's also responsible for coal, LNG and waste paper. Those are top exports from this port, and the biggest imports to the port have been vehicles, salt, gypsum and sugar. It was the number 10 port in the country last year for container imports, according to the Pacific Merchant Shipping Association. A former Bethlehem steel plant near the north entry ramp to the bridge was converted into a logistics park called Trade Point Atlantic. It's about 3,300 acres and that's where Amazon, Fedex, UPS and Under Armour are located. Coal traffic is delivered to the port mainly by freight rail. Bmw said its import terminal to the south of the bridge won't be affected.

Tony Hines: 7:59

Many people, of course, rely on the bridge on a daily basis, so it will add time and, of course, cost to the additional journeys that they'll have to make around the area. About 3,000 journeys were made across the bridge on a daily basis prior to the collapse. The Francis Scott Quay Bridge is about 1.6 miles long. It was built in 1977, so it's 47 years old. And, of course, if we think about ships, in the 1970s they were much smaller than they are today. And even this container ship that struck the bridge, or one of the pillars on the bridge, which made the whole structure collapse, is about half the size of many of the larger ships that sail the oceans today. So one of the questions that must be crossing people's minds as they consider the fallout from this accident is how many other ships could possibly lose control in ports and damage bridges or harbour structures. And actually this particular ship is not new to this problem.

Tony Hines: 9:04

The ship involved, the Dali, is a Singapore-flagged container ship. The Dali's owner is listed as Grace Ocean, a Singapore-based firm, but it's managed by Synergy Marine, also headquartered in Singapore, which temporarily leased the ship to Maersk, and it set off from Baltimore Seagirt Marine Terminal en route for Colombo, sri Lanka. It was built by Hyundai Heavy Industries in South Korea. Since striking the bridge, a major search and rescue operation was underway, but that's been turned into a recovery operation right now. The same ship was involved in another incident, a crash in 2016. That was just a year after it was built. At the time, it was reported that Vessel Finder said the incident was caused by a mistake made by the master and pilot on board and no injuries were were reported, but there was damage to the stern of the ship and the aftermath of the collision was there to be seen on youtube. This happened in antwerp in july 2016, but allegedly it's human error.

Tony Hines: 10:13

The singapore flag dali is about 984 feet long and 157 feet wide, according according to the listing on Vessel Finder, with 80% of trade international trade that is carried out by sea, it's essential that those carrying out that trade have insurance, and marine insurance, of course, is very important, and we don't need to be reminded of that from this event reported this week where the contendership struck a bridge, but we've had a number of losses that have incurred problems for many businesses over the past few years. So if you haven't learned the lessons that insurance is important yet, then you need to, because companies don't just incur financial loss when this happens, but you can lose market share and you can risk reputation. So it's essential that you actually make sure that you've got the right cover for the marine insurance that you have Now. That might include cargo insurance, which provides protection against loss or damage while in transit by sea or air or over land, and it's important that you've got.

Tony Hines: 11:30

If you're a ship owner or you have container vessels on ships, then the carriers need to have hull insurance, which provides cover for physical damage of the ship, and that might include any machinery that's on board as part of the loading and unloading for that ship or anything else. You also need liability insurance in case you damage other people's properties. So, for example, if it's a collision and you run into a bridge, there might be a claim against the ship and the ship owner for the damage done to a bridge or a harbour. And then there's other types of insurance that we're aware of, such as freight insurance, which is normal for goods carried by motor vehicles or railways or any other form of transport, and there's insurance if you're an offshore energy provider as well. So there's all types of different insurance and the premiums for those insurances don't come cheap. But you can't afford not to have them, and over the past couple of years in India, insurance rates marine insurance rates have gone up by around 50%. So don't be a casualty. Make sure you've got the right insurance. I'm sure that this damage to the bridge in Baltimore by the Dali will cost a pretty penny and once again, there'll be some big insurance claims. The other thing you can insure for, of course, is lost profit, and that might be rather important. If you think you're particularly at risk, or even if you don't and it doesn't add too much to the premium, you're probably as well to get insurance against lost profit, especially if you do lots of international trade. So make sure you have all the risks that you carry covered by insurance.

Tony Hines: 13:19

Well, some other news this week, subaru in the United States is recalling 118,723 SUVs and sedans over an issue which prevents airbags from deploying in a crash. This is according to the National Highway Traffic Safety Administration, the NHTSA. These cars were produced between 2020 and 2022, so it's not a new problem. It's a problem that's been around since 2020, and it revolves around an occupant detection system with a capacitor in the sensors. It may crack and short-circuit and that can prevent the passenger airbag in the front seats from deploying if the cars or the vehicles have a crash. Now I think it's quite interesting. There's been a lot of car recalls and we've been talking about these over the past few weeks and, of course, you can stop by and pick up my episode that's out right now on remembering quality, and it's very timely, it's very poignant and I'm sure it will remind people of how important quality and quality systems are in the process of production. So drop by, take a listen, pick that one up.

Tony Hines: 14:35

Byd, the Chinese car maker, has set target for 2024 of about 3.6 million vehicles, and that's up 20% from the record-breaking sales it's said to have had last year. That's according to the China Business Network. The company aims to sell about 500,000 vehicles overseas this year, and that's more than double last year's total, and it's hoping to reach 1 million by 2025. That's according to the chairman, wang Shunfu. That's what he told an investor meeting this week. When it comes to the environment, it's top of the list for many CEOs, considering the future and how sustainability is going to impact their business. And this isn't just an emotional decision or a decision particularly about the future of the planet, although it's articulated in those terms but it's also the future of profit and where profit streams, the value streams for those businesses, are going to come from in the future.

Tony Hines: 15:48

So there are a couple of stories that caught my eye this week which I'd like to share with you right now. Now, the first one is coming from India, and it's about another search for valuable minerals which are hidden in the depths of the oceans of the world, and they argue that it could hold the key to a cleaner, greener future. India already has two deep-sea exploration licences for the Indian Ocean and it's applied for two more, and there's increasing competition between global powers to secure critical minerals, which I've talked about on the program in the past. China, Russia and India are each vying to reach huge deposits of minerals, such as cobalt, nickel, copper, manganese, that lie at the bottom of our oceans. These metals are invaluable to produce renewable energy. They're needed for solar and wind power, for electric vehicles and for battery technology and in the battle against climate change. The UN-affiliated International Seabird Authority has, in all, issued 31 explorational licences to date, and 30 of those are active Explorational Licences to date, and 30 of those are active. There's a meeting taking place in Jamaica this week to discuss regulations around the issue of licences. One of the licences that India has is to explore polymetallic sulphides, and they contain copper, zinc, gold and silver. They're in a place called the Carlsberg Ridge of the Central Indian Ocean.

Tony Hines: 17:22

Of course, some parties are not very happy about this, and Greenpeace have been tracking some of the mining activities that have been going on. The concern appears to be around the disruption to the ocean bed and to sea life, of course, as well and what damage could occur as a result of this mining activity on the seabed. China, of course, is dominant in processing all the metals that will come from any mining activity. In these particular metals, it has a monopoly when it comes to production. It produces 100% of the refined supply of natural graphite and dysprosium, 70% when it comes to cobalt and 60% of all processed lithium and manganese, according to the International Renewable Energy Agency, and China has also banned the export of some of its processing technologies, so it's not willing to share those with anyone else anytime soon. India has signed an agreement with Russia to develop deep sea mining technologies, so this is likely to become quite an issue in the next few years. And, of course, it's something that's not visible, because it's happening on the ocean beds of the world and it's not something that comes across our minds every day. And what people would like to see, of course, is responsible investment in mineral supply chains and some kind of greater control over the impact of these activities when it comes to environment.

Tony Hines: 18:59

Now we had the pleasure of having Bindiya Vakil on the Chain Reaction podcast a few weeks back. Bindiya is the co-founder and CEO of Resilinc and they deal in supply chain risk, and I came across a presentation by Bindiya on Bloomberg television talking about this problem in Baltimore and I was interested to see her take on things, and she basically said that it would take about four or more weeks to get the supply chain back to normal. But that doesn't mean, of course, that the port of Baltimore will be back to normal, because that's going to take much longer. And she also made a very good point about capacity at the ports, where they have some spare capacity getting choked as people try to rearrange shipments quickly. So things could stack up at other ports, as congestion may be caused from what happens in the fallout from the Baltimore situation, but we'll have to wait and see.

Tony Hines: 20:08

Well, that's it for this week's Newsround. I hope you've enjoyed the episode. I hope you found out a few things perhaps that you didn't know previously, and I hope you found it, most of all, interesting. I'm Tony Hines. I'm signing off, so I'll see you next time in the Chain Reaction Podcast. Bye for now. Bye.