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The Impact of the Francis Scott Key Bridge Collapse on Fifth District Firms

Regional Matters
May 3, 2024

The collapse of the Francis Scott Key Bridge in Baltimore, Maryland, on March 26 killed six people, severed a major interstate highway, and temporarily closed the Port of Baltimore. This Macro Minute blog post last month discussed potential regional economic effects as well as several reasons to be hopeful for the port's long-term recovery upon reopening.

Between March 28 and April 17 in our April manufacturing and service sector surveys, to assess its immediate economic impact, we asked Fifth District firms to report if and how the bridge collapse will impact their businesses. Overall, 30 percent of Fifth District firms anticipated some level of impact from the bridge collapse. However, the impact was expected to be small and concentrated among Maryland-based and port-reliant firms (e.g., transportation, warehousing, retail).

More Than 60 Percent of Maryland Firms Expect Impact From Key Bridge Collapse

The majority of Fifth District firms in our April survey did not expect any business impact from the bridge collapse. However, 23 percent expect a small impact, 6 percent expect a moderate impact, and very few firms expect a significant impact. The results were similar for surveyed manufacturing and service sector firms.

Unsurprisingly, Maryland firms were more likely to expect some impact on their businesses. Over 60 percent of responding Maryland businesses expected impact to their businesses compared to 28 percent of non-Maryland firms. Among Maryland firms, 41 percent expect a small impact, 9 percent expect a moderate impact, and 13 percent expect a significant impact. Maryland respondents mentioned impacts such as increased congestion for freight or longer commute times for employees.

Across industries, two categories were most likely to report impact: Forty percent of retail, accommodation, and food services firms expect an impact compared to 36 percent that expect no impact. Additionally, nearly twice as many firms within utilities, construction, transportation, and warehousing expect some impact (57 percent) than no impact (29 percent). This is not surprising as the Port of Baltimore specializes in, among other things, construction, and heavy equipment.

Bridge Collapse Will Put Pressure on Supply Chains and Baltimore Traffic

Firm comments on the bridge collapse suggest that supply chain issues were a primary concern for Fifth District businesses, particularly delivery delays and increased shipping costs. Although Maryland firms were more likely to report an impact than other states, supply chain concerns around the bridge collapse appear to have reverberated across the Fifth District. For example, a North Carolina farm that exports poultry through the Port of Baltimore will redirect their poultry through Norfolk, leading to increased freight costs. As another example, a Virginia furniture store commented, "Rerouting of container ships to Norfolk will cause delays from port congestion for both us and for some of our suppliers; we also have orders expected to arrive in Baltimore that will be delayed."

Several Baltimore area businesses commented that the bridge collapse led to difficulty navigating the city. A Baltimore-based chartered bus company expects more miles driven and longer drive times around the Francis Scott Key Bridge. A bank branch located close to the bridge expects their customers to face difficulty accessing the branch.

Closing Thoughts

Fifth District firms expect a limited impact to their businesses due to the collapse of the Francis Scott Key Bridge, although the impact varies across industries. For example, disrupted supply chains due to the closing of the Port of Baltimore could lead to increased costs and production times for several firms. There were also direct impacts to the communities surrounding the bridge. As Baltimore recovers, we will continue to monitor the impacts of the Francis Scott Key Bridge collapse on the Fifth District.

If you are a business leader and interested in making your voice heard, click here to sign up for the Richmond Fed's Monthly Survey of Business Conditions.

Views expressed are those of the author(s) and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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