The collapse of Baltimore’s Francis Scott Key Bridge is threatening to leave behind economic ripples for months to come. MM has a quick rundown of key issues to watch. The most immediate impact is the disruption of the Port of Baltimore, which has suspended vessel traffic until further notice as debris is cleared. The port is a major economic hub that handled 52.3 million tons of foreign cargo worth $80.8 billion last year, per the Maryland Port Administration. It’s the busiest U.S. port for car shipments, handling 847,000 cars and light trucks in 2023, and is also a gateway for coal exports. The rerouting of logistics may be felt across the country and hike costs along the way. Ryan Petersen, CEO of the supply chain management firm Flexport, told MM that ships being rerouted to other East Coast ports could trigger congestion. He said it could also be another factor that drives shipments to the West Coast, in addition to problems in the Red Sea and the Panama Canal and looming labor negotiations with East Coast maritime workers. “I think you’re going to see months of impact from this and probably throughout the year as volumes shift to the West Coast,” he said. But economists expect the macroeconomic impact will be contained. JPMorgan Chase’s Michael Feroli and Daniel Silver wrote Tuesday afternoon that it will likely have minimal implications for vehicle inflation. While Baltimore is the top port for vehicle imports, they said many more cars are shipped over land from Canada and Mexico. Vessels are already being diverted to other East Coast ports, and some auto companies have Baltimore terminals outside the area choked off by the bridge collapse, they added. The local economy may feel it the most, RSM US chief economist and principal Joe Brusuelas told MM. Workers involved in the operations of the port may experience a reduction in hours and temporary layoffs. The Baltimore Banner reports that an estimated 140,000 jobs are linked to the port, on top of the more than 15,000 people directly employed there. “When I take a look at this, there is a negligible impact on the U.S. macro economy but there will be a notable impact regionally,” Brusuelas said. Longer term, the big question is what it will cost to rebuild and how it will be paid for. President Joe Biden says he wants the federal government to cover the entire cost of reconstruction and that he expects Congress to support him. It’s not a sure bet amid heightened political tensions over spending. Brookings Institution fellow Joe Kane told MM that the floor for reconstruction is more than $500 million, based on the bridge’s $110 million price tag nearly 50 years ago adjusted for inflation. It could easily cost more than $1 billion. “We’re not just talking about a small bridge over a creek,” he said. “We’re talking about a 1.6-mile, elevated bridge over water in a very busy harbor area. As the complexity goes up, so do the costs.” Large transportation projects are often federal, state and local responsibilities. In terms of Washington support, Kane said there are many varieties of potential federal funding that could come into play, including DOT and disaster-related money. Beyond reconstruction, there will also be questions about how Maryland will raise revenue to fund the new bridge’s operations. Our colleague Anthony Andragna has a rundown on the funding state of play. Sen. Chris Van Hollen (D-Md.) is indicating that federal transportation agencies will not wait for congressional action before providing funds for rebuilding. Lawmakers will separately have to assess whether existing money in fiscal 2024 spending legislation might be sufficient. If not, the White House would likely make a request to Congress. “It's going to cost an enormous amount of money to rebuild that bridge,” former Transportation Secretary Ray LaHood told our E&E colleagues Tuesday. “Congress is going to have to do a special appropriation to pay for that. There's no money set aside to build a structure like that right now.” A team of reporters across the POLITICO newsroom has more on the potential impacts of the bridge disaster. It’s Wednesday — Send tips to zwarmbrodt@politico.com.
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