Sal Mercogliano on the Baltimore Bridge Collapse

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1:23Hello and welcome to another episode of the All Thoughts podcast. I'm Traci Allaway. And I'm Joe Weisenthal. So, Joe, this is an emergency episode of Odd Thoughts. Anyone waking up on Tuesday morning would have seen the very, very dramatic news coming out of Baltimore. I slept in today and now I'm never going to make that mistake again because then I walked into the office and I literally asked Tracy, is there some sort of huge port disaster? And so, yes. And I thought you were trolling me initially, but it turned out you hadn't actually seen the news. So what happened this morning? We are recording on March 26th and a container ship called Dolly crashed into the Francis Scott Key Bridge in Baltimore.

2:05This is the key bridge in many senses of the word. It is a vital commuter lane and it is just outside the port of Baltimore, which means ships go under it in order to get in and out of the port. What we know so far about the ship is it was a Singaporean flagship. It was chartered to Maersk, the shipping giant. And it's kind of reminiscent a little bit of what happened in March 2022 in the Chesapeake Bay with the Ever Forward. But it seems like the results of this are much more dramatic. So the bridge is entirely collapsed. As we are recording this, the search and rescue mission is still underway.

2:46They are still looking for survivors of this tragedy. So clearly a loss of life there. But Joe, this opens up a whole bunch of questions about how exactly this happened, what it means for shipping and freight, what it means for the wider economy. Let's jump right into it. All right. We're going to be speaking with one of our favorite All Thoughts guests. We're speaking with Sal Mercogliano, professor at Campbell University and the host of the What is Going On With Shipping show on YouTube. Sal, you've become the person that everyone calls whenever there's a maritime disaster, it seems. It does.

3:20And unfortunately, that phone rings a little too often some days. Why don't we just start with, as of right now, the basics of what you understand happened? Yeah. So Dolly was just finishing up an East Coast run. It hit a couple of East Coast ports. It was leaving the port of Baltimore, heading down to the Panama Canal, and was heading over to Sri Lanka, the port of Colombo. The ship is owned by a company out of Singapore, which is not unusual, and it's actually leased and operated for Maersk lines. The ship had on board two Maryland pilots, Chesapeake Bay pilots. The ship was doing as it normally would do.

3:54A ship just before it had come off the Sea Grid Terminal. This is the terminal, container terminal, just outside of Baltimore, but it's inside the harbor there. The ship had gotten into the channel and was heading outbound at about eight knots, and everything seemed to be normal. Now, there are reports that when the ship was coming up the bay, and even when the ship was pierced, that the ship suffered some engineering issues. There were some issues with black smoke, there was some issue with power loss. But before the ship ever would have thrown off lines, it would have done a series of tests at the dock to make sure that it had propulsion, it had rudder control, and it would have been cleared to leave.

4:30As a matter of fact, this ship was recently inspected by the U.S. Coast Guard under a port state agreement. The ship headed southbound, and what we have is both the information from marine traffic and from video provided from the Port of Baltimore. And what we see in these two images is the ship, as it was heading toward the Francis Scott Key Bridge, lost power. The ship went dark. And as a former mariner, I could say this, that the worst feeling I've ever had on a ship is when everything goes quiet. There's always noise. There's always, you know, because that's a sign that you've dropped the plant.

5:03In other words, you've lost the engine. And silence is deadly. It just means everything has gone wrong. Now you have a 100 ,000-ton ship at eight knots, roughly about 10 miles an hour, with no control. And very quickly, within 10, 15 seconds, we see lights come back on. But that's not clear that the ship's engines have come back on. That could be the emergency backup engines coming on to give you propulsion. We know, and I've talked to a tug operator in Baltimore, they heard the ship's pilot. Now remember, ships will have a crew on board. We believe this crew to be an Indian crew. So the ship's master is ultimately in control of the vessel.

5:43Masters are ultimately responsible. But there were two Maryland pilots on board. Pilots assist. They provide expertise, but they don't take command. But one of the pilots signaled a mayday that they had lost propulsion. They were heading for the bridge. And in the background, alarms were sounding. And that would have been the loss of power alarms up on the bridge. After the ship's lights came back on, we see a distinct pail of black smoke come out of one of the ship's smokestacks. That's usually an indication that not only is the engine coming back online, but they're probably trying to back down with the engine.

6:17They're forcing fuel into the engine to get it to go into reverse. And looks like what they were trying to do was slow down the vessel. Unfortunately, that was not sufficient. There'll be a big question during the investigation, which will probably be led by the Coast Guard and NTSB. What was the orders given up on the bridge? There's a vessel data recorder that is independently powered. It has a battery backup, so we will get this. It'll have the information from the ship, like a plane's black box, but also the recordings from the bridge. Did they order a stern move? Did they try to steer the vessel?

6:53One of the things I worry about is they tried to back down. And when you try to back down a vessel that big at that speed, you start to lose helm control because you create this disturbance in the water around the propeller. And what we do know is the ship then continued its kind of slant to the south. It was being pushed by both the wind coming out of the north and also the torque of the propeller. And it impaled itself up against the southern pylon of the Francis Scott Key Bridge. And that resulted in the collapse of the bridge actually onto the bow of the vessel. We know the ship dropped its port anchor because you can see it down and it's streaming aft.

7:30So they tried to do it, but an anchor at eight knots is just going to drag the bottom. It's not going to stop. So the collapse of the bridge is clearly a dramatic development and makes this particular incident very different to things like the Ever Forward running aground. But I guess one question I have is what's a reasonable expectation here for vulnerability? And what I mean by that is, is the expectation that container ships just don't ever go into bridges, which would seem like a good thing, or should bridges be able to withstand ships running into them? Like, are there particular protections around bridges?

8:09I've seen concrete barriers and things like that. I guess in general, it just seems kind of crazy to think that you have thousands of ships going under these giant structures on a day-to-day basis around the world. And if something goes wrong with one of them, then the entire bridge can collapse. Right. So, I mean, you really come into, I hate to say it, but it's almost a cost-benefit analysis. How much protection do you want to put around the pillars of a bridge? This ship hit the southern pillar almost head on at eight knots, probably about seven knots, 100 ,000 tons. That's a lot of force. I mean, I'm not sure, I'm not an engineer when it comes to building bridges, but I'm not exactly sure how much force and area you have to build around a bridge for that.

8:54The pilings were not, you know, right up against the side of the channel. This ship came out of the channel, so it maneuvered out of what is then the normal channel. When we had discussions about Ever Given, for example, when it grounded in the Suez or Ever Forward when it came out of Baltimore, one of the questions was, well, maybe it should have tugboats with it at all times. It's not exactly clear that even if you had tugs, it would have prevented this from happening. Plus, tugs incur a big cost because there are dozens of ships a day coming in and out of port at times. You would need a lot of assets to do it.

9:26It would raise costs for it. it's hard to harden your infrastructure to the point where everything would be safe from every eventuality. If the ship had dropped its plant a minute earlier, a minute later, this never happens. The ship may have lost propulsion, it may have anchored, and we probably wouldn't even be talking about this. But because it happened at this key moment, and one of the things we've talked about in the past is one of the things we've done with global shipping is not just increase the volume of cargo that's moving around the world, but the velocity of it. And so that leaves very little time for what is usually needed for repairs and upkeep and all that aspect.

10:06We are moving cargo at an ever greater rate. And so there's a very small margin of error right now that we have, and unfortunately, we're seeing these accidents take place. When you think in your mental encyclopedia about past disasters, obviously our mind goes to the ever forward because it was in Baltimore. But are there other incidents that this reminds you of? Oh, you gotta go back to the 80s, to the Tampa Bridge incident where you had a collapse of the bridge, almost a very similar thing. Vessel was much smaller at the time, but you had a vessel out of control, hit the bridge and caused a collapse of the bridge.

10:42In Tampa, we saw it in San Francisco in the early 2010s where we had a hit, but that was a glancing hit up against the pilings didn't really get to the bridge structure. Where we've seen it more than anything else is actually in coastal waters, in inland waters, where we've seen this on the Mississippi and the Ohio River, where we've seen these incidents take place in other places. But again, Baltimore is not a big port in terms of the United States. It's not even in the top 10 of ports, but it's a port that does$74 billion of business a year. It moves 43 million tons of cargo. So there's a lot of cargo moving in and out.

11:20And, you know, we've talked about the idea about infrastructure and how much we need to kind of improve infrastructure. One of the limitations on the Port of Baltimore has been the Francis Scott Key Bridge because of its height and the nature of the bridge. So, you know, we don't unfortunately spend enough on hardening and improving our infrastructure, especially in the maritime environment. What's the immediate impact on shipping. So the Dolly is still there under the wreckage of the bridge. The bridge wreckage itself is obviously absolutely massive, and it's going to take some time to move that.

11:54We know there are ships still stuck in the port of Baltimore. What about other ships? Do they just get rerouted to New York or Norfolk? And how much of a disruption is that? Yeah. I mean, so Port of Baltimore will be closed for the foreseeable future. I mean, And even once Dolly is removed from it, you've got to remove the entire structure of the bridge from the main shipping channel. So it is effectively closed. So whoever's in Baltimore is staying in Baltimore. The ships going into Baltimore, you can reroute some of them. But the problem is Baltimore is a very well-rounded port. It does a little bit of everything.

12:26So you can offload containers in other facilities. That's not really a big issue. But it's a big car terminal. So you're talking about having to offload cars in other facilities, maybe up in New Jersey or up in New England or down in Savannah or Brunswick in Georgia. But then you're going to have to move those cars up to the region of Baltimore. The biggest issue here is going to be the export of coal. Baltimore is a major port for export of coal. And it's not like you can just move the coal to another facility because you need specialized facilities for that. And the facilities that do exist are largely at capacity.

13:00So this is going to be a big problem. If you look at imagery of marine traffic or any of the other AIS, you'll see just south of the Bay Bridge, a fleet of vessels waiting to get into Baltimore and then another one larger down to Chesapeake. So this shutting down of the port of Baltimore is going to have a major impact on the transportation of energy out of the United States, in this case, coal. So I remember when we, you know, when we talked about the situation in the Suez several years ago, this idea of specialized local captains or pilots who would just be on the ship for that one part navigating the canal, and then they would get off and then the normal crew would take over.

13:41Is it the same situation when you said, okay, that there was, I think, did you say a pilot? Or what is the role? There was a Maryland, someone from Maryland. Is it the same sort of thing where in that specific area, there'll be people on the ship who just know how to navigate that thing, and then they get out after the ship leaves the water? Exactly. You would have two Chesapeake Bay pilots on board. We know there was two on there. So they would provide that expertise for the area. They would actually, you would have a docking pilot who would undock the vessel. The docking pilot would probably get back off the vessel once it's off the berth.

14:12And then the two bay pilots would stay on board until the vessel sailed out of Hampton Roads through Chesapeake Bay to come out. They know the lay of the land. But if you remember what happened with Everforward, the incident that was later determined to have cause, the grounding was the one pilot who was on board at the time was distracted, was on his computer and missed a key turn. I would argue that we don't see an issue here with pilot at all. This doesn't seem to be a pilot error. It doesn't even seem to be a maneuvering error here. Again, we can talk about judgment later on about whether or not they should have gone in a stern if that's what they did.

14:49But this seems to be a mechanical issue that has been the issue that plagued the vessel. And again, a pilot wouldn't really know this coming on board. This is the ship's crew knowing what is the status of their vessel, both mechanically and the ability of it to sail.

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16:37It's built to grow with your business, whether you are just starting out or already scaling up. Plus, it's easy to use, customizable, and designed to streamline every process. so you can focus on what really matters, running your business. Thousands of businesses have made the switch, so why not you? Try Odoo for free at odoo.com. That's O-D-O-O dot com. We have limited information so far, and as you mentioned, there is surely going to be a very long and ongoing investigation into this particular incident, but it does seem like some things were done right. So we know the ship dropped anchor. We know they made a mayday call, which seems to have gotten some of the cars off the bridge and potentially save lives.

17:24But how do you sort of stack up the actions of the ship from what we know so far or the crew? Yeah, I mean, again, until we get the full detail, it's really hard to say. But, you know, based on the reports coming in, it sounds like they did everything they could have done. You know, the anchor is just not going to stop a vessel at that speed. It may look like you can do it in movies, but it's not in real life because of the momentum of the vessel. It's extremely hard. We know the port anchor was down because we see the imagery of it, which would be the right anchor to drop because you're trying to drag the ship back into the channel to get it back in there.

17:57The coordination between the pilot on the vessel with the bridge and trying to get vehicles off is key. Unfortunately, they were not able to stop all the vehicles on it. But again, one of the big questions that I have going in is like, okay, what is the track record of this vessel? Did this vessel encounter issues coming up? Were there systematic maintenance problems with the vessel? Did it drop power while coming up the Chesapeake Bay? We don't know that for sure. I've heard reports of the vessel did have some black smoke coming out of it, which is not always unusual. But even if it was up at the berth, were there instances of that?

18:31Was the vessel ready to go? Unfortunately, what tends to happen here is unless there's a full inspection being done, not every vessel that comes into the U.S. ports are inspected. They are done periodically. They will be cleared by customs and Coast Guard, but they won't do a full inspection of the vessel. And even then, we rely entirely on the ship and the ship's crew and the ship's operating company to ensure that ships are meeting their standards. We rely on that because that's the way international shipping operates. And the Singapore flag is a good registry. It's a very good registry. This ship was under lease to Maersk, but it wasn't a Maersk ship.

19:07You'll notice there's no name on the side of the vessel, no company. This is basically like a rental vessel that they used to fill in for surge at the time. So there's going to be have to go back to Singapore where the company is based to find out what was the history of this vessel. Did it maintain its maintenance? The Classification Society, which is that third party that exists outside of the registry and the ownership that's supposed to ensure that everything is being done. It takes time to go through this. And that's what this is going to entail, especially because of the loss of life associated with this incident.

19:39With the stipulation that there's obviously tons we don't know currently, give us an overview of sort of what maritime law says about the possible distribution of penalties and fines and costs for damages and repairs and things like that. Liability. Right. And so this is something we had a conversation with back with Everford at the time. So obviously, you know, the ship has insurance for both the ship itself and the cargo. So you can expect that the owner of the ship would declare general average, which would basically spread the cost of liability, not just across the ship, but across the cargo.

20:15The crew will be held. The Coast Guard probably almost immediately went on board that vessel and would have drug tested, alcohol tested everybody on board. They will get depositions from them, try to find out. There will be liability issues for whether or not there is negligence. In the case of what happened back in San Francisco in the 2010s, they actually found the pilot to be liable at that time. And there was actually a criminal case against him for his negligence with a jail sentence involved. So we can see punishments against the crew. We can see issues with the pilots, depending on whether or not there's culpability.

20:50But definitely with the owners of the company, the question is going to be, does that go as far as Maersk Lines, who is leasing the vessel? or will it be with this Singapore company? As you know, in shipping, one of the things that happens a lot is ships are incorporated into these kind of shadow corporations to basically diffuse liability. You know, the ship isn't owned by Marist. There's no direct connection to it. It goes through a series of subcontracts. And the question becomes how much of that liability will be there. It will also go to the insurance clubs, the P &I for the cargo, the hull and machinery for the vessel.

21:27and they'll be assessing that damage. Plus, we can see liability claims come in from those who have been killed or wounded on the bridge. And we can also see the same thing for cargo now that's going to divert because of this, because they're going to blame extra costs for doing this. The amount of liability that's at play here is I can't even fathom right now. This is the thing about maritime cases, is they can just blow up into numbers that just really boggle the mind at times because of the impacts it had, the butterfly effects down the entire supply chain. So there's three sort of core all lots concepts that seem to be involved in the current discussion of this incident.

22:10One of them you just mentioned, so the law of general averages. The other two are the Foreign Dredge Act of 1906 and, of course, the Jones Act. You knew it was inevitable that we would bring up the Jones Act at some point in this discussion. But how are we seeing those conversations play out in light of this tragedy? Well, let's go to Dredge Act for a second, because one of the big issues, once we get past the rescue and the recovery option here, which is going to take time, seven people still missing, that's going to be the priority right now. But once that is accomplished, then you're going to have to start talking about salvage.

22:47and you're going to need to bring in a lot of salvage equipment. You have to dismantle the Francis Scott Key Bridge. You have to take it apart. You actually have to get the bridge off the bow of the dolly. So you're talking about cranes, you're talking about barges, you're talking about all that stuff that operates in the coastal waters. That would be both under the Dredge Act and under the Jones Act. So a lot of those facilities are going to come in. When we watch what happened with Everforward, it took time to get cranes and barges in place that you needed to offload 500 containers off of Everforward.

23:15This is going to be a much more laborious process. I don't know if you're going to have to dredge as much as get the bridge off the bottom and recover it. We have a lot of salvage equipment and material. The problem is it's going to be scattered. So you're talking about repositioning, bringing all that equipment and material to Baltimore. You're going to have to operate from basically one side of the bridge right now until you can get under parts of the bridge and certify you can cross those sections of the bridge that have not collapsed. So this is going to take a long time to do. The Jones Act really didn't apply at all to this.

23:49This ship was in international trade, so it stopped at multiple U.S. ports, but it wasn't moving cargo between U.S. ports. But it is an issue here because we're going to have to see cargo offloaded at other ports. Would you expect it to revive a debate over the Jones Act? Because I think I saw some commentary to that effect, people talking about how it's a good thing that the Jones Act requires shipping on inland waterways to be done with U.S. registered vessels, because otherwise there are safety issues such as the one we just saw. And I'm not necessarily agreeing with that statement, but certainly that's a sentiment that we have seen, at least on Twitter, in less than 24 hours after this incident occurred.