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Bridge Collapse in Baltimore Creates Supply Chain Hurdles for Fuel Providers

Following the collapse of a key bridge earlier this week, Baltimore fuel suppliers anticipate trucking delays and minor logistical challenges, disrupting the city’s port operations indefinitely, as stated by market participants on Wednesday.

On Tuesday, an incident involving a cargo ship colliding with the Francis Scott Key Bridge led to parts of the bridge falling into the shipping lanes at the entrance of the Port of Baltimore. This event has temporarily halted operations at one of the busiest ports along the U.S. East Coast.

As a result of the bridge collapse, fuel delivery times are expected to be extended for several months. Fuel trucks, which previously utilized the bridge for transit, must now opt for longer alternative routes, according to fuel supplier Mansfield on Tuesday.

Mansfield also mentioned that the need for longer detours will reduce the number of daily deliveries each truck can make, thereby tightening local freight capacity.

What used to be a five-mile trip across the bridge now spans more than 15 miles via alternate routes, analyst Patrick De Haan highlighted on Tuesday.

The Colonial pipeline, Baltimore’s main fuel provider stretching 5,500 miles, has adjusted its operations to accommodate a surge in demand for transporting refined products through its Line 32 section. This section is responsible for moving gasoline, diesel, and jet fuel from Colonial’s Dorsey Junction station in Maryland to the Curtis Bay terminal in Baltimore’s port area.

Colonial announced on Wednesday that fuel deliveries on Line 32 would be proportionately allocated between April 9 and 16, following a notice that halted any new delivery requests before April 9.

The company clarified that the allocation was due to shipper requests exceeding the pipeline’s delivery capacity for the upcoming five-day cycle, although its operations remain unaffected.

The closure of the port primarily affects U.S. coal exports and diminishes bunker fuel consumption, according to the Energy Information Administration’s Wednesday report.

While the Port of Baltimore is not a significant entry point for waterborne fuel imports, it usually receives some gasoline and diesel shipments around this time of year to meet rising domestic demand, as shown by data from ship tracking service Kpler.

Should any imports originally destined for Baltimore need rerouting, they could be redirected to Philadelphia or Norfolk and subsequently trucked to Baltimore, suggested Steven Barsamian, COO of The Tank Tiger, a terminal storage brokerage in the U.S.

The extended shutdown of the port might influence ethanol barge imports from other East Coast locations, potentially impacting gasoline markets, De Haan noted on Wednesday. Ethanol, a necessary biofuel blend for gasoline to meet environmental standards, might see increased rail transportation to Baltimore in the coming weeks if the port remains closed for an extended period.

De Haan added that regional ethanol reserves should suffice in the short term, but longer-term port closures could raise concerns.

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