Benzinga - by Ramakrishnan M, Benzinga Editor.
Baltimore was rocked by tragedy early Tuesday as the Francis Scott Key Bridge collapsed after a cargo ship, operated by Synergy Group and chartered by Danish shipping giant AP Moller Maersk (OTC:AMKBY), lost power and struck a support column. This catastrophic event led to multiple vehicles plunging into the river below, sparking a desperate search for survivors.
Effect Of Collision: As rescue efforts unfolded, it was reported by several media outlets that two persons working on the bridge had been rescued, while tragically, six others were presumed dead by their employer.
Vital Link: The Key Bridge, a vital thoroughfare facilitating the passage of over 30,000 vehicles daily, stands as a critical artery in the region’s transportation network.
Constructed between 1972 and 1977 for $60.3 million, the bridge primarily comprises lightweight concrete, as outlined in a November 2021 report by the U.S. Federal Highway Administration, Vox reported.
The incident’s repercussions extend beyond Baltimore, affecting global trade amidst existing challenges in the shipping industry such as record-breaking droughts in Panama to Houthi strikes on ships in the Red Sea.
Who Bears The Costs? The insurance sector anticipates significant liabilities, as per the Financial Times, with insurers expected to cover extensive losses, including bridge damage, port disruptions, and potential loss of life. The focus reportedly centers on protection and indemnity insurance, with Britannia P&I Club, among others, facing scrutiny in navigating this complex situation.
Initial estimates suggest potential insurance payouts could rival the approximately $1.5 billion disbursed after the 2012 Costa Concordia cruise ship crash, as per a marine insurance expert quoted by FT.
President Joe Biden expressed his commitment to federal support for the bridge’s reconstruction, pledging the government’s full backing. “It is my intention that the federal government will pay for the entire cost of reconstructing that bridge, and I expect the Congress to support my effort,” he said in remarks from the White House. “To the people of Baltimore, I want to say, we’re with you. We’re going to stay with you as long as it takes.”
Flexport CEO Ryan Petersen, whose company has two containers on the ship, underscored the intricate legal nuances surrounding liability in a social media post. Contrary to his initial assumptions, he said cargo owners may only be responsible for damages to the vessel and cargo, with the ship operator and their P&I insurance carrier assuming broader financial obligations.
This morning I tweeted that the cargo owners would have to pay for the damages to the bridge under the principle of maritime law known as general average. I was wrong. It appears they will only have to pay for the damage to the vessel and the cargo, split pro rata based on how…— Ryan Petersen (@typesfast) March 26, 2024
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