How will the Baltimore bridge collapse affect deliveries? What to know after ship collision
The collapse of Baltimore’s Francis Scott Key Bridge could have a significant economic impact, effectively shutting down the nation’s busiest port for cars and light trucks in the U.S. and the ninth busiest port overall for an indefinite period.
The bridge provides access to the Port of Baltimore, and its sudden inability to handle imports and exports likely could mean shifting traffic to other ports on the East and West coasts, experts say. However, the reshuffling could cause product delivery delays.
Shortly after the bridge collapsed, the Port of Baltimore suspended vessel traffic “until further notice,” according to its website.
“This does not mean the Port of Baltimore is shut down. We are still processing trucks inside of our terminals,” the statement said.
But Bloomberg reported that the port “looks to be out of commission indefinitely.”
The accident comes as military conflict at the Suez Canal and low water levels at the Panama Canal separately have disrupted global shipping networks in recent weeks.
At least 40 ships are now more or less trapped inside the port, according to Reuters. At least 30 other ships had planned to arrive there.
“They will likely have to reroute shipping to other ports on the East Coast,” said Kevin Linderman, a professor and supply chain expert at Pennsylvania State University. “However, this will put additional demand on these ports, and shippers may not be able to access US markets” as efficiently, he said.
“One critical question is, can the other ports handle the products that were destined to Baltimore?”
The bridge collapse also could shift goods through West Coast ports, Bloomberg reported. But it’s not clear which other ports can handle the so-called roll on/roll off shipping containers that carry cars as well as farm and construction machinery.
Most shipments to the port come from Mexico, Germany and Japan, said Tinglong Dai, a professor of operations management and business analytics at Johns Hopkins University. Rerouting deliveries from Mexico and Germany to other East Coast ports likely would not cause significant delays, he said, but transferring Japanese imports to West Coast facilities could be more disruptive.
Although much of the port will effectively be shuttered until the bridge is rebuilt, the terminals of some companies, such as BMW, don't need access to the bridge and will be able to get up and running again relatively quickly, Dai said.
How busy is the Port of Baltimore?
Last year, the Port of Baltimore handled a record 847,158 cars and light trucks, more than any other U.S. port, according to Maryland Governor Wes Moore’s office. Overall, the port handled 52.3 million tons of foreign cargo worth $80 billion, making it the nation’s ninth busiest.
The facility also handled 1.3 million tons of farm and construction machinery, the most of any U.S. port.
The port has grown busier as many manufacturers have moved production from Asia to North America because of supply-chain bottlenecks during the pandemic, Dai said.
GM, Ford and Stellantis — which makes Chrysler, Dodge, Jeep, Ram and Fiat vehicles — use the port mostly for exporting vehicles manufactured in North America to Europe, says Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions of Chester Springs, Pennsylvania. So any interruption to exports will, "require costly relocation of products to New Jersey, Virginia, or South Carolina. This will also hold up ships, already in short supply and now locked into the port, from keeping the trade routes flowing."
Ford CFO John Lawler told Bloomberg TV Tuesday the incident will have a negative impact on deliveries of parts. He said Ford is looking to reroute car parts to other east coast ports and it would draw on its experience with COVID-related supply chain disruptions, but that the supply chains will inevitably be lengthened.
“It’s a large port with a lot of flow through it, so it’s going to have an impact,” Lawler said on Bloomberg TV. “We’ll work on the workarounds.”
GM spokesman Kevin Kelly said GM uses the port to ship some vehicles "to select export markets." GM exports the Chevrolet Corvette, built in Bowling Green, Kentucky, to the United Kingdom through Baltimore as one example. Kelly said GM is working with its logistics providers to find shipping options at other ports, but GM expects only a minor impact on operations.
Stellantis spokeswoman Jodi Tinson said in an emailed statement, "The Port of Baltimore is an important waterway for the automotive industry. We are initiating discussions with our various transportation providers on contingency plans to ensure an uninterrupted flow of vehicles to our customers and will continue to carefully monitor this situation."
JPMorgan Chase economists Michael Feroli and Daniel Silver will have "minimal implications for vehicle inflation."
"While Baltimore is the most important port for vehicle imports, many more vehicles are imported over land from Canada and Mexico. the economists wrote in a note to clients.
And less than 24 hours after the disaster, vessels were already diverted to other East Coast ports, they added. "According to the Port of Virginia those ports will have sufficient capacity to handle all the diverted cargo," they wrote.
Will the port shutdown affect consumer goods, prices?
Several big firms have distribution warehouses in an industrial park near the bridge and port, including Amazon, FedEx, Under Armour, Home Depot and BMW, according to Bloomberg and one analyst's tweet on X.
Some analysts, however, predict only a minimal impact on the movement of goods up and down the East Coast from the bridge collapse.
Baltimore’s port holds just 4% of all East Coast trade volume, according to S&P Global. New York’s port, by contrast, does 38% of that business.
What makes the Port of Baltimore an attractive destination for the shipping industry?
Yet, the port offers the deepest harbor in Maryland’s Chesapeake Bay, is closer to the Midwest than any other East Coast port, and is within an overnight drive of one-third of the US population, according to the port website. The port boasts five public and 12 private terminals.
“For the American consumer, the biggest impact will be felt in terms of imported motor vehicles,” said Jason Miller, a business professor at Michigan State University. “As such, so long as motor vehicle sales remain strong, we could see inventories drop on the lots of dealers that sell imported vehicles until alternative arrangements can be made. This could increase motor vehicle prices for some makes and models.”
Contributing: Jamie L, LaReau of the Detroit Free Press
This article originally appeared on USA TODAY: Key bridge collapse in Baltimore may affect US product deliveries
