Baltimore is the largest vehicle loading port in the United States
Washington:
Cargo diversion and supply chain disruptions — Businesses are scrambling to avoid an economic hit after a cargo ship hit a major bridge in Baltimore this week, causing it to collapse.
Ship traffic at the Port of Baltimore has been suspended since Tuesday’s incident until further notice, and experts have warned of possible knock-on effects but said they should be manageable in the short term.
U.S. Transportation Secretary Pete Buttigieg noted in an interview with CBS that Baltimore is the largest port in the United States for loading and unloading vehicles, including cars and heavy farm equipment.
“Now, ocean shippers, other ports and cargo owners are trying to figure out where to reroute ships heading in that direction,” he said.
In addition to the thousands of Baltimore port workers affected, Maryland Governor Wes Moore warned in an interview with CNN that more than 140,000 people could be indirectly affected by the disruption.
“The Port of Baltimore not only has such a significant economic impact on my state,” he said, adding that the port handled more than 50 million tons of foreign cargo last year.
“We’re talking about, you know, cars, heavy trucks, agricultural equipment,” Moore said.
“That’s the impact it’s going to have on our country’s economy.”
Diversion of goods
Some cargo bound for Baltimore may be diverted to the Ports of New York and New Jersey, analysts said.
A shipping industry source told AFP that while it would involve diversions, the port was “capable of handling whatever is going to happen”.
That’s because the Port of New York and New Jersey, the second or third busiest ports in the United States, handles the equivalent of Baltimore’s annual container throughput in less time, sources said.
Bethan Rooney, port director for the Port Authority of New York and New Jersey, added that the company is “actively working with our industry partners to respond as needed to ensure the continuity of the East Coast supply chain.”
Despite the “clear trouble” ahead in the coming months, Oxford Economics economist Ryan Sweet expects businesses will be able to adapt.
Supply chains will be disrupted, but he said: “I don’t think there will be a macroeconomic impact because there are a lot of big ports nearby.”
Sweet noted that the ports will likely be able to handle the increase in cargo volumes.
He added that there may not be a “broad supply shock” affecting U.S. consumer goods inflation or gross domestic product.
car
Logistics platform Container xChange noted that certain industries will be affected more than others, such as automotive.
The Port of Baltimore’s private and public terminals handled more than 840,000 cars and light trucks in 2023, the most of any U.S. port, according to official data.
“The port is an important gateway for specialist cargo and bulk handling and is a key link in many supply chains,” Container xChange said.
It warned that freight delays “could lead to inventory shortages, impacting businesses such as the automotive industry that rely on timely delivery.”
Companies seeking alternative routes may also face higher shipping costs.
Major car companies importing through Baltimore include automaker Mazda, which told AFP the Port of Baltimore is “an important part of Mazda’s logistics chain in the United States.”
“Mazda is currently evaluating the potential impact of a prolonged closure of the Port of Baltimore to ensure minimal disruption to operations,” a spokesperson said.
Mazda added: “At this time, replacement plans have not been finalized.”
Stellantis, another major carmaker, said it was starting talks with transport providers about “contingency plans to ensure uninterrupted vehicle operations” to customers.
But Oxford Economics’ Sweet believes widespread shortages in the auto industry are unlikely as demand for new cars weakens and companies build inventories.
“For some companies that rely on the Port of Baltimore to import inventory, these issues may be more isolated,” he said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
