Explained: Impact of Baltimore port closure on global supply chains

Baltimore ranks among top 20 U.S. ports

Washington:

A bridge collapse that closed the Port of Baltimore has raised concerns about the disaster’s potential impact on global supply chains.

Authorities have warned that significant work will be needed to reopen major ports after a catastrophic cargo ship collision on Tuesday blocked the port’s entrance.

Here’s how this impacts global trade:

major bus terminals

According to the U.S. Bureau of Transportation Statistics, Baltimore is one of the top 20 ports in the United States by tonnage and container throughput.

Last year, it handled a record 1.1 million 20-foot equivalent units (TEU) containers, a measure of container volume.

Container imports through Baltimore account for 2.1% of total imports from all U.S. ports, according to Allianz Trade.

Its location deep in the Chesapeake Bay makes it a “second-tier U.S. port,” said Paul Tourret, president of ISEMAR, a French maritime industry research institute.

Toure said the port carries transatlantic traffic, including smaller ships from northern Europe and the Mediterranean, as well as some routes from the Indian Ocean.

But it is an important hub for the automotive industry.

According to Maryland data, its private and public terminals handled 847,158 cars and light trucks last year, more than any other U.S. port for the 13th consecutive year.

It also ranks first in agricultural and construction machinery and sugar and gypsum imports and second in coal exports.

alternative route

German car giants Volkswagen and BMW said their operations were not affected as ships could still access their factory sites.

U.S. rival Ford said it had found alternative routes.

But the Mercedes-Benz terminal is located behind a collapsed bridge and is therefore no longer accessible by sea.

The company told German media it was looking for alternative routes.

“The blockade of the Port of Baltimore will have little impact on trade between the United States and Europe,” Patrick Lepperhoff, principal at Inverto Consulting, wrote in a report.

“In the last quarter of 2023, the port handled approximately 260,000 TEUs.

He wrote that the cargo could be diverted to neighboring ports such as New York and Norfolk, Virginia.

The impact of coal and cobalt

Ratings agency S&P Global said the port closures were expected to mainly affect U.S. coal exports and cobalt imports.

Access to CSX’s coal export terminals at Curtis Bay and Consol Marine Terminal has been blocked, the statement said.

S&P added that it expected the accident to disrupt coal exports from Baltimore for 10 to 15 days, but market participants said “the impact on pricing will be limited due to ample inventory in the market.”

Baltimore’s coal exports will jump to 28 million short tons in 2023, according to the U.S. Energy Information Administration, largely due to growing demand in Asia.

“Even before the port closures, we expected growth in total U.S. coal exports to slow significantly in 2024, to just 1%,” the EIA said.

“Operational disruptions in Baltimore may impact export volumes this year,” it added.

Cobalt stocks in Baltimore are already under pressure due to strong demand for the mineral, a key ingredient in electric vehicle batteries and high-tech equipment.

Attacks by Yemeni rebels on ships in the Red Sea have also caused delays as shipping companies have had to reroute vessels to longer and more expensive routes around southern Africa.

S&P said that while the bridge incident would have “little to no impact” on U.S. refined products, shipping fuel supplies “will likely tighten” along the Atlantic coast as ships refuel outside Baltimore.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)