The collapse of a bridge near Baltimore after it was hit by a container ship could have far-reaching economic consequences – affecting the price of goods and delaying UK deliveries.
The Francis Scott Key Bridge tragedy is thought to have left six people dead. The Port of Baltimore is closed to ships and there is no reopening date yet.
The port is one of the top ten ports in the United States value The volume of cargo it transports each year plays a key role in international trade and today’s highly interconnected global supply chains.
This could have an impact on consumers around the world, including in the UK, resulting in higher costs or delayed delivery times for cars, food and energy.
How will this affect UK consumers?
The Port of Baltimore is the No. 1 U.S. auto export port and handled a quarter of the country’s coal exports before the accident.
Mohan Sodhi, professor of supply chain and statistics at Bayesian Business School, believes a major shipping incident like this could lead to a series of small price increases for Britons on everything from bananas to gas .
This is because marine insurance companies may start using the incident as an excuse to increase the premiums they charge shipping companies.
“It’s just opportunism. People want to make money,” he told I. “They see this as an opportunity to make money.”
“If a competitor raises prices, they think I can do the same. They know consumers have the accident fresh in their minds and are unlikely to question it.”
The UK relies on the shipping industry to bring food into the country, and because the UK imports most of its food, even a small increase in shipping insurance prices could end up leading to higher prices for consumers.
According to the Maryland Port Authority, the port transported more than 750,000 vehicles in 2023 alone.
Professor Soddy said the incident will affect the ability of the U.S. Midwest, one of the global auto manufacturing hotspots, to effectively export cars. That could mean weeks of delays for drivers buying popular U.S. cars from brands like Ford and General Motors.
It could also mean short-term delays for many car companies with significant manufacturing bases in the U.S. Midwest, including Nissan, Fiat and Audi.
However, he believes the U.S. has enough port capacity to redirect supply flows and resolve the issue relatively quickly, and that many other Midwestern ports can pick up the slack.
How will this affect UK businesses?
The tragedy could also impact British businesses.
Professor Soddy pointed out that many of the world’s largest marine insurance companies are based in the UK, and London is the capital of insurance.
In theory, these companies could benefit from potential increases in transportation insurance premiums.
However, Barclays analysts said Insurers could face claims of up to $3 billion Companies in London’s Lloyd’s market most at risk related to bridge collapse, Bloomberg the report said.
The Port of Baltimore is also one of the key points for the flow of British-made cars into the United States.
That could mean higher costs and significant delays for British carmakers such as Jaguar, Land Rover and Aston Martin, as well as multinationals such as Toyota, which has many factories in the UK.
Hasn’t this happened before?
Professor Soddy compared the situation to other recent geopolitical events, such as the instability caused by attacks by Yemen’s Houthi rebels on cargo ships in the Red Sea and Suez Canal, leading to higher prices for UK consumers.
Prices of tea, wine, meat and fish in British supermarkets soared after the Red Sea attacks, forcing hundreds of cargo ships to divert around South Africa’s Cape of Good Hope, a longer voyage.
Insurers raise premiums charged to U.S., U.K. and Israeli companies up to 50% Ships sailing in the Red Sea after the attack.
Another unforeseen geopolitical event, the war in Ukraine, has also pushed up the price of essential goods such as food and energy in the UK.
The biggest impact will be within the United States. President Joe Biden has pledged that the federal government will cover the cost of rebuilding the bridge, which could exceed $600m (£474m).
With a main span of more than 1,200 feet, the bridge is one of the longest continuous bridges in the world.
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