Business

East Coast ports brace for fallout from Baltimore bridge collapse

Eastern seaboard ports are preparing to accept shipments of goods being rerouted from the Port of Baltimore following the collapse of the Francis Scott Key Bridge early Tuesday morning.

Port officials and private-sector distributors told The Hill that plans to divert cargo shipments are in the works due to the suspension of vessel traffic into and out of the Port of Baltimore.

“We’ve been in tons of meetings all day trying to figure out what to do about this,” said MacKenzie Chalmers, an administrative coordinator at marine terminal and industrial rail operator Tradepoint Atlantic, which works with big brands like Amazon, Home Depot, McCormick, BMW and Volkswagen, among others.

In a statement, the company said it has been in constant contact with city and state officials during what it calls an “extremely challenging situation.”

An official with the Virginia Port Authority said his office “was sure” there would be additional cargo routed through the state’s port system, which includes a major hub in Norfolk, though he cautioned that the extent of necessary diversions wasn’t yet clear.


“There’s an open line now with customers, the ocean carriers that own the cargo, which includes some of the big box carriers,” spokesman Joe Harris for the Virginia Port Authority told The Hill. “They’re going to speak and determine where is best to land the cargo.”

The Port of New York and New Jersey said Tuesday it is working with shippers to make sure East Coast supply chains don’t buckle under the strain of losing access to the Baltimore port.

Some Baltimore-bound cargo will likely be diverted to New York — the largest port on the East Coast and the second largest in the country after Los Angeles. New York dockworkers were handling roughly 20 percent more cargo in 2021 than they are now, according to an official estimate.

Multiple East Coast ports told The Hill Tuesday that they had extra capacity to absorb additional shipments, suggesting that effects on overhead costs and consumer prices could be muted. 

The Port of Baltimore said Tuesday that while no ships are currently moving through its facilities, the port is still operational and that trucks are coming in and out of terminals.

“I don’t think we’ll have a large impact in terms of logistics and shipping moving forward. There might be snafus over the next couple days while issues are being worked through, but I think they’ll be able to overcome that pretty quickly,” Brent Howard, president of the Baltimore County Chamber of Commerce, said during a phone interview. 

The Baltimore Port specializes in what is known in the shipping industry as “roll on, roll off” cargo, which is vehicles and heavy machinery as opposed to containers. Experts say the commercial effects of the bridge collapse could most directly affect shipments of automobiles.

“Baltimore is very significant in terms of … consumer goods, cars and other things the US imports from abroad. This is not as significant in the commodities business. They do export coal from the Baltimore area, but probably what’s going to be affected most is deliveries of new cars, for example,” shipping analyst John Kartsonas, who manages two shipping-focused ETFs, wrote in a commentary.

Kartsonas said the incident will result in some “disruptions in global trade,” some of which “will be felt in the US market,” due to the importance of Baltimore for importing cars and consumer goods.

Even so, representative for the Port of Philadelphia said that any excess of automobile imports shouldn’t pose a problem.

“Philadelphia has a ‘roll on, roll off’ terminal, our vehicle processing center where we take imports of Hyundai, Kia, and Genesis vehicles, so we have the skilled labor with the Teamsters and [International Longshoremen’s Association] already trained in handling those cargoes,” Ryan Mulvey, director of public affairs at the Philadelphia port, told The Hill.

Mulvey added that the Philadelphia port hasn’t yet received any ships from Baltimore but that he does expect to see some diversions in the days and weeks ahead, depending on how long the Baltimore shipping terminals remain inaccessible.

Whether companies choose to raise prices in response to diversion costs could be a matter of how fast they respond to the closure of Baltimore’s port access.

“The question is how quickly ocean freight carriers can put diversions in place, particularly for vessels already en route to Baltimore or containers at the port waiting to be exported,” Emily Stausbøll, analyst with freight analytics company Xeneta, told trade publication World Cargo News.

Additional capacity at nearby ports “may limit any impact on ocean freight shipping rates,” Stausbøll noted, cautioning that “there is only so much port capacity available and this will leave supply chains vulnerable to any further pressure.”

Shipping routes and supply chains have come under scrutiny in the aftermath of the pandemic as geopolitical tensions have flared and production pipelines have been reworked as part of new economic agendas.

Attacks in the Red Sea in response to the Israeli siege of Gaza sent many ships away from the Red Sea and around the Cape of Good Hope, leading to a spike in global shipping rates.

A drought in Panama has slowed traffic through the Panama Canal, another of the world’s primary shipping routes.

The producer price index for deep sea freight transportation remained relatively flat between 2010 and 2020 but skyrocketed in 2021 following the economic shutdowns of the pandemic and is still close to all-time highs.

While the metric increased about 45 percent over the last decade, it has jumped by more than 50 percent in just the last four years.

Inflation has decelerated in the economy as supply chain pressures have eased and consumers have spent their savings, though profits both in absolute terms and as a share of added value remain way above their pre-pandemic levels.