Bridge Collapse at Port of Baltimore Disrupts East Coast Shipping

Port of Baltimore Closure Sparks Redirection of Container Traffic, Potential Supply Chain Strain

Baltimore

Days after the 26th of March incident at 01:28, where the 10,000 TEU container vessel “Dali” collided with one of the support columns of the Francis Scott Key Bridge spanning the Patapsco River between Baltimore and Dundalk, resulting in its collapse and the subsequent blockade of the Port of Baltimore on the US East Coast, the true magnitude of this latest disruption in international container shipping is beginning to unfold.

In the container market, as per Drewry’s analysis, the primary gateway port in the northern half of the US East Coast is New York/New Jersey (NY-NJ) commanding 59% of throughput. Hampton Roads terminals, primarily Norfolk International Terminal and Virginia International Gateway, handle 25%, while Baltimore accounts for 9%, Philadelphia 6%, and the remainder distributed among Boston, Wilmington (Delaware), and other smaller terminals.

According to Vespucci Maritime, the port handled 1.1 million TEUs in 2023, placing it outside the top ten container ports in North America, representing less than 5% of total US maritime imports last year.

In 2023, the port witnessed a 13.2% year-on-year decrease in overall container volumes despite a 5.5% increase in capacity, primarily attributable to the Seagirt Marine Terminal, which added 800,000 TEUs during the year.

However, despite the noted additional capacity and reduced throughput in 2023, wait times at the ports of Baltimore and New York only recently managed to be controlled, dropping to an average of 0.2 days in February 2024. In contrast, Hampton Roads terminals maintain a higher average of 0.5 days.

Where will Baltimore’s cargo flow?

Given that most of Baltimore’s container terminals are situated behind the collapsed bridge, container exports either currently in Baltimore or planning to depart from this port will have to wait until the waterway is reopened (though no date has been set) or be diverted by truck or rail to alternative ports in the region.

Against this backdrop, Drewry forecasts that with Baltimore’s capacity eliminated and its container volume redistributed to the terminals of New York/New Jersey, Philadelphia, and Hampton Roads, these ports are likely to experience sustained congestion, particularly if the surge in utilization occurs over a short period, potentially straining supply chains in this market in the coming months.

Thus, exporters opting for these alternatives might face higher road and rail transportation fees as demand for volume transfers to other ports increases. Furthermore, vessels with scheduled calls at the Port of Baltimore will redirect to other ports on their itineraries while the closure persists. In fact, the same container vessel “Dali” had scheduled calls along the East Coast.

The silver lining amidst this scenario is that maritime shipping is currently in its low season between the Lunar New Year and the usual peak season starting in June or July. At present, there is no significant congestion at any of the major East Coast ports. Therefore, while some short-term disruptions may occur as the market adjusts, Baltimore volumes should be able to be redirected to other ports without causing significant setbacks.

According to Freightos’ chief analyst, Judah Levine, the advancement of part of the peak season volumes in the coming months, due to concerns over potential labor stoppages at East Coast ports in the third quarter, could make imports stronger than usual. However, he notes, “It is expected that the other East Coast ports can handle these volumes anyway.”

Nevertheless, the analyst suggests that if congestion does occur on the East Coast, it could exert some temporary upward pressure on spot freight rates on the Asia-East Coast US route and Transatlantic routes.

In any case, Levine points out that Asia-East Coast US rates are already high (more than double their March 2019 level) due to diversions via the Cape of Good Hope but have dropped by 22% to US$5,284/FEU since their peak in February as demand has decreased and shipping lines have made adjustments to accommodate longer itineraries. Meanwhile, Transatlantic rates are nearly on par with 2019 levels at US$1,659/FEU.

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