Baltimore Bridge Collapse threatens global supply chain

The catastrophic collapse of Baltimore bridge is set to disrupt the global supply chain in the days to come. As per Bloomberg, as much as 2.5 million tons of coal, hundreds of cars made by Ford Motor Co., and General Motors Co., and lumber and gypsum are threatened with disruption after the container ship Dali slammed into and brought down Baltimore’s Francis Scott Key Bridge in the early hours of Tuesday.

Supply chain disruption

The global supply chain which has already weakened by drought in Panama and missile attacks on Red Sea shipping by Yemen-based Houthi militants has come under the spotlight again. As per Bloomberg, docks in New Jersey and Virginia face the threat of being overwhelmed by traffic that’s being forced away from Baltimore which is one of the busiest ports on the US East Coast.

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“It’s a large port with a lot of flow through it, so it’s going to have an impact,” John Lawler, Ford’s chief financial officer, told Bloomberg TV. “We’ll work on the workarounds. We’ll have to divert parts to other ports along the East Coast or elsewhere in the country.”

Baltimore's capacity

As per S&P Global Market Intelligence, Baltimore only handled 3% of all East Coast and Gulf Coast imports in the year through Jan. 31. However, Baltimore is important to cars and light trucks with European carmakers such as Mercedes-Benz Group AG, Volkswagen AG and BMW operating facilities in and around the port. The port is also the second-largest terminal for US exports of coal, with a shutdown potentially hitting shipments to India.

As per IHS Markit and Wood Mackenzie’s Genscape, about a dozen large vessels are stuck inside Baltimore’s harbor as well as a similar number of tug boats. The list also includes cargo ships, automobile carriers and a tanker named the Palanca Rio.

Meanwhile the American Trucking Associations have estimated that the annual value of goods is going over $28 billion.

“We rely on our infrastructure systems for our daily needs, for a huge amount of the goods that we get in the United States from overseas and to have it cut off so suddenly, it’s a huge crisis,” Yonah Freemark, a researcher at the Urban Institute told Bloomberg.

The bridge was constructed in 1977 and took 4 years to complete. The cost at the time of construction was around $141 million, according to one estimate.

United States President Joe Biden has said that the federal government would pay for the reconstruction and vowed “to move heaven and earth to reopen the port and rebuild the bridge.”