Cargo ship Dali sits in the water after running into and collapsing Baltimore's Francis Scott Key Bridge on March 27, 2024. Image Credit: AFP

WASHINGTON: The catastrophic bridge collapse that closed the Port of Baltimore to ship traffic is unlikely to trigger a major new US supply chain crisis or spike goods prices, due to ample and growing spare capacity at competing East Coast ports, economists and logistics experts say.

It remained unclear how long the twisted superstructure would block the harbour’s mouth. But port officials from New York to Georgia were busy on Tuesday fielding queries from shippers about diverting Baltimore-bound cargo from containers to vehicles and bulk material.

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“We’re ready to help. We have ample capacity to absorb any surge in container traffic,” Port of Virginia spokesperson Joe Harris told Reuters.

The Norfolk-based port is seen as a major beneficiary, due to its close proximity to Baltimore, but ports in Savannah and Brunswick, Georgia, also were poised to absorb some traffic, a spokesperson for the Georgia Ports Authority said.

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The situation is a marked shift from the clogged, understaffed ports and supply chain chaos of 2021 and 2022 that spiked prices and fueled inflation as Americans binged on imported goods purchases coming out of the COVID-19 pandemic.

East Coast ports have invested billions of dollars over the past decade to expand capacity and while the temporary closure at Baltimore may add time and cost for some companies, economists do not expect a significant macroeconomic impact.

“The collapse of the Francis Scott Key Bridge in Maryland is another reminder of the US vulnerability to supply-chain shocks, but this event will have greater economic implications for the Baltimore economy than nationally,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note.

“We don’t anticipate that the disruptions to trade or transportation will be visible in US GDP, and the implications for inflation are minimal,” he added.


One area of concern is higher shipment costs for imported cars and trucks and for exports of farm tractors and construction equipment as Baltimore is the largest US port for “roll-on, roll-off” vehicle shipments, with over 750,000 cars and light trucks handled by state-owned terminals in 2023, according to Maryland Port Administration data.

Ford Motor Co and General Motors said they would reroute some affected shipments but the impact would be minimal, while Volkswagen is unaffected because its new Sparrows Point vehicles terminal is located at a former steel mill site on the bridge’s Chesapeake Bay side.

The risk of car price spikes is further dampened by a recovery in automotive inventories to their highest level since May 2020, after being drawn down sharply during the pandemic.

The industry’s inventory-to-sales ratio is near its 32-year-average of 1.96 to 1 according to Census Bureau data, and sales incentives have risen in recent months as high interest rates dampen demand.


Ryan Peterson, founder and CEO of logistics platform Flexport, said that with Baltimore handling only 1.1 million twenty-foot equivalent containers last year - ranking 12th in the US, any impact on container rates and shipping costs from the disruption would be far less than increases caused by cargoes diverted from the Suez Canal because of attacks on Red Sea shipping by the Houthi militant group in Yemen.

But the port outage could contribute to a shift of container traffic to West Coast US ports that was already underway over the past several months because of the lack Asian shippers’ access to the Suez route and reduced capacity in the Panama Canal due to low water levels. Peterson said the potential for an East Coast longshoreman strike in late September - at the height of Christmas-season imports - also has some shippers considering West Coast shipments.

“East Coast volumes are down and there is the ability for those ports to flex up to handle this,” he said of the Baltimore disruption, adding that it’s “one more reason to think to start shifting volumes to the West Coast instead of the East.”