The Biden administration has warned of a lengthy disruption to one of the US’s busiest ports, as carmakers reroute their shipments and insurers brace themselves for multibillion-dollar claims following the collapse of a Baltimore bridge on Tuesday.
Pete Buttigieg, the US transportation secretary, said on Wednesday it was “too soon to be certain” how long it would take to reopen the port and restore the highway bridge over the Patapsco river, which was destroyed in the early hours of Tuesday after being struck by the container ship Dali.
“Rebuilding will not be quick or easy or cheap, but we will get it done,” Buttigieg said.
Carmakers that use Baltimore — the US’s largest vehicle import terminal — said they were rerouting trade to other east coast ports in South Carolina, New Jersey and New York, but expected bottlenecks due to increased traffic and a shortage of specialist dockside handlers.
“There will undoubtedly be constraints as everyone moves to alternative routes,” said a director at one European carmaker.
The White House was concerned that the economic impact of the port shutdown would “ripple out” beyond the Baltimore region, Buttigieg said, adding that he would convene with shipping companies on Thursday.
“This is an important port for both imports and exports,” he said. “No matter how quickly the channels can be reopened, we know that it can’t happen overnight. And so we’re going to have to manage the impacts.”
Two container ships could be seen anchored downstream of the crumpled Francis Scott Key Bridge on Wednesday, waiting to enter Baltimore or be redirected to other east coast ports.
Federal investigators were cleared to board the Dali on Tuesday evening, obtaining data from the voyage recorder that could help them piece together the events that led to the collision, which is thought to have claimed the lives of six people.
Vice-admiral Peter Gautier, the deputy commandant for operations for the Coast Guard, said that the Dali — which has 4,700 cargo containers on board — was “stable”, but that underwater inspections of its hull were ongoing.
The Army Corps of Engineers will work with the US Coast Guard to remove the collapsed bridge from the bow of the ship. “The vessel bow is sitting on the bottom because of the weight of that bridge debris,” Gautier told reporters.
Baltimore’s port is popular with carmakers because it is far inland and connected to two direct rail links. The port accounted for 15 per cent of the US’s car imports in 2023, and four-fifths of the cars imported through Baltimore came in upstream of the collapsed bridge, according to Stephen Gordon, managing director of Clarksons Research.
Alternative ports on the east coast have less vehicle-handling capacity than Baltimore “and many were already seeing record levels of car imports over recent quarters”, he added.
Atlantic Container Line, which operates roll-on-roll-off ships that carry finished vehicles, predicted that big car importers would have “a lot of trouble” finding spaces elsewhere on the eastern seaboard. “Alternative ports will fill up very quickly before the ‘no vacancy’ sign goes up.”
Mediterranean Shipping Company, operator of the world’s largest container ship fleet, has warned customers it will be “several months” before port operations return to normal and will omit Baltimore from its services “for the foreseeable future”.
One car group that exports to the US through Baltimore said the bridge collapse could measurably affect its sales in the coming months. Another significant European car exporter warned dealers to expect “delays” to vehicle shipments.
“The main issue with rerouting to alternative ports is the lack of skilled labour and specialist equipment in handling the cars,” said Dominic Tribe, an automotive analyst at Vendigital.
Several European carmakers, including Volkswagen and BMW, are unaffected because Baltimore’s Sparrows Point terminal, on the site of an old steelworks, is downstream of the bridge and remains open.
The first ship to arrive at the Sparrows Point terminal after it reopened on Wednesday was the Wolfsburg, named after VW’s German headquarters, the port operators said.
Mercedes-Benz said Baltimore was among several ports used by the company in the US. JLR, which uses the main Baltimore terminal, said its vehicles were affected and that it was “assessing alternative routes into the country”.
Insurance groups are now bracing themselves for billions of dollars of losses stemming from the accident, with reinsurers likely to foot the bill in a legal fallout expected to last for years.
The insurance claim stemming from the accident could reach $1bn-$3bn, Barclays analysts estimated on Wednesday.
Most of it is expected to flow through to the ship’s reinsurers, a large group including Axa XL, a division of the French insurer. Axa said any impact would be “non-material” at group level.
Claims could span property and cargo damage, third-party liabilities and business interruption, said Mathilde Jakobsen, senior director at AM Best, an insurer rating agency, and would “add to the increasing challenges in reinsurance availability”.
Insurers are rushing to get their head around the size and variety of the potential claims. President Joe Biden has said the federal government would fund the bridge’s reconstruction, adding that it was “not going to wait” for the private sector.
Julien Horn, a partner at insurance broker McGill & Partners, said the potential liabilities “go beyond the rebuilding of the bridge and will need to consider removing the bridge debris” from the ship and river.
Source: Economy - ft.com
