United States braces for supply chain disruption

US transportation secretary Pete Buttigieg has warned of “major and protracted impact to supply chains” following the closure of the Port of Baltimore for the foreseeable future after Tuesday’s catastrophic bridge collapse, although some experts sai US transportation secretary Pete Buttigieg has warned of a significant disruption to supply chains due to the collapse of the Francis Scott Key Bridge in Baltimore. The bridge, which took nine years to plan and nearly five to build, collapsed into the Patapsco River after being hit by a cargo ship. At least six people are presumed dead and the state of Maryland has declared a state of emergency. The Port of Baltimore, which handled foreign cargo worth $80 billion in 2023, was one of the most important ports in the US and was also the second-largest for coal exports. The immediate consequences include trapped ships in Baltimore port, which are expected to wait for the bridge to be cleared. There are also concerns about the impact on a global economy still reeling from the Red Sea crisis.

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Spanning more than 2km (1.2 miles) and with four lanes of traffic, the Francis Scott Key Bridge – a vital artery in Baltimore’s industrial heartland – took nine years to plan and almost five to build, but came down in under a minute after being struck by a cargo ship in the early hours of Tuesday.

At least six people are presumed dead after the bridge collapsed into the Patapsco River, and the state of Maryland has declared a state of emergency.

The Maryland governor, Wes Moore, said the disaster was heartbreaking. The missing – all members of a construction crew filling potholes on the bridge – were described as “hard-working, humble men” and are reported to have been from Guatemala, Honduras, El Salvador and Mexico.

The US’s top safety regulator, the Occupational Safety and Health Administration, has described construction, where about half of construction workers are Hispanic, as a “high hazard industry”.

In addition to the devastating impact on the families of those who lost their lives, there are questions about the possible effects on a global economy still reeling from Covid shocks and the Red Sea crisis, which have disrupted supply chains.

On Tuesday, US president Joe Biden called the bridge “one of the most important elements” supporting the US northeast’s economy. Its collapse in effect shut off access to one of the busiest and most important ports in the country.

Speaking to MSNBC on Wednesday, Mr Buttigieg said that even though there were other ports on the east coast, “there is no substitute for the Port of Baltimore being up and running.”

The immediate consequences are perhaps the most clear: all the ships in Baltimore port are trapped, said Salvatore Mercogliano, an associate professor of history at Campbell University and host of the What Is Going on With Shipping? YouTube channel.

“That mean that vessels that are in there will have to wait for the bridge to be cleared and obviously that’s going to be a long prospect,” he said, adding a number of vessels were also waiting to access the port.

Baltimore is the ninth busiest port in the US, and the busiest for car shipments, handling at least 750,000 vehicles in 2023, according to data from the Maryland Port Administration. Motor vehicles and parts accounted for 42 per cent of all Baltimore port imports.

General Motors (GM) and Ford have announced they will reroute affected shipments but Mr Buttigieg said on Tuesday there was “no question” the impact would be major.

The port handled foreign cargo worth $80 billion (€74 billion) in 2023, according to the governor, meaning there will be millions of dollars in lost trade and taxes for every day that shipping vessels are blocked from accessing it.

The biggest issue, according to Mr Mercogliano, will be the export of coal. In 2023, Baltimore was the second busiest US port for coal exports, with India the single biggest importer of that coal.

Most of the coal from Baltimore makes its way to India for electricity generation, Ernie Thrasher, the CEO of the coal trading firm Xcoal Energy & Resources, told Bloomberg. “The big question is the impact on India more than any global impact,” Mr Thrasher said.

Some of that coal will be rerouted, but complicated logistics will limit how much other ports can take.

Mr Mercogliano said: “Baltimore is a major port for the export of coal, and it’s not like you can move the coal to another facility because you need specialised facilities for that … and those that do exist are largely at capacity. Shutting down the port of Baltimore is going to have a major impact on the transportation of energy out of the United States.”

Mr Biden has said the federal government would pay for the entire reconstruction of the bridge and that he expects Congress to fund relief efforts.

Meanwhile, treasury secretary Janet Yellen said a federal supply taskforce was meeting on Wednesday to assess the port’s closure, adding that the Biden administration “will do everything as quickly as we possibly can” to resume the port’s operations.

Beyond port operations, the community more broadly is hugely reliant on the bridge for its day-to-day functioning. Almost 12m vehicles cross the bridge every year.

Distribution warehouses owned by Amazon and FedEx are located at the port, and experts say it is likely some operations will be disrupted. An Amazon spokesperson told Newsweek that the company was assessing the “immediate and future impacts” of the bridge disaster.

Mary Kane, the president and CEO of the Maryland Chamber of Commerce, said: “The economic impact that’s going to be felt by Baltimore and the state of Maryland is incomprehensible.” – Guardian

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