The Biden administration has warned of a long disruption at one of the busiest U.S. ports, as automakers reroute their shipments and insurers brace for multibillion-dollar claims following the collapse of a Baltimore bridge on Tuesday.
Pete Buttigieg, the US secretary of transportation, said on Wednesday it was “too early 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 destroyed. hit by the container ship Dali.
“Rebuilding won’t be quick, easy or cheap, but we will get through it,” Buttigieg said.
Automakers using Baltimore — the largest U.S. vehicle import terminal — said they are diverting trade to other East Coast ports in South Carolina, New Jersey and New York, but expect bottlenecks due to the increase in traffic and the lack of specialized port operators.
“There will undoubtedly be constraints as everyone moves to alternative routes,” said the director of a European car manufacturer.
The White House was concerned that the economic impact of the port closure would “spread” beyond the Baltimore region, Buttigieg said, adding that he would meet with shipping companies on Thursday.
“This is an important port for both imports and exports,” he said. “No matter how quickly the canals can be reopened, we know this cannot happen overnight. And so we will have to manage the impacts.”
Two container ships could be seen anchored downstream from the collapsed Francis Scott Key Bridge Wednesday, waiting to enter Baltimore or be rerouted to other East Coast ports.
Federal investigators were allowed to board the Dali Tuesday evening, obtaining data from the voyage recorder that could help them reconstruct the events leading up to the collision, which is believed to have killed six people.
Jennifer Homendy, chairwoman of the National Transportation Safety Board, said Wednesday that her investigation is expected to last 12 to 24 months and that authorities will speak with pilots on Thursday. She added that the search for the material was complicated by open containers, hazardous materials, structural damage and cold weather.
“We are very careful not to jump to conclusions,” he said. Homendy described the bridge as “critically fractured,” meaning that when part of it gives way, other portions are at risk of collapse. But he said he was in “satisfactory condition” at the time of the collapse.
Vice Admiral Peter Gautier, the Coast Guard’s deputy commander of operations, said the Dali – which has 4,700 containers on board – was “stable”, but that underwater inspections of its hull were ongoing.
The Army Corps of Engineers will work with the U.S. Coast Guard to remove the collapsed deck from the ship’s bow. “The bow of the ship is resting on the bottom due to the weight of the debris from the deck,” Gautier told reporters.
The Port of Baltimore is popular with automakers because it is located inland and is connected to two direct rail links. The port accounted for 15% of U.S. auto imports in 2023, and four-fifths of cars imported through Baltimore arrived upstream of the collapsed bridge, according to Stephen Gordon, chief executive of Clarksons Research.
Alternative ports on the East Coast have less vehicle-handling capacity than Baltimore “and many have already seen record levels of auto imports in recent quarters,” he added.
Atlantic Container Line, which operates roll-on-roll-off ships that transport finished vehicles, predicted that large auto importers would have “a lot of trouble” finding space elsewhere on the East Coast. “Alternative ports will fill very quickly before the ‘no vacancy’ sign is posted.”
The Mediterranean Shipping Company, operator of the world’s largest fleet of container ships, has warned customers that it will take “several months” for port operations to return to normal and will omit Baltimore from its services “for the foreseeable future.”
An auto group that exports to the United States through Baltimore said the bridge collapse could measurably affect its sales in coming months. Another major European car exporter has warned dealers to expect “delays” in vehicle shipments.
“The main problem with rerouting to alternative ports is the lack of skilled labor and specialized car-handling equipment,” said Dominic Tribe, automotive analyst at Vendigital.
Several European automakers, including Volkswagen and BMW, are unaffected by the fact that Baltimore’s Sparrows Point terminal, on the site of an old steel mill, is downstream from the bridge and remains open.
The first ship to arrive at the Sparrows Point terminal after its reopening on Wednesday was the Wolfsburg, named after VW’s German headquarters, port operators said.
Mercedes-Benz said Baltimore is one of several ports used by the company in the United States. JLR, which uses Baltimore’s main terminal, said its vehicles were affected and it was “evaluating alternative routes into the country.”
Insurance groups are now bracing for billions of dollars in losses from the crash, with reinsurers likely to foot the bill in a legal fallout expected to last for years.
Insurance payouts from the crash could reach $1-3 billion, Barclays analysts estimated on Wednesday.
Most of the amount is expected to flow 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 a group level.
The claims could involve damage to property and cargo, third-party liability and business interruption, said Mathilde Jakobsen, senior director at AM Best, an insurance rating agency, and “would add to growing challenges in the availability of reinsurance”.
Insurers are scrambling to assess the size and variety of potential claims. President Joe Biden said the federal government would fund the reconstruction of the bridge, adding that he “won’t wait” for the private sector.
Julien Horn, partner at insurance broker McGill & Partners, said the potential liabilities “go beyond rebuilding the bridge and will need to take into account the removal of bridge debris” from the vessel and the river.
Additional reporting by James Politi