The Biden administration has warned of a long-term outage at one of America's busiest ports, as automakers reroute their shipments and insurers brace for billions of dollars in claims after a Baltimore bridge collapsed on Tuesday.
US Transportation Secretary Pete Buttigieg said on Wednesday that it was “too early to be sure” 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 it was damaged. It was struck by the container ship Daly.
“Rebuilding won't be quick, easy or cheap, but we will get it done,” Buttigieg said.
Automakers that use Baltimore — the largest U.S. auto import terminal — said they are redirecting trade to other East Coast ports in South Carolina, New Jersey and New York, but expect bottlenecks due to increased traffic and a shortage of specialized dockside handling workers.
“There will undoubtedly be restrictions as everyone moves to alternative routes,” said a manager at a European automaker.
Buttigieg said the White House is concerned that the economic impact of the port closures will “ripple” beyond the Baltimore area, adding that he will meet with shipping companies on Thursday.
“This is an important port for both imports and exports,” he said. “No matter how quickly the canals reopen, we know it cannot happen overnight. So we will have to manage the impacts.”
Two container ships could be seen anchored beneath the collapsed Francis Scott Key Bridge on Wednesday, waiting to enter Baltimore or be redirected to other East Coast ports.
Federal investigators were allowed to board the Daly on Tuesday evening to obtain data from the flight recorder that could help them piece together the events leading up to the collision, which is believed to have killed six people.
Jennifer Homendy, head of the National Transportation Safety Board, said on Wednesday that the investigation was expected to last 12 to 24 months, and that authorities would speak with the pilots on Thursday. She added that the search for the materials was complicated by open containers, hazardous materials, structural damage and cold weather.
“We are very careful not to jump to conclusions,” she added. Homendy described the bridge as a “fracture hazard,” meaning that when one part of it collapses, the other parts are at risk of collapsing. But she said she was in a “sick condition” at the time of the collapse.
Vice Admiral Peter Gauthier, deputy commander of Coast Guard operations, said the Daly – which carries 4,700 shipping containers on board – was “stable”, but underwater inspections of its hull were still ongoing.
The Army Corps of Engineers will work with the U.S. Coast Guard to remove the collapsed bridge from the bow of the ship. “The bow of the ship is sitting at the bottom due to the weight of the bridge debris,” Gauthier told reporters.
The Port of Baltimore is popular with automakers because it is far inland and connected by two direct rail connections. The port accounted for 15 percent of U.S. auto imports in 2023, and four-fifths of cars imported through Baltimore came upstream of the collapsed bridge, according to Stephen Gordon, managing director of Clarksons Research.
He added that alternative ports on the East Coast have less capacity to handle vehicles than Baltimore, “and many of them were already seeing record levels of vehicle imports during recent quarters.”
Atlantic Container Line, which operates roll-on ships carrying finished vehicles, predicted that large auto importers would have “a lot of trouble” finding space elsewhere on the East Coast. “Alternate slots will fill up very quickly before the 'no space available' sign appears.”
Mediterranean Shipping Company, operator of the world's largest fleet of container ships, has warned customers that it will take “several months” before port operations return to normal and will remove Baltimore from its services “for the foreseeable future.”
One of the car groups that exports to the United States via Baltimore said that the collapse of the bridge could significantly affect its sales in the coming months. Another major European auto exporter warned dealers to expect “delays” in vehicle shipments.
“The main problem with rerouting to alternative ports is the lack of skilled labor and specialized equipment in handling cars,” said Dominic Tribe, automotive analyst at Vindigital.
Many European automakers, including Volkswagen and BMW, are not affected because Baltimore's Sparrows Point station, on the site of old steel mills, is located below 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 Volkswagen's German headquarters, port operators said.
Mercedes-Benz said Baltimore was among several ports used by the company in the United States. Jaguar Land Rover, which uses the main Baltimore station, said its vehicles were affected and it was evaluating alternative routes into the country.
Insurance groups are now preparing to face billions of dollars in losses resulting from the accident, and reinsurers are likely to foot the bill in legal ramifications expected to last for years.
Barclays analysts estimated on Wednesday that the insurance claim resulting from the accident could range between one billion and three billion dollars.
Most of it is expected to flow to the ship's reinsurers, a large group including Axa XL, a division of the French insurer. Aksa said any impact would be “immaterial” at the group level.
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Claims can include damage to property and goods, third-party liabilities and business interruption, and will “add to growing challenges in the availability of reinsurance,” said Mathilde Jacobsen, senior director at insurance rating agency AM Best.
Insurers are scrambling to understand the volume and diversity of potential claims. President Joe Biden said the federal government will fund the bridge's reconstruction, adding that it “will not wait” for the private sector.
Julian Horne, a partner at insurance firm McGill & Partners, said the potential liabilities “go beyond rebuilding the bridge and will need to consider removing bridge debris” from the ship and river.
Additional reporting by James Politi
