Supply chains show resiliency after the Baltimore bridge collapse, port blockage

The horrifying images of Baltimore's Francis Scott Key Bridge collapsing on March 26 — and the subsequent blocking of commercial shipping in and out of the country's busiest automotive port — left some in the auto industry wondering if it would be in for a repeat of the supply chain woes it experienced during the pandemic and microchip shortage.

But one week after the collapse, there's no indication the disaster in Baltimore will have an impact anywhere near that, supply chain experts said. While the situation is far from ideal, it's proved to be manageable, they said.

"There was a lot of panic for a lot of people last week when this happened, wondering if this would be a return to the days in 202," said Jason Miller, a professor in supply chain management at Michigan State University. "But this is not a return to 2021."

Automakers and suppliers have thus far been able to reroute imports and shipments of vehicles and parts to other ports on the East Coast. Miller said some vehicle cargo has since moved through ports in Delaware and Georgia, while parts shipments have also been rerouted to ports around New York and in the South, according to AutoForecast Solutions.

To be sure, rerouting shipments is a job that's easier said than done for logistics managers, and having to ship parts and vehicles from different ports will raise costs for automakers and suppliers.

But those costs should be quite manageable, said Robert Streda, an analyst with credit rating agency Morningstar DBRS.

"We're pretty comfortable that companies will be able to find alternative routes," Streda said. "To the extent that this results in higher costs, they can absorb that," citing relatively strong balance sheets for most automakers.

Meanwhile, auto suppliers "are not reporting any significant changes in their supply chain yet," said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions.

Given the Port of Baltimore's importance for the auto industry, that likely comes as a relief.

The port is the busiest in the U.S. by volume of automotive products that pass through, particularly imports and exports of new vehicles. According to Morningstar, more than 847,000 vehicles moved through the port in 2023.

Still, the vast majority of imports and exports into the U.S. occurred elsewhere. Baltimore accounted for about 11 percent of overall auto imports in 2023, a number Morningstar said is feasible for the industry as companies reroute.

The auto industry received good news when it became clear that Tradepoint Atlantic, a shipping site on the seaward side of the collapsed bridge, remained open to commercial cargo. Volkswagen and BMW use that facility, Miller said.

"The fact that the one facility is not shut down is a major help and may help to mitigate the magnitude of the disruption," Miller said.

The collapse might also prove to be less of a stress on the supply chain than it otherwise would have been because of lessons learned from the pandemic and chip shortage. The crises forced the automakers and suppliers to implement better forecasting capabilities, diversify their supply bases and bolster their risk management practices, Streda said.

"We think they're more prepared to deal with this than they might've been," he said.

The industry is also relying less on imported parts. The proliferation of just-in-time delivery and geopolitical pressures have forced automakers and suppliers to rely more on regional subsuppliers.

According to U.S. Department of Commerce data, 49.8 percent of the customs value of automotive parts imported into the U.S. in 2019 came from Mexico and Canada, up from 46.6 percent in 2014 and 45.8 percent in 2009.

MSU's Miller said the bridge collapse is likely to have a similar impact on North American automotive trade as the Houthi militant attacks in the Red Sea have had on trade in Europe and Asia.

"There were dire predictions in December and January about shortages and inflation, and none of that has come to pass," he said. "Networks have adjusted. This is the same type of situation because there will be several weeks of adjustments that take place, but once we get those adjustments knocked out, the disruption will be reasonably limited."

It remained unclear how long it would take for crews to reopen most commercial shipping in and out of the Port of Baltimore. Recovery teams opened a second channel enabling smaller vessels to navigate the port on April 2, but most commercial shipping remains blocked by the collapsed bridge and stranded container ship that brought the structure down.

The bodies of four victims remain trapped beneath the wreckage, officials say. Divers recovered two other bodies.

The Biden administration has helped secure equipment and initial emergency funding of $60 million to begin recovery, and the president has asked Congress to fund the rebuilding of the bridge, which forms part of a highway looping around Baltimore.

Reuters contributed to this report.