In the aftermath of the Baltimore bridge collision, US supply chain professionals are anticipating a significant rise in container price increases that will ripple through the economy.
This comes as freight volumes into the US rebounded this year, coupled with the bridge collision, ongoing challenges in the Red Sea and the Panama Canal’s expected strain on the country’s ports, which is expected to continue in the short term. This is expected to lead to increased congestion, additional logistical and operational complexities, and short to midterm price increases.
The Container xChange's Container Price Sentiment Index (xCPSI) unexpectedly surged from 26 to 61 points between March 18 and March 29, 2024. This marked increase suggests that the industry is anticipating container prices to increase in the coming weeks, while the suddenness of the index’s move highlights rising uncertainty in the market.
“The sharp rise in sentiment could be linked to ongoing market volatility, the perceived emergency on the US East Coast due to the Baltimore collision, and the resulting sustained pressure on the market,” said Christian Roeloffs, cofounder and CEO of Container xChange.
As at 29 March, the Key Bridge Response 2024 Unified Command reported that 56 total containers loaded on the vessel contained hazardous materials, with 14 impacted. These 14 containers were assessed by an industrial hygienist for potential hazards. The Unified Command and Joint Information Center were established in Baltimore on 26 March to co-ordinate the response and disseminate information regarding the Francis Scott Key Bridge collapse.
In the meantime, the Captain of the Port of Baltimore has established a temporary alternate channel on the northeast side of the main channel in the vicinity of the Francis Scott Key Bridge for commercially essential vessels, according to an official statement released by Baltimore Mayor Brandon Scott. The Unified Command is working to establish a second, temporary alternate channel on the southwest side of the main channel.
Shippers whose routes include Baltimore are expected to face significant challenges in the coming days, including increased shipping costs and associated expenses due to rerouting.
“In the short term, the bridge collapse will lead to localised disruptions in container availability and transportation. The incident has also led to increased delivery times and fuel costs which could indirectly impact container prices and leasing rates in the coming times,” said Roeloffs.
Container xChange's analysis of loaded imports at the top 10 ports in the US reveals a significant increase in container throughput compared with 2023, indicating a strong start to the year in terms of freight demand and activity.
Ports such as the Port of Long Beach, LA, and Port of Vancouver have shown significant increases in loaded inbound TEUs, indicating strong growth in maritime freight traffic, Container xChange reported.
However, with the latest diversions, it remains to be seen how well these ports will handle the rise in traffic.
“As more cargo gets diverted to these ports, we will see an increased throughput pressure on these ports. This could lead to higher congestion and longer wait times for vessels, trucks, and trains at the port,” Container xChange said.
“Given this situation, we would expect container prices at these ports to rise in the month of April and beyond, depending on the intensity of the diversions and its aftermath. The aftermaths of the Baltimore collision are being felt nationwide.”
By February 2024, most US ports experienced a resurgence in loaded cargo imports compared with the same period last year (Jan-Feb volumes in 2023).
However, while volumes have rebounded and port operations have improved, concerns linger due to the ongoing Red Sea crisis and the recent Baltimore bridge collision, which is expected to cause months-long disruptions.
“This is likely to increase pressure on nearby ports with similar capabilities and may lead shippers and carriers to consider diverting entirely to the West Coast, potentially resulting in additional challenges or even closures for carriers," Roeloffs said.
"As we move forward, we anticipate increased wait times and processing fees at the ports where traffic is diverted in the US.”
