Experts say the Key Bridge and Port of Baltimore tragedy will have a major negative impact on America's auto industry. Shortages and price increases could result. And it will not just be Asian brands that are impacted.
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America is just recovering from an historic shortage of automobiles. The shortage had multiple causes, all well known, and its impact drove prices sky-high. Dealer markups of $10,000 to $20,000 were not uncommon on popular models. Unfortunately, a new tragedy of epic proportions has just hit the American automotive market. Our country’s largest East-Coast port has been slammed by a bridge collapse that spans the port's entry and exitway. Ship traffic is at a standstill. Cleanup will take weeks or months.
Logistics expert Tinglong Dai, a professor of operations management and business analytics at the Johns Hopkins Carey Business School, commented on the Port of Baltimore’s importance to the American Auto industry, saying, “We're talking more than 800,000 vehicles a year, a lot of cars imported from Europe and Mexico, and a lot of cars exported by Detroit automakers. On the consumer side, we're likely to see delays in delivery in some cases, depending on how quickly vehicle inventories are depleted, and perhaps price increases in certain cases."
Author Note: Before we proceed, let us say with all sincerity that those families and individuals who have lost loved ones in the Francis Scott Key Bridge collapse have our deepest sympathy. We report on automotive news here and do not wish for this story to imply that a shortage of cars is in any way comparable to loss of life.
Here is how this terrible tragedy will affect your next car purchase.
1) Reduced Availability of Popular Models From Many Brands
2) Slower Delivery For Vehicles Already On Order
3) Longer Lead Times For Future Vehicle Orders
4) Increased Prices For New Vehicles
5) Additional Dealer Markups On Popular Models
6) Reduced Repair Parts Inventory
7) Longer Wait Times For Common Repairs (Due to Part Shortages)
Background On Port of Baltimore and Its Role In the Automotive Industry In America
The Port of Baltimore is the top port in the country by volume when it comes to importing vehicles. The Port’s unique abilities are related to its 16 Panamax cranes used to unload the world’s largest container ships that can transit the Panama Canal.
In a statement, President Biden pointed out that 850,000 vehicles come through the port every year. He is spot on. The exact number in 2023 was 847,158 autos and light trucks. That equates to roughly seven percent of all the vehicles sold in America in 2023. Since Baltimore is an East Coast port, the impact of shortages may be felt more on this side of the American continent.
In addition to vehicle cargo, the port is also a massive hub for imported car parts. In 2023, the port’s website reports that 11.7 million tons of general cargo were transported through the Port of Baltimore.
Will Port of Baltimore Closure Create Vehicle Shortages?
Automotive expert and former CEO of one of America’s largest vehicle dealership chains, Ernie Bock Jr., said in an interview yesterday, “It’s going to be a major, major problem unless they clean it up quick.” He went on to add, “Less than six hours before that, my ship came to New England with over 1,000 Subarus, so we got out just in time.” Mr. Boch points out that it is not just one brand that this port closure will affect. “It’s Toyota, Honda, Nissan, Mercedes. Anyone who produces outside the United States has to come to Baltimore.”
Of course, America is blessed with many other ports. However, shipping expert Yossi Sheffi of MIT’s Center for Transportation and Logistics says that not all ports are equipped with the specialized equipment needed to efficiently and cost-effectively unload and send vehicles arriving at the ports.
Will Port of Baltimore Closure Lead to Shortages of Vehicles and Vehicle Price Increases?
Our focus in this story is on automotive-related shortages, but Ryan Petersen, CEO of Flexport, an expert in supply chain management, told the Associated Press Americans should expect shortages of goods as the Baltimore bridge collapse affects ocean container shipping and East Coast trucking logistics.“It’s not just the port of Baltimore that’s going to be impacted,” said Mr. Petersen. He added, “It’s a scramble because each of those containers has now a new journey to clear customs, you’ve got to get a different truck to pick it up at a different port, it creates a whole lot of downstream work.”
Port of Baltimore Closure Will There Be Car Parts Shortages and Long Waits For Repairs
Although new vehicle inventory has, for the most part, caught up to demand, parts shortages are still significant. For example, Toyota has been delivering vehicles with just one of the two includes keyfobs. That is ongoing. A long-term test vehicle we purchased earlier this month had just one fob included. Toyota promises to send the second, but owners are reporting multi-month waits. Ford has experienced delays in commonly needed parts such as water pumps. Owners have waited weeks to months for parts in some cases. With the port closed to traffic, parts shortages could be extended.
Key Bridge / Port of Baltimore Tragedy - A Positive Outlook From One of Our Most Trusted Automotive Experts
One automotive expert we follow closely is Karl Brauer, Executive Analyst at iSeeCars.com. Mr. Brauer’s view is a bit more tempered than some of the other experts’. He told Torque News, “While this issue isn't as far-reaching as the global supply chain challenges of recent years, Baltimore’s port plays a critical role in U.S. vehicle distribution. If the shipping lanes are re-opened within a week or two the impact will be minimized, but if it takes more than a few weeks we could be looking at another rise in new and used car prices due to restricted supply.”
Conclusion - Imapcts of the Key Bride Collapse and Disruptions at the Port of Baltimore
Experts seem united in their belief that the collapse of the Key Bridge in Baltimore will disrupt the American automotive industry, with the East Coast feeling the effects most acutely. Our hope is that Mr. Brauer's prediction is the most accurate and that the impacts will be both short-term and manageable. Watch Torque News for more updates on this unfortunate event as more information becomes available.
Image courtesy of The Port of Baltimore's official Facebook Page.
John Goreham is an experienced New England Motor Press Association member and expert vehicle tester. John completed an engineering program with a focus on electric vehicles, followed by two decades of work in high-tech, biopharma, and the automotive supply chain before becoming a news contributor. In addition to his eleven years of work at Torque News, John has published thousands of articles and reviews at American news outlets. He is known for offering unfiltered opinions on vehicle topics. You can follow John on Twitter, and connect with him at Linkedin.
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