Port of Baltimore Impact 'Manageable'

Ag Equipment Manufacturers: Port of Baltimore Closure Won't Affect Spring Planting

Dan Miller
By  Dan Miller , Progressive Farmer Senior Editor
The Port of Norfolk in Virginia and the Port of Savannah in Georgia have roll on-roll off facilities like the Port of Baltimore. But the capacity of those ports is already being tested. (Photo courtesy of the Port of Baltimore)

BIRMINGHAM, Ala. (DTN) -- The collapse of the Francis Scott Key Bridge at the Port of Baltimore on March 26 should not affect the ability of agricultural equipment manufacturers to keep their customers up and running through spring planting. The domestic inventory of parts and components appears to be in good supply.

In the longer term, however, if the port remains closed for two or three months, supply chains will likely begin to show some strain.

"(The Port of Baltimore) is a critical hub in our supply chains," said Kip Eideberg, senior vice president, government and industry relations for the Association of Equipment Manufacturers. AEM is an industry trade group representing agricultural and construction machinery manufacturers.

"We're still trying to figure out the mid- to long-term impact," Eideberg said. "For now, at least until the channel reopens fully, shipments are being diverted to other East Coast ports, which is adding to congestion and to delays (and rising shipping costs). We're starting to see a bit of a cascading impact on the overall ocean supply chain."

It appears, he said, many inbound cargo ships are diverting to ports at Norfolk, Virginia, and Savannah, Georgia. Depending on U.S. import destinations, other shipments may be diverting to the Port of Charleston in South Carolina and into Galveston Bay and the Port of Houston in Texas.

One manufacturer, AGCO Corporation, has an assembly center near the Port of Baltimore. "Our hearts go out to the loss of life and economic impact; a lot of people are going to be negatively impacted by this. That's the primary reaction I have," AGCO CEO Eric Hansotia told DTN/Progressive Farmer.

"But, secondarily, in terms of how it impacts AGCO or our farmers, so far, what we're seeing is it will be quite moderate. We've been able to reroute shipments to other assembly centers," Hansotia said. "We (have) inventory in the field for product, so (few, if any) customers are going to be impacted."

Federal and state agencies working to clear the bridge structure from Baltimore's shipping channel hope to open a temporary channel that will accommodate ships able to haul cargo such as agricultural equipment by the end of April. Engineers hope to open the full channel by the end of May.

For more DTN reporting on the Port of Baltimore, go here: https://www.dtnpf.com/….

"The biggest impact we are seeing or expecting to see for the next two to three months is going to be on the outbound side," Eideberg said. "But if other ports become more and more congested, and it takes longer than expected to get the Port of Baltimore in a place where they can receive imports and parts and components for equipment, then I think we're going to start to see some real impact."

All ports have different capacities. An important feature in Baltimore is its roll on-roll-off infrastructure -- that is, the ability to drive equipment or automobiles onto or off the cargo ship. Norfolk and Savannah have roll on-roll off facilities that are well served by rail and interstate highways. But those ports, of course, already manage their own ocean-going traffic flows and may not have all the facilities ag shippers have come to depend on in Baltimore.

When one port is out of commission, other modes of transportation, such as trucking, start to see cascading effects, Eideberg said. "It's easier to transport apparel (by truck) than (it is to transport) a combine harvester. We're already seeing major backups on thoroughfares along the East Coast I-95 corridor. Until the port is opened, the infrastructure around the Port of Baltimore (and around Baltimore) is going to be stressed."

Baltimore isn't the only stressor on shipping worldwide, though. Drought at the Panama Canal is affecting ship traffic flow. And Houthi rebels are affecting ship movements in the Red Sea and the Gulf of Aden.

"All of that is creating a lot of stress on ocean supply chains, which means additional surcharges from the carriers as the carriers try to adjust shipping lanes and cargo vessels. That's where I expect to see the immediate impact -- in the cost. It's going to go up," Eideberg said.

Lessons learned from COVID, perhaps surprisingly, may be moderating the loss of Baltimore.

"We learned a lot of lessons about being able to quickly shift supply chains to meet demand," said Eideberg.

Hansotia said AGCO is using lessons it learned over the months of COVID to manage the sudden impact on its import-export activities.

"We got good at setting up what we call 'control towers,'" Hansotia said. "The whole thing is to get organized fast. Feed information into (one) group. We can have one set of assumptions, our latest understanding of the truth, what's happening with our customers, with our dealers ... and then collectively make a decision and deploy it.

"And, so, that muscle that we built during COVID is one that we have used in many other crisis situations, whether it's the Russia-Ukraine situation, or those that are more site specific or location specific. We use that same muscle to rapidly get our arms around the information, make a fast decision and deploy that decision."

Dan Miller can be reached at dan.miller@dtn.com

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Dan Miller