Baltimore incident could impact global auto, coal supply chains

THE BLOCKADE of vessel traffic at the crucial port of baltimore in the United States after the collapse of the Francis Scott Key bridge on Tuesday could have a ripple effect chiefly on the global automotive vehicle and coal supply chain as operations at the port are expectedto remain shut for months. However, experts have ruled out any direct impact on India's trade.

This comes close on the heels of major shipping disruption such as the Red Sea crisis and the drought in the panama canal that has already hit over one-third of the global goods trade at a time when WTO has predicted weak upward momentum in trade in 2024. Disruption in the global supply chain for automobile vehicles comes as the Port of Baltimore is the busiest port in the us handling nearly 8.5 lakh autos, light trucks and farm and construction machinery. India’s export of vehicle and auto components exports to the us infy 23 stood at $2.1 billion, a fraction of India’s total exports to the us that stand sat $78 billion.

“Automobile exports used to be higher with the US before Ford and General Motor’s exit from India. Currently, the trade is not that significant. We have not received any report of a disruption at the moment in terms of automobile exports to the US. At the moment there is no challenge.,” an Indian auto industry executive who did not wish to be named said. The Port of Baltimore is also

crucial for its handling of coal exports from the US making up about 1.5 per cent of the global coal trade. india, however, imports the majority of its coal from Australia and Indonesia. The US only comprises 7 per cent of India’s total coal imports, as per commerce and industry ministry data.

“The incident primarily impacts auto markets due to Baltimore's role as a key import hub for vehicles, particularly affecting asia- pacific' s largest car exporters like China and Japan. The coal market is also affected, with over a quarter of US seaborne coal exports, which make up about 1.5% of the global coal trade, facing potential disruptions,” a Moody’s Analytics report said.

“The event, though unlikely to significantly affect Asia-pacific macroeconomic data, serves as a reminder of the fragility of global supply chains amidst ongoing geopolitical conflicts, natural disasters, and industrial actions that threaten to exacerbate supply chain vulnerabilities and inflationary pressures ,” Harry Murphy

Cruise, Economist, Moody’s Analytics said. Supply chain vulnerability largely stems from the ongoing disruption in the red sea region that has forced global shipping lines to take longer and costlier trade routes. The United Nations Conference on Trade and Development (UNCTAD) estimates that transits passing the Suez Canal decreased by 42% compared to its peak.

“With major players in the shipping industry temporarily suspending Suez transits, weekly container ship transits have fallen by 67 percent, and container carryingcapacity, tanker trans its, and gas carriers have experienced significant declines,”unc tad report released last month said.

The Panama Canal, a critical artery linking the Atlantic and Pacific oceans, is confronting a separate challenge. Dwindling water levels have raised concerns about the long-term resilience of global supply chains, underscoring the fragility of the world's trade infrastructure, the report said.