Baltimore bridge collapse sparks frenzy in the dry bulk market

* Imports include sugar, gypsum and fertilisers.

Source: Drewry Maritime Research

These figures indicate that about two million tonnes of dry bulk cargo (mostly coal), approximately 150 vessels, will be affected each month if the current situation does not improve. Almost three quarters of the port’s coal cargo is shipped to Asian countries such as India, China and Japan. Moreover, the port’s coal exports to Asia (1.5 million tonnes) every month contribute more than 1% to the entire dry bulk monthly shipping demand. 

Source: Drewry Maritime Research

In the aftermath of the bridge collapse and subsequent closure of access to the Baltimore port, Asian countries will source coal from the spot market (thermal coal from Indonesia, Australia and South Africa while coking coal from Australia) to meet their buoyant coal demand, considering many Asian countries do not maintain a large inventory.  We do not expect this change of trade pattern to be irreversible. As soon as the shipping route is cleared, the US- Asia coal trade will be restored.

Most vessels heading out of the US for Asia have been transiting through the Cape of Good Hope instead of the Suez Canal after the Houthi attacks in the Red Sea, increasing the distance from less than 8,500 nautical miles to more than 11,500 nautical miles. 

With Asian countries securing cargoes within the Asia Pacific through spot market, thereby shortening sea distances to 3,000 to 6,000 nautical miles, there is a likelihood of a dent the global shipping demand. This will reduce the monthly dry bulk shipping demand by more than 0.5 percentage points, further dampening freight rates. However, we do not anticipate the problem with the movement of vessels to continue for long as this is a critical sea route, and the US government will make all efforts to promptly clear it and minimise the economic impact.

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