US bridge collapse may weigh on dry freight rates

The collapse of a major bridge in the Port of Baltimore, Maryland, will likely put downward pressure on dry bulk rates as ship traffic in and out of the port remains closed indefinitely.

Market participants differ on the extent of any such market pressure, however.

"We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures meant the collapse "may not have too much of an impact" on dry freight markets overall.

Some coal suppliers will be able to load their cargoes at ports such as Hampton Roads, said two shipbrokers. This could partly mitigate any potential downward pressure on rates from suspended vessel traffic in Baltimore that would come from decreased cargo demand.

But a third shipbroker doubted much US coal could be diverted to other east coast ports. Panamax rates would likely decline because "coal, unlike other commodities cannot easily pivot to alternate ports," she said. The loss of cargo could expand Panamax tonnage supply in the Atlantic, she said.

"It is conceivable that Panamax intended for coal will now head south as long as they can present grain clean lengthening tonnage lists which will drive down rates."

Meanwhile, vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions across many shipping segments from Baltimore, according to market contacts.

By Gabriel Squitieri and Luis Gronda