Baltimore bridge crash weakens link in global coal chain

Thermal coal producer Consol Energy (NASDAQ: CEIX) is one of scores of companies hit by this week’s collapse of the Francis Scott Key Bridge that has shut the port of Baltimore, America’s second-largest coal exporter.

The disaster could hit Consol’s revenues by more than US$140 million should it be unable to access its coal terminal for at least six weeks, as some experts say appears likely. The terminal shipped about 19 million tons of coal last year at US$62.50-US$66.50 per ton which amounts to about US$1.2 billion in annual revenue.

“The extent of the financial impact will depend on how long the terminal remains inaccessible to vessels,” Moody’s Ratings vice president and senior analyst Sandeep Sama told The Northern Miner by email. There is “some potential offset from any business interruption insurance coverage,” he said.

Baltimore is America’s ninth-largest port by trade volume, but it’s especially important for coal and cars. More than a quarter of U.S. seaborne coal exports leave from Baltimore, most often bound for India, China and Europe. It’s also a main entry point to the U.S. market for Asian automakers delivering vehicles and parts. Shutting the port will likely have companies trying new routes and suppliers, like when China blocked Australian coal imports 24 years ago.

“Rather than throwing global trade into disarray, what came next was the reshuffling of global suppliers,” Moody’s Analytics economist Harry Murphy Cruise recounted in a report this week. “China found new sellers in Russia and Indonesia, which forced Japan, India and South Korea to switch to Australian suppliers.” 

US$1B loss 

Rebuilding the bridge will likely cost US$600 million and be paid for by the federal government, IMPLAN, an economic software analysis company, says in a report. The accident’s hit to Maryland’s economy will be around US$1 billion, it said.

The U.S. accounts for around 5.5% of global coal exports, so about 1.5% of global coal trade may face disruptions, Moody’s said. The U.S. exported 85.9 million tons of coal in 2022, according to the Energy Information Administration. Although Baltimore’s contribution to global seaborne coal is less than 2%, it’s important for India’s electricity generation.

Consol said it’s considering alternative export markets and activating contingency plans.

“These plans include, but are not limited to, the ability to move coal tons through open terminals on the East Coast and increasing domestic shipments,” spokesperson Erica Fisher said by email. “At this time, no one has a definitive timeline of when vessel access or normal operations will resume, but we have initiated discussions with our customers and contingency plans are being implemented.”

The collision could shut down the port’s coal exports for six weeks and block up to 2.5 million tons from being shipped, Ernie Thrasher, the CEO of privately held Xcoal Energy & Resources told Bloomberg.

Six dead

Trade through the Port of Baltimore has been suspended as investigators probe into how the cargo vessel Dali crashed into the world’s third-longest truss bridge, tossing people into the Patapsco River and leaving six presumed dead.

Rebuilding the bridge will likely cost US$600 million and be paid for by the federal government, IMPLAN, an economic software analysis company, says in a report. The accident’s hit to Maryland’s economy will be around US$1 billion, it said.

Global trade is already being squeezed by Houthi rebel missiles in the Red Sea near the Suez Canal while drought limits shipping in the Panama Canal and strikes in Australia and Finland affect their ports, Moody’s Cruise said.

“It won’t take much to hobble supply chains and reinflate price pressure,” the analyst said. “The demise of a bridge in Baltimore won’t be the straw to break the camel’s back, but it takes us nearer to that limit.”