European Carmakers Face Limited Financial Loss from Baltimore Port Disruption

The collapse of the Francis Scott Key Bridge in Baltimore is likely to have only a limited impact on the operations and financial results of European automakers, Fitch Ratings says. Automakers are finding alternative routes and should be able to avoid raising vehicle sticker prices.

The Port of Baltimore is the largest automotive port in the US, handling about 750,000 cars and trucks in 2023, according to the Maryland Port Authority. About 70% of these vehicles were imported, with more than one third of these coming from German and British manufacturers. Rescue works in the port are continuing, while the timeline for bridge restoration remains unclear.

Mercedes is the most affected among German carmakers by the 26 March bridge collapse as Baltimore serves as a distribution centre for its US operations. The company is diverting its shipments to other ports, with the Brunswick port in Georgia – the second-largest automotive port in the US – being the most viable option. VW and BMW continue to use their terminal at the Baltimore port, as it is located east of the collapsed bridge and therefore remains operational. This terminal can process up to 200,000 units annually for the two brands combined.

We believe the incident will not reverse the softening pricing trend in the automotive market, while operational and financial implications for European automakers will remain limited. Although shipping conditions remained tight in North America in 2023, logistics costs typically comprise only a single-digit percentage of a vehicle’s price tag. European brands’ imports are concentrated in the premium and luxury segments, where profitability is resilient. Any additional expenses due to ships rerouting will likely be absorbed by the automakers.

US inventory levels of the largest European brands are all close to or above the national average, with the exception of Jaguar Land Rover. These levels should sustain supply for about 2.5 months, providing a buffer for the affected automakers as shipping times have lengthened following rerouting.
Source: Fitch Ratings