On Tuesday morning, a container ship crashed into the Francis Scott Key Bridge near Baltimore, causing most of the bridge to collapse. During the incident, several vehicles on the bridge fell into the Patapsco River below.
Commenting on the accident, market participants raised concerns about the potential macroeconomic impact, particularly regarding supply chain disruptions and the risk of reigniting inflation.
However, financial research firm Sevens Report believes that’s unlikely for two key reasons.
“First, Baltimore is the ninth-largest port in the U.S., but it’s very specialized and it’s not large enough to cause a material supply chain disruption that leads to broader inflation,” analysts at Sevens Report said.
The port's primary imports include specialized automobiles, and any interruptions are likely to be mitigated by alternative ports in Charleston, Savannah, and New York/New Jersey.
Moreover, the port does not handle major energy imports that could cause an inflationary surge in energy prices. Coal is a key export, and the incident may result in temporary disruptions.
This was reflected in the stock market, where coal companies and CSX (NASDAQ:CSX), the rail operator, saw declines. Specifically, Consol and CSX saw their stock prices drop by 6.8% and 1.9%, respectively, due to the anticipated short-term impact on coal shipments, the analysts highlighted.
“But while it will take a long time to rebuild the bridge, this isn’t a material negative for either company, and if the declines become extreme they’re likely a buying opportunity,” they added.
“Bottom line, the bridge collapse is both a human tragedy and a short-term negative for some specific companies but it’s unlikely to alter the outlook for inflation or growth and it’s not enough to disrupt the bullish mantra of 1) Stable growth, 2) Falling inflation, 3) Looming Fed rate cuts and 4) AI enthusiasm.”