March 28, 2024 • 9 mins
Vince Castillo, Assistant Professor of logistics at Ohio State says that it will not be too bad. There are ports on the East Coast will be able to handle the extra loads, but Appalachian coal will be affected in the midwest
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Episode Transcript
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(00:00):
As we continue to cover the storyof the Baltimore Bridge collapse, and there's
multiple facets to that story, andthere's the human side. Of course,
there were still in the recovery mode. They found two men submerged in a
pickup truck at about twenty five feetof water there. These were two of
the six construction workers that were onthe bridge when it collapsed, So there's
(00:20):
still four more they need to getout of there before they can really start
to get to work and clearing thedebris out of the river there. You
know, you hear stories about peoplewho got over the bridge just in the
nick of time. You know.One of the stories was a guy who
apparently had a fight with his girlfriendand at one in the morning and stormed
out of her apartment and drove acrossthe bridge to go back, presumably to
(00:43):
his house. Realized he was wrongand wanted to go back to apologize.
He crossed back over the bridge rightbefore they closed it down and just seconds
away from being a total disaster there, So his girlfriend will be right from
here on out the rest of hislife. Every argument, he'll just nod
yes. And then there's the economicside of the things, and that's why
(01:06):
we wanted to check in with ourexpert. It is Vince Castillo, Professor
of Logistics, Fisher College of Businessat Ohio State University. Professor, thanks
for the time this morning. Appreciateit. Yeah, absolutely, thanks for
having me. So we kind ofhear conflicting stories of you know, this
is going to be a huge problemfor supply chain and you know, specifically
the auto industry, and then wehear, well, it's not going to
(01:30):
be that bad because there's alternative portsand there's a lot of workarounds. It's
more of an issue for the localeconomy of Baltimore. Which which camp are
you in on this? Well,I think the big takeaway is I think
the big story here is that wehave a lot of evidence that are supply
chains, especially those that are passingin through ports on the East Coast,
(01:53):
have built up a lot of resilience. So honestly, I do think that
there are some a lot of alternativeoptions for auto importers, for construction machinery
importers and exporters, and they havealternative places to go, and I think
they're going to be able to responsefairly quickly. Vince Castillo, Assistant Professor
(02:13):
of logistics on the Legacy Retirement Groupdot com phone line. Vince's at Ohio
State. You're hearing that there's fifteenroughly fifteen million dollars a day and lost
economic activity, Vince. And specifically, this is the fourth largest port in
the US, but it is thenumber one port for auto imports. So
you got companies like GM, saythey're rerouting Mercedes, Mazda, Volkswagen.
(02:38):
And you know, it's my understanding, Vince, that a lot of the
work that's done on these cars whenthey roll off the ships is done at
the port. So all of theseautomakers have their own facility there and they
do some fine tuning and they dosome inspections and paperwork, and other ports
that they're going to be rerouting todon't necessarily have those facilities in place.
(03:00):
Yeah, and you know, therewill be some, uh some disruptions in
the short term. And for thelocal workers, the longshoremen in Baltimore,
there's you know, they're relying on, you know, their day workers,
and so they're going to have,uh, their union's gonna is scrambling right
now to uh to find some tohelp them help their workers their members get
(03:20):
through this. Uh. This disruption. But as for the major automakers,
you know, Port of Baltimore Importsis a port of import for GM or
SDEs Benz uh uh UH you know, GM and Ford export through Baltimore.
It's the number one auto handling portin the country and it also handles you
(03:40):
know, it's part of a broadercategory called roll on roll off. Now,
some of the other ports UH Newarkin Virginia, UH, they have
additional capacity to be able to absorbsome of UH and pick up the slack
for while Baltimore is UH is offline. But the Port of Brunswick down in
Georgia recently finished a round of expansionof its as it's roll on roll off
(04:05):
infrastructure, and so it has atthe moment more than enough capacity to pick
up the slack, while while Baltimoreneeds time to recover. So that's the
the interesting point there. You saidtime to recover. You know we I
know you're not an expert on inconstruction and you know, debris removal,
and you know, once they cankind of started getting that twisted metal and
(04:27):
all of that the debris out ofthe river and we can start using the
port again. You know, there'sthere's no telling how long that's going to
take. Some estimates have it,you know, going into May. So
if we're talking, you know,sixty to ninety days until that port is
operational. You know, what isthe what is the snowball, the trickle
down effect there on the supply chain. Yeah, well, depending on how
(04:49):
far shipments have to be diverted,whether you know imports and exports have to
go as far south as Georgia,there are some added transportation cost So it's
possible that, uh, those goodscould see some upticking prices on the in
the short term, but it reallydepends on you know, how much extra
(05:11):
inventory they also have in their ownwithin their supply chain. You know,
autos, you know, those areexpensive vehicles, so you know, there
may not be a whole lot ofadditional inventory. But you know, some
of the other goods that come throughBaltimore, like home construction product products like
lumber and gypsum. Uh, someof the companies that provide those two consumers
(05:32):
throughout the US, if they don'thave enough sufficient inventory as possible, we
could see an into an uptick inthose prices in the short term as well.
But again, you know, notto downplay how important Baltimore is,
but uh, Newark in uh inVirginia and some of the other ports on
the eastern seaboard, can they canhandle the uh uh the uh they can
(05:56):
pick up the slack for Baltimore.I think another thing to consider, especially
for US in near the Appalachian region, is coal exports. Baltimore is one
of the biggest it's one of thebiggest ports for American coal, especially you
know the coal that comes out ofthe Appalachian region. Appalachian coal is that
(06:19):
makes up something like twenty seven percentof total US production and our biggest buyers
India. So taking Baltimore offline asan export location of coal is it could
potentially cause an increase in prices andmaybe doesn't and maybe in the sport from
(06:40):
also harms how competitive American coal canbe. That's the first I've heard about
coal. Getting great information this morningfrom Vince Castile, Assistant Professor of Logistics
Ohio State. And you know,we really first started as far as mainstream
hearing about supply chains and logistics duringthe pandemic. And since that sort of
started the ease a little bit.And you know where are we if we
(07:02):
pull back the scope a little bit. You know. We we hear about
you know, cargo ships, youknow, being attacked in the Red Sea,
and there's some backups in in SuezCanal and the Panama Canal. So
there's already a couple of issues,you know, with with supply chain and
ships being stacked up you know,globally, and then you throw this into
the mix. You know, wheredoes this fit on a on a larger
(07:26):
scale the disaster in Baltimore. Yeah, Well, where it comes down to
is uh you know, I mentionedsupply chain resilience earlier, and COVID was
a you know, our companies learneda lot of hard lessons as a result
of COVID, A lot of supplychain resilience lessons about coming up with backup
(07:47):
plans and figuring out alternative shipping routes, alternative sources of supply. Uh.
You know, you hear about companiestrying to reshore and nearshore you know,
meaning they're going to trying to bringmanufacturing clothes are to uh uh you know,
bring it into Mexico and Central Americaand back into the US in order
(08:07):
to handle these disruptions. And inthat way they're not as uh detrimental economically
as as COVID was. So,you know, with the drought in Panama,
you know, I had heard someconcerns about trying to ship UH or
some some guesses that companies would tryto start shipping goods over to the to
(08:28):
the west coast. But the droughtis going to make that difficult for especially
for large ships UH down in Panama. But again, the ports on the
East coast there there is extra capacitythere. You know, from from what
I can tell, I think UHour infrastructure on the East coast is going
to be able to absorb this.You know, some of the companies like
(08:48):
GM and Ford have already stated howthey're looking for alternative paths to get in
get their goods in and out ofUH, in and out of the country,
and I feel like they're going toUH to respond firly quickly,
As we continue to cover the storyof the Baltimore Bridge collapse, and there's
multiple facets to that story, andthere's the human side. Of course,
there were still in the recovery mode. They found two men submerged in a
pickup truck at about twenty five feetof water there. These were two of
the six construction workers that were onthe bridge when it collapsed, So there's
(00:20):
still four more they need to getout of there before they can really start
to get to work and clearing thedebris out of the river there. You
know, you hear stories about peoplewho got over the bridge just in the
nick of time. You know.One of the stories was a guy who
apparently had a fight with his girlfriendand at one in the morning and stormed
out of her apartment and drove acrossthe bridge to go back, presumably to
(00:43):
his house. Realized he was wrongand wanted to go back to apologize.
He crossed back over the bridge rightbefore they closed it down and just seconds
away from being a total disaster there, So his girlfriend will be right from
here on out the rest of hislife. Every argument, he'll just nod
yes. And then there's the economicside of the things, and that's why
(01:06):
we wanted to check in with ourexpert. It is Vince Castillo, Professor
of Logistics, Fisher College of Businessat Ohio State University. Professor, thanks
for the time this morning. Appreciateit. Yeah, absolutely, thanks for
having me. So we kind ofhear conflicting stories of you know, this
is going to be a huge problemfor supply chain and you know, specifically
the auto industry, and then wehear, well, it's not going to
(01:30):
be that bad because there's alternative portsand there's a lot of workarounds. It's
more of an issue for the localeconomy of Baltimore. Which which camp are
you in on this? Well,I think the big takeaway is I think
the big story here is that wehave a lot of evidence that are supply
chains, especially those that are passingin through ports on the East Coast,
(01:53):
have built up a lot of resilience. So honestly, I do think that
there are some a lot of alternativeoptions for auto importers, for construction machinery
importers and exporters, and they havealternative places to go, and I think
they're going to be able to responsefairly quickly. Vince Castillo, Assistant Professor
(02:13):
of logistics on the Legacy Retirement Groupdot com phone line. Vince's at Ohio
State. You're hearing that there's fifteenroughly fifteen million dollars a day and lost
economic activity, Vince. And specifically, this is the fourth largest port in
the US, but it is thenumber one port for auto imports. So
you got companies like GM, saythey're rerouting Mercedes, Mazda, Volkswagen.
(02:38):
And you know, it's my understanding, Vince, that a lot of the
work that's done on these cars whenthey roll off the ships is done at
the port. So all of theseautomakers have their own facility there and they
do some fine tuning and they dosome inspections and paperwork, and other ports
that they're going to be rerouting todon't necessarily have those facilities in place.
(03:00):
Yeah, and you know, therewill be some, uh some disruptions in
the short term. And for thelocal workers, the longshoremen in Baltimore,
there's you know, they're relying on, you know, their day workers,
and so they're going to have,uh, their union's gonna is scrambling right
now to uh to find some tohelp them help their workers their members get
(03:20):
through this. Uh. This disruption. But as for the major automakers,
you know, Port of Baltimore Importsis a port of import for GM or
SDEs Benz uh uh UH you know, GM and Ford export through Baltimore.
It's the number one auto handling portin the country and it also handles you
(03:40):
know, it's part of a broadercategory called roll on roll off. Now,
some of the other ports UH Newarkin Virginia, UH, they have
additional capacity to be able to absorbsome of UH and pick up the slack
for while Baltimore is UH is offline. But the Port of Brunswick down in
Georgia recently finished a round of expansionof its as it's roll on roll off
(04:05):
infrastructure, and so it has atthe moment more than enough capacity to pick
up the slack, while while Baltimoreneeds time to recover. So that's the
the interesting point there. You saidtime to recover. You know we I
know you're not an expert on inconstruction and you know, debris removal,
and you know, once they cankind of started getting that twisted metal and
(04:27):
all of that the debris out ofthe river and we can start using the
port again. You know, there'sthere's no telling how long that's going to
take. Some estimates have it,you know, going into May. So
if we're talking, you know,sixty to ninety days until that port is
operational. You know, what isthe what is the snowball, the trickle
down effect there on the supply chain. Yeah, well, depending on how
(04:49):
far shipments have to be diverted,whether you know imports and exports have to
go as far south as Georgia,there are some added transportation cost So it's
possible that, uh, those goodscould see some upticking prices on the in
the short term, but it reallydepends on you know, how much extra
(05:11):
inventory they also have in their ownwithin their supply chain. You know,
autos, you know, those areexpensive vehicles, so you know, there
may not be a whole lot ofadditional inventory. But you know, some
of the other goods that come throughBaltimore, like home construction product products like
lumber and gypsum. Uh, someof the companies that provide those two consumers
(05:32):
throughout the US, if they don'thave enough sufficient inventory as possible, we
could see an into an uptick inthose prices in the short term as well.
But again, you know, notto downplay how important Baltimore is,
but uh, Newark in uh inVirginia and some of the other ports on
the eastern seaboard, can they canhandle the uh uh the uh they can
(05:56):
pick up the slack for Baltimore.I think another thing to consider, especially
for US in near the Appalachian region, is coal exports. Baltimore is one
of the biggest it's one of thebiggest ports for American coal, especially you
know the coal that comes out ofthe Appalachian region. Appalachian coal is that
(06:19):
makes up something like twenty seven percentof total US production and our biggest buyers
India. So taking Baltimore offline asan export location of coal is it could
potentially cause an increase in prices andmaybe doesn't and maybe in the sport from
(06:40):
also harms how competitive American coal canbe. That's the first I've heard about
coal. Getting great information this morningfrom Vince Castile, Assistant Professor of Logistics
Ohio State. And you know,we really first started as far as mainstream
hearing about supply chains and logistics duringthe pandemic. And since that sort of
started the ease a little bit.And you know where are we if we
(07:02):
pull back the scope a little bit. You know. We we hear about
you know, cargo ships, youknow, being attacked in the Red Sea,
and there's some backups in in SuezCanal and the Panama Canal. So
there's already a couple of issues,you know, with with supply chain and
ships being stacked up you know,globally, and then you throw this into
the mix. You know, wheredoes this fit on a on a larger
(07:26):
scale the disaster in Baltimore. Yeah, Well, where it comes down to
is uh you know, I mentionedsupply chain resilience earlier, and COVID was
a you know, our companies learneda lot of hard lessons as a result
of COVID, A lot of supplychain resilience lessons about coming up with backup
(07:47):
plans and figuring out alternative shipping routes, alternative sources of supply. Uh.
You know, you hear about companiestrying to reshore and nearshore you know,
meaning they're going to trying to bringmanufacturing clothes are to uh uh you know,
bring it into Mexico and Central Americaand back into the US in order
(08:07):
to handle these disruptions. And inthat way they're not as uh detrimental economically
as as COVID was. So,you know, with the drought in Panama,
you know, I had heard someconcerns about trying to ship UH or
some some guesses that companies would tryto start shipping goods over to the to
(08:28):
the west coast. But the droughtis going to make that difficult for especially
for large ships UH down in Panama. But again, the ports on the
East coast there there is extra capacitythere. You know, from from what
I can tell, I think UHour infrastructure on the East coast is going
to be able to absorb this.You know, some of the companies like
(08:48):
GM and Ford have already stated howthey're looking for alternative paths to get in
get their goods in and out ofUH, in and out of the country,
and I feel like they're going toUH to respond firly quickly,
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