The shipping markets from 2020-2022 were impacted by COVID-19, and the influence of geopolitics has been a continuous factor. The potential effects of future wars on ocean trade could be more severe than current circumstances. North Korea’s alignment with Russia adds another layer to the geopolitical landscape.
While a North Korean attack on South Korea or Japan is considered unlikely, it remains a known threat. Recent statements from North Korea indicate a shift in their approach towards their neighbors, raising concerns about the possibility of military conflict. Experts warn that the situation on the Korean Peninsula is more precarious than it has been in decades, with the risk of war looming.
Any conflict in the region would have significant implications for ocean shipping, as South Korea and Japan are major exporters to the U.S. Additionally, these two countries account for a significant portion of global shipbuilding production. The potential disruption to shipyard output could impact future freight rates.
In terms of trade, the U.S. imports a substantial amount of goods from South Korea and Japan. These imports include a variety of products, such as motor vehicles, electrical equipment, and machinery. Any disruption in trade due to a conflict in the region could have economic ramifications for both countries and the U.S.
Overall, the threat of war in the Korean Peninsula poses a risk to both ocean trade and shipbuilding industries, highlighting the interconnectedness of geopolitics and global commerce. It is crucial for policymakers to consider these risks and take steps to mitigate potential impacts on the shipping sector.
