The emerging detente between US and North Korea represents a step forward in world peace. But shipping is waiting for the next shoe to drop before getting excited about the deal.
US president Donald Trump promised to stop military exercises on the Korean Peninsula while North Korean dictator Kim Jong Un agreed to limit its nuclear weapons programme.
The agreement reduces the war risk for any company doing business in Asia. But shipping-related opportunities around the "Hermit Kingdom" are hardly clear yet.
"We find it unlikely there will be any other impact on the dry bulk market in the near term," said William Tooth, analyst at Maritime Strategies International.
If anything, shipping saw some small benefit from the moves to isolate North Korea economically. China's decision to ban imports of North Korean coal last August meant the world's largest coal consumer had to tap overseas sources more.
"With the ban on North Korea coal imports in China . . . seaborne coal had to be sourced from further afield, aiding tonne miles," Navios Maritime Holdings chief executive Angeliki Frangou said on an earnings conference call earlier this year.
Tooth says North Korea’s coal exports have almost exclusively been to China due to the sanctions placed by most western nations. Tooth says North Korean shipped 22.5 million tonnes of coal, primarily to China in 2016. But the sanctions cut North Korea's coal exports down to 4.8 million tonnes to China.
If China decides to follow Trump's lead and dial back sanctions, then Tooth says North Korea's coal exports could ramp right back up.
The additional cargoes would mean more business for handysizes in the region, Tooth says. But that, of course, comes to detriment of larger bulkers bringing coal from other sources.
Kim's hand in the deal has been forced by the country's struggling economy, with North Korea short both grain and crude oil.
But tankers will not see much benefit even if they are allowed to trade with North Korea. The country imports about four million barrels per year of crude oil, less than half of what China imports in a day.
Of course, until sanctions on doing business with the country are lifted, no international traders are going to extend credit to North Korean importers. In addition, until coal exports start up in earnest, the country will lack the hard currency needed to import its other needs.
"The North Koreans will struggle to raise funds needed to import significant quantities of grain unless coal exports surprise on the upside," Tooth said. "To increase their coal exports would require more trade partners than China, which will take time to improve relationships."
"This depends, of course, on the end to UN sanctions," Tooth said. "Although relations seem to be heading in that direction it could still be some way off."
The thicket of US sanctions surrounding North Korea is the main deterrent for companies from doing business with North Korea.
But Bruce Paulsen, a partner at Seward & Kissel and an expert in sanctions law, says President Trump could rescind his executive order and to not enforce other legislation surrounding doing business with North Korea. That would offer a quick path to doing business with the country.
"There's precedent for the US government to impose sanctions, then wind them down," Paulsen said.
"But I don't think there's going to be anything too swift coming from the White House," Paulsen said. Despite the thaw this week, the US is not going "to take the maximum pressure off the country."
As for whether clients are approaching him on doing deals in North Korea, "the answer is no," Paulsen said. "Reputable shipping companies are not doing business with North Korea. It's just wait and see at this point."
Asians react
In South Korea, leading owner HMM said it did not have a statement on what is a national holiday.
Hyundai Group - not now connected to HMM - had been involved in a lot of activities with the North, such as the Mount Kumgang tour, but business has been fairly slow after this tourism venture ended and the Kaesong Industrial Region closed down.
The deal gives a glimpse of hope for the group in the improving political situation.
Taiwanese container line Yang Ming told TradeWinds: "The meeting between US president Donald Trump and North Korean leader Kim Jong Un is undoubtedly a historical moment.
"Yang Ming, as a global shipping line, will also observe any development following the summit."
