In June, the VCFI increased by 15.06% over the previous month to 3,138.98 points
High demand in maritime traffic, congestion in the United States, Yantian and some ports in Northern Europe have contributed to the increase in the Index
The Western Mediterranean area grew by 4.35% in June and the Far East by 4.8%
Idle fleet represents 0.9% of total capacity
València, July 2nd, 2021.- The high demand for maritime container traffic, congestion in the United States, Yantian and some northern European ports, the blockade in the Suez Canal and the increase in fuel prices are some of the determining factors in the behaviour of freight rates in recent months. The Valencia Containerised Freight Index (VCFI) has grown by 15.06% in the month of June, and it is now 11 consecutive months with this upward trend, which has placed this Index at 3,138.98 points with an increase since the beginning of the series in January 2018 of 213.9%.
In this sense, the binomial formed by the supply and demand of maritime transport continues to be one of the determining factors of the upward behaviour of prices in recent months. On the demand side, traffic in the world’s main container ports continues to grow strongly, as shown by the latest RWI/ISL published in May by the Leibniz Institute for Economic Research. On the other hand, according to Alphaliner’s data, the commercially inactive fleet remains at minimum levels in June, mainly due to the increase in demand. If we look only at the fleet idle for purely commercial reasons, we find only 61 idle vessels representing 0.9% of the total capacity, thus showing a slight decrease of 0.1% compared to the level of idle fleet at the end of May.
However, beyond demand and supply, other factors more linked to port congestion in the United States and recently in Yantian and some ports in Northern Europe, as well as the blockade in the Suez Canal, may have contributed in recent months to the even greater intensity of the increase in freight rates.
As for fuel prices, the price of a barrel of Brent crude oil rose by 6.45% in June compared to the previous month. The same trend is followed by the price of bunkering – the refuelling of ships at sea – in the main ports of the world, where the month of June saw an increase in the average price of fuels compared to May. Specifically, according to Ship&Bunker data, the average price of IFO 380 (Intermediate Fuel Oil) rose from 405 in May to 425 euros per tonne in June, which represents an increase of 4.94%. VLSFO (Very Low Sulphur Fuel Oil) increased from 517 euros per tonne in May to 544 in June, an increase of 5.22%.
By geographical areas, it is worth highlighting once again the increases in freight rates with countries located in the American continent, especially in the areas of Central America and the Caribbean (23.45%), the United States and Canada (22.31%) and Latin America Pacific (13.40%), where export traffic from Valenciaport continues to increase, especially with the United States. It is also necessary to highlight the growth experienced by freight with Atlantic Europe, which after several months of stabilisation and decreases, in June began to grow again. According to Alphaliner, one of the reasons that may be influencing this strong increase is the congestion in some of the main ports of Northern Europe, even forcing the temporary adjustment of the rotations of two large loops between the Far East and this area. Moreover, given the intensity of traffic between the port of Yantian and European ports, congestion in the Asian port has had a greater effect on freight rates on this trade route.
VCFI Western Mediterranean
The Western Mediterranean sub-index for the month of June is again growing at a rate of 4.35%, reaching 1,862.32 points. In this case, it seems that the growth may be due to the generalised upward trend in the rest of the areas and that finally it also influences the countries located in the Western Mediterranean. However, it is necessary to highlight the recovery in the last month and the change in trend experienced in export traffic from Valenciaport with Morocco and Algeria, which may also be putting upward pressure on freight rates with these markets.
VCFI Far East
As for the Far East sub-index in June, it continues the trend resumed in May, this time growing by 4.80% to 3,471.92 points. After the reduction in traffic in the previous month, the May data point to a strong recovery in Valenciaport’s exports to these markets, especially China. It should also be noted that the congestion and reduction of operations in Yantian, one of China’s main ports due to an outbreak of covid, may be influencing the increase in June’s freight rates with this area.