The VCFI is the index created by the Port Authority of Valencia to reflect the evolution of the market rates for the export of full containers by sea from Valenciaport. VCFI stands for Valencia Containerised Freight Index. This index will serve shippers as a tool to predict the evolution of freight rates within their markets of interest, which is a key determinant of the cost of their export operations. On the other hand, it will also be useful for operators that offer such services, providing a benchmark for the evolution of their own freight rates and those on the market.

 

The Valencia Containerised Freight Index (VCFI) grew 1,26% in September, a slower pace than in previous months, to reach 3,557.94 points. Once again, factors like international demand, the scarcity of the supply, traffic congestion in certain geographic areas and the increases in fuel prices have resulted in an increase in the index. The VCFI, created by the Port Authority of Valencia to reflect the evolution of rates in the container export market, shows accumulated growth of 255.79% since the start of the series in 2018.

Demand maintains the same upward trajectory of previous months, which is reflected in the port traffic measured by the RWI/ISL-Container Throughput Index, compiled by the Leibniz Institute for Economic Research. August saw a new increase in levels, caused primarily by growth at Chinese ports. This strong push in demand, especially in United States import traffic, is having effects on the global shipping market, requiring shipping companies to roll out all their available capacity onto the market to meet existing demand.

Faced with this scenario, idle fleet levels remain at historic lows. According to data from Alphaliner, in late August the idle fleet for strictly commercial reasons stood at 0.7% of the total, and despite the fact that mid-September saw a slight increase (to 1.1%) it fell again later that same month to 0.6% of the total active fleet or 159,714 TEUs (standard 20-foot equivalent container units).

Beyond the supply of capacity on the part of shipping companies and the idle fleet level, we must also highlight port congestion as a key factor on the scarcity of containers we are currently seeing.  The latest data published by the specialised shipping traffic firm Sea-Intelligence, corresponding to the month of August, shows how delays and congestion are having a negative effect on container availability. Specifically, the data from Sea-Intelligence show that 12.5% of the global fleet was unavailable due to those inefficiencies. Consequently, the schedule reliability (departures/arrivals) of shipping companies stood at around 33.6% in August, its lowest figure since 2018. If we take 2019 as a reference in terms of schedule reliability for shipping companies, over the course of the year it oscillated between 70% and 85%. So far in 2021, that figure has not risen above 40%.

The strong demand sustained over time, together with the shortcomings in supply and a lack of efficiency in maritime supply chains, make for a combination of factors placing further pressure on freights. We must add to this the movements in the average price per barrel of European Brent, which has seen an upward trend over the last month. In this regard and reversing the downward trend of the previous month, the average price per barrel of crude oil has risen 5.028% month-on-month, from $70.75 in August to $74.49 in September. As for bunkering prices (refuelling of ships at sea), at the 20 main ports in the world, and according to data from Ship&Bunker, the average price of IFO 380 (Intermediate Fuel Oil) has also risen, from $449.50 in August to $489 in September, an increase of 8.78%. Similarly, VLSFO (Very Low Sulphur Fuel Oil) has risen 7.28% to $542 in September compared to $581.50 the previous month.

Turning to our analysis by geographical areas, it must be noted that, as has happened in recent months, growth in freights remains the dominant trend despite the fact that September saw that the differences in intensity of growth vary across different regions.  Far East (-3.35%) and Middle East freights (-5.22%) are the only regions to see a decrease, while Atlantic Europe and the Baltic Countries remained constant.

Turning to the growth regions, Atlantic Latin America stands out in particular (43.85%), followed by the Indian Subcontinent (7.62%), Africa East Coast and the United States. The factors cited above are common and impact on the global maritime transport network. However, it must be added that the strong increase in Atlantic Latin America can also be explained by entering a season with greater volume with the arrival of the spring in the southern hemisphere. We must add to this the fact that the region is emerging from a complicated situation at its ports due to the pandemic restrictions.

VCFI Western Mediterranean

In terms of the Western Mediterranean Sub-Index, September continues the upward trend, but with more moderate growth of 1.51% to stand at 2,094.68 points. The factors behind this increase are linked to the general trend and to congestion problems and the difficulty finding slots on ships. Despite the fact that exports from Valenciaport to Algeria have recovered, returning to growth in the last month, exports to Morocco have been falling for several consecutive months.

VCFI Far East

With respect to the Far East Sub-Index, September saw freights fall 3.35% to stand at 3,628.89 points. Despite this fall, freights with this area show accumulated growth of 262.99% from the start of the series in January 2018. While it is true that freights show four consecutive months of strong growth, export traffic from Valenciaport to the Far East started the year strongly but over the summer and autumn months flows have stabilised and even fallen. In fact, exports to China, the most important market in this region, show a four-month downward trend, which could be pressuring freights in this direction.