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) continues its upward trend to stand 2,314.89 points for the month of April, an increase of 17.39% on the previous month. In a global context marked by widespread growth in freights, the VCFI has recorded its ninth consecutive month of growth and surpassed two thousand points for the first time since the index began in January 2018. The effects of the incident involving the ship Ever Given in the Suez Canal, released from its predicament in late March, have only added further complications to an already stressed market. On top of that, we must add forecasts for growth in global GDP boosting market demand, the congestion at the major US ports and the increase in the price of some fuels.

April 2021’s World Economic Outlook, published by the International Monetary Fund (IMF), adjusted global GDP growth and international trade in goods upward, confirming the dynamism of demand perceived in different markets. The IMF forecasts point to an increase in global GDP in 2021 of 6%, compared to an estimate of 5.5% in January and 5.2% in October 2020. With respect to the trade in goods, the growth forecast is 9.4%, 1.1 point above the figure in the previous report. With regard to port traffic, the reference index, the RWI/ISL Container Throughput Index reflects an increase in the month of March (latest data available), putting shipping activity above pre-pandemic levels.

To meet this buoyant demand, the supply side is attempting to respond to a number of problems facing the market, including a scarcity of equipment on certain routes, port congestion in some areas and fleet availability. On this final point, and according to the data from Alphaliner, the commercially inactive fleet remains at minimum levels, (56 vessels), representing 0.8% of total capacity. To this number we must add the vessels currently in shipyards (106 units), whether for maintenance or repairs or due to retrofit processes (ship refurbishment). In terms of equipment, shipping companies have announced orders for new units to alleviate the market shortage.

With respect to the price of fuel, this month saw a relatively stable performance. According to the data from Shipandbunker for the principal bunkering ports (refuelling of ships at sea), the price of low-sulphur fuel closed April at 514 dollars per ton, representing a rise of 3% in respect of the start of the same month. The price differential with respect to Heavy Fuel Oil stands at 112 dollars per ton.

Turning to the regional analysis, given the importance of links to Valenciaport, we must highlight the increase of export freights to the United States and Canada region to the tune of more than 30%, for nine consecutive months of increases. In addition to demand factors, the congestion situations suffered at some US ports for several weeks now is placing constant pressure on freights. The trend seems to point, albeit timidly, towards an improvement, even if the problem remains serious, as illustrated by the 7.5 days waiting time at the ports of Los Angeles and Long Beach. Problems of capacity and equipment availability, therefore, are set to exacerbate. In fact, this situation is extending across the American continent and the restrictions are also leading to rises in freights. In terms of the VCFI, the other three neighbouring regions in the area (Atlantic Latin America, Pacific Latin America and the Caribbean and Central America) also recorded significant growth in April.

VCFI Western Mediterranean

Closer to home, for the Western Mediterranean sub index, shipping export prices performed similarly to the previous month, growing 19.3% to stand at 1,741.19 points, the record high since the data began to be published. The connection of this type of traffic with the major container routes makes it highly vulnerable to shifts in the international shipping market and, therefore, freight increases are also foreseeable for these connections. We must also add the export dynamics between Valenciaport and Morocco for the first quarter.

VCFI Far East

As for the Far East Sub-Index, the VCFI showed a slight downward correction of -1,92% on March, explained by the stability of freights in April and favourable exchange rates. The decrease contrasts with the growth trend of this index over recent months. The value of the VCFI for this region now stands at 3,119 points. Nevertheless, the region still reflects the general trends mentioned previously and they are likely to endure for several more months. It must be noted that the outlook was conditioned by the consequences of the Ever Given incident in the Suez Canal, right on the Mediterranean-Far East route and this will lead to effective restrictions on capacity over the coming weeks.