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.

VCFI General

The Valencia Containerised Freight Index (VCFI) has resumed its upward trajectory, with a 2.13% increase in March compared to the previous month, resulting in a value of 1,790.11 points and a cumulative growth of 79.01% since the beginning of the series in 2018. A general increase is observed in all the areas analysed. The most notable increase was observed in the East Coast Africa area (6.08%), followed by the USA and Canada (5.92%) and the Middle East (4.96%). Conversely, there was a notable decline in freight originating from the Baltic region, with a reduction of -39.42%.

The current situation is characterised by the ongoing conflict between Palestine and Israel, which has the effect of maintaining the Red Sea Crisis as a relevant factor influencing international shipping. The recent intensification of hostilities suggests that the transit of maritime traffic through the Red Sea and Suez Canal may not be a viable option in the near term, prompting shipping companies to redirect most of their vessels via the Cape of Good Hope. The alteration of shipping routes is a consequence of the necessity to accommodate the geopolitical circumstances in the region.

Towards the end of March, a significant incident occurred in the field of international shipping, namely the collision of the freighter DALI with the Francis Scott Key Bridge in Baltimore. The collision resulted in the steel centre section of the bridge collapsing into the main navigation channel. Although access to the port of Baltimore was initially restricted, indicating a significant and possibly prolonged impact on supply chains, analysts suggest that the impact on freight rates is being limited. Nevertheless, the closure of the Port of Baltimore has resulted in a diversion of traffic to alternative logistics routes in the short term, which has led to an increase in inland transport costs for cargo redirected to neighbouring ports such as New York or Hampton Roads.

The analysis of the factors influencing the supply and demand sides of shipping, with a particular focus on the latter, reveals that, according to the latest update of world trade by the United Nations Conference on Trade and Development (UNCTAD), world trade is expected to recover in 2024 after several quarters of decline. The data for the first quarter of 2024 indicate that there are signs of improvement in global trade. The growing demand for environmental goods, such as electric vehicles, in conjunction with an improving global economic outlook, is anticipated to stimulate trade towards the end of the year.

The latest estimate of the World Trade Organization (WTO) Trade Barometer, a composite indicator that provides real-time information on merchandise trade developments in comparison to recent trends, indicates that the latest estimate shows a higher quarterly trade volume index. This further indicates that the merchandise trade is undergoing a recovery process.

The latest RWI/ISL Container Throughput Index, published in March, indicates that port traffic has increased compared to the previous month. This suggests that there has been an increase in demand for shipping from international trade. This has resulted in a notable expansion in global container throughput over the past four consecutive months. The most recent data indicates that, in the absence of the pronounced decline in container traffic at Chinese ports, which was to some extent influenced by the impact of the Spring Festival, the observed increase would have been even more pronounced. Furthermore, in European ports, container traffic exhibited a notable increase of nearly three percent. This growth may be attributed to the recovery of German exports, as well as the incidents in the Red Sea.

A review of the factors influencing the supply of shipping in the energy and commodities market reveals that the average price per barrel of Brent crude increased slightly in March, reaching $85.41, compared to $83.48 in February. This represents a 2.3% increase. In addition, in the field of marine fuels, the cost of bunkering in the world’s top 20 ports, as reported by Ship&Bunker, demonstrated a slight increase of 0.8 per cent for VLSFO (Very Low Sulphur Fuel Oil), from $661.85 in February to $667.18 in March.

Regarding the idle fleet levels, following a downward trend since early December, when the Red Sea conflict and the resulting service diversions via the Cape of Good Hope began to absorb additional capacity, the fleet of idle container vessels has increased since the beginning of March. Nevertheless, the container fleet remains fully employed, at least in the short term, due to the avoidance of the Red Sea. As of 25 March, the Alphaliner data indicated that the inactive container ship fleet comprised 79 vessels, with a total TEU capacity of 251,049. This represents a modest increase of six vessels and 63,294 TEUs over the previous two-week period, resulting in a slight rise in the proportion of the total containership fleet from 0.7% to 0.9%. However, as previously stated, in such small fractions, this can be considered to represent full employment.

It is notable that, following the return to normalcy and the seasonal peak, the number of blank sailings announcements has decreased. This is in accordance with the information provided by Drewry in its Cancelled Sailings Tracker, which indicates that the main East-West cabotage routes have seen a decline in this trend. A total of 48 cancelled sailings have been announced on the Transpacific, Transatlantic and Asia-North Europe & Med routes between weeks 14 (1 April-7 April) and week 18 (29 April-5 May). This represents a cancellation rate of 7% out of a total of 650 scheduled sailings.  Furthermore, during this period, 46% of empty departures will occur on the eastbound Transpacific route, 33% on the Asia-North Europe and Mediterranean route and 21% on the westbound Transatlantic route. In terms of port congestion, analysis by the consultancy Linerlytica indicates that this worsened last week, with a sharp increase in berthing delays at ports in North and Southeast Asia. We have been informed that waiting times have increased at major ports in the Far East, including Busan, Ningbo, Shanghai, Singapore and Port Klang. In some cases, waits of up to three days have been recorded. In the United States, there has been no increase in port congestion, and East Coast ports have not been affected by the closure of the port of Baltimore. Most cargo has been redirected to northern ports. During week 14, the level of port congestion reached 1.80 million TEUs, representing 6.3% of the total fleet.  This differs slightly from the data observed in the previous reading, with 1.63 million TEUs, representing 5.6% of the total fleet.

VCFI Western Mediterranean

Regarding the Western Mediterranean sub-index, a marginal increase of 0.34% has been recorded in comparison to the previous month. The VCFI for the Western Mediterranean area has now reached 1,935.40 points, which is a 93.54% increase since the series began in 2018.

Regarding Valenciaport, the latest figures show an increase in exports to Morocco and Algeria, while exports to Tunisia have declined.

VCFI Far East

In the Far East region, the index has declined by -9.68% to 2,424.39 points, representing a cumulative growth of 142.44% since the start of the series in January 2018. As expected, demand has slowed down after the Lunar New Year festivities, providing some relief to the industry. However, as far as Valenciaport is concerned, and according to the most recent data available, there has been an increase in traffic with the Far East. China continues to be the main trading partner in this area. The increase in transhipment traffic at the Valencian docks, mainly originating in Asia and destined for other Mediterranean ports, is the main reason for this.

It is vital to maintain an awareness of the specific circumstances currently in place, which have been subject to some disruptions. In addition to the ongoing drought in the Panama Canal, which is hindering the passage of large ships, and the recent Houthi attacks on cargo ships in the Red Sea, which have led to the diversion of a significant portion of the Asia-Europe traffic through the Cape of Good Hope, there has been the unfortunate collapse of the Baltimore Bridge. These developments continue to fuel what is known as the “perfect storm” currently affecting the logistics sector.