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) closes 2022 with a reduction of -13.10% compared to November. It is the fourth consecutive month with a decrease in the index, in a year marked by rises and falls which reflect the uncertainty of economic and trade activity across all markets. At the close of this financial year, the VCFI stands at 3,603.07 points, which represents a growth of 260.31% since the series began in 2018. In the last month of the year the decrease in the freight in Central America and the Caribbean (-22.61%), Pacific Latin America (-17.37%), USA and Canada (-13.09%), Western Mediterranean (-11.43%) and Far East (-7.51%) must be highlighted.

From the point of view of demand in international trade, the scenario continues to be uncertain and complicated, due to the sustained fall in consumption in an environment of high inflation. Proof of this is the recent reading of the Goods Trade Barometer, issued by the World Trade Organization (WTO), which shows a decrease in the indicator to 98.3 points, slightly less than its reference value of 100, and seven points below the previous reading, taken in June which read 105.5 points.  Along these lines, according to the consultant Sea Intelligence, in reference to the changing demand at the main ports, the latest data show a market that has noticeably slowed, observing a decrease in the volume of TEU handled.

As regards determining factors for the supply of shipping supply and, specifically the capacity offered, data from the consultancy Alphaliner show that the idle fleet has increased compared the previous month. In-mid December, 93 idle vessels were counted, for a total of 581,677 TEU (15,934 TEU more than in November), representing 2.2% of the total active fleet.

Congestion levels follow the downward trend of the last months although pre-pandemic levels have not yet been reached. According to data from Linerlytica, the region of north Asia accumulates 37% of total world congestion, North America 16% and Europe 10%. It should be highlighted that blockage in Chinese ports has increased after further outbreaks of COVID-19, which has which has particularly affected the ports of Shanghai, Ningbo and Qingdao, the TEU of ships at anchor reaching 850,000 at the end of December.

In terms of the energy market and primary materials, the average price per barrel of Brent crude oil has decreased. In December the average price was $80.92 compared to $91.42 in November, a decrease of 11.4% and lower than the average of $86.51 in January 2022.  Similarly, shipping fuels have generally fluctuated downwards since June, according to data provided by Ship&Bunker, taking into account the bunkering prices of the world’s top 20 ports. Consequently, the price of VLSFO (Very Low Sulphur Fuel Oil) has gone from $712.8 in June to $646.9 in July, a decrease of 9.2%.

VCFI Western Mediterranean

Turning to the Western Mediterranean sub-index, we can see a reduction of -11.43% on the previous month, to stand at 1,897.94 points, and accumulated growth of 89.79% since the start of the series in 2018. In this area the fall in volume of exports from Valenciaport to Morocco, Tunisia and Algeria, the main countries of reference in the area, should be highlighted. Although the setback responds to the current economic situation, it is also influenced by the blockage of Spain’s foreign trade operations with Algeria due to the cancellation of the good neighbourliness treaty by the Algerian government.

VCFI Far East

Turning to the Far East sub-index, in December we can see a reduction of -7.51% to place the VCFI at 2,372.04 points, which represents an accumulated increase of 137.20% since the start of the series in January 2018. The last month of the year has seen a retraction in export levels, compared to the rise in November. A situation provoked by the collapse in demand due new outbreaks of COVID-19 which have created high levels of congestion, as noted above.

Without a doubt, 2022 has been defined by a series of unforeseen global events, such as the Russian invasion of Ukraine, which has directly influenced the shipping market, creating a complex and uncertain scenario. In addition, the possibility of a recession has prompted imbalance in the supply of containers and global demand. Estimations for this new year predict a normalisation in the shipping price levels, even if cargo levels could fall up to 2.5% in 2023, as noted by the consultancy Xeneta.