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.

 

In April, the Valencia Containerised Freight Index (VCFI) increased by 5.09% compared to the previous month. Over the last year, the index has doubled from 2,314.89 points in April 2021 to 4,653.85 in the same month of 2022. Compared to when the series began in January 2018, the VCFI has grown 365.39%. The current economic situation. with its extreme volatility, is affecting market behaviour as is the supply-demand dynamic in maritime transport. We also note the downward revisions in world economic growth which was already predicted by some of the leading international organisations.

A feature of the current energy market is the war in Ukraine and the decline in activity in China as a result of the restrictions imposed due to new Covid-19 outbreaks. This has led Brent oil to reverse its upward trend in prices, falling 5% compared to the previous month to $100.80. In regard to marine fuels and the cost of bunkering (ie refuelling of ships at sea) across the world’s 20 main ports, data provided by Ship&Bunker shows that there is also a certain degree of containment. Thus, the price of VLSFO fuel has risen from $915.50 in March to $924.50 in April – an increase of only 0.98%.

As noted by Alphaliner, in terms of capacity offered, fleet that is inactive for commercial reasons has remained at a minimum. Thus, in mid-April, a total of 55 vessels were idle, with a total of 180,653 TEU (standard 20-foot container), representing 0.7% of the total active fleet. This is a drop compared to March, with a total of 59 idle vessels and 204,977 TEU, representing 0.8% of the total active fleet.

Transportation demand was lower due to the drop in international trade. According to the latest data provided by consulting firm Linerlytica, there has been a significant decline in port traffic volumes compared to the previous month – mainly due to the fall in Chinese traffic as a result of its zero-Covid-19 policy. This has severely affected port performance in Shanghai. The impact on European port traffic of sanctions against Russia together with declining confidence levels and consumer consumption, remains a constant factor.

Another problem the maritime industry has had to face and seen in April is the high levels of port congestion. Data provided by Linerlytica shows that global port traffic congestion increased by 1.4% in April with 3.4m TEU, representing 13.4% of the total fleet. The main regions affected include North America (30%), North Asia (29%) and Northern Europe (11%). Clearly, the reasons behind these levels have been the pull in import demand from North America and the closure of Chinese ports due to the latest Covid-19 outbreak. This has doubled waiting times.

In terms of analysis of the different areas that make up the VCFI, there is a general increase with the exception of Latin America Atlantic, which has fallen back 0.94%. Of the increases, we highlight those in US and Canada freight rates (9.82%) – resulting from the boost in import demand – and East Coast Africa (8.14%) – which is a direct consequence of the severe flooding caused by heavy rains – which forced port activity to come to a standstill, resulting in a build-up of large numbers of containers.

VCFI Western Mediterranean

Looking at the Western Mediterranean sub-index, an increase of 6.29% was recorded compared to the previous month – at 2,333.88 points – and growth of 133.39% since the series was launched in 2018. For traffic from Valenciaport, there was however a month-on-month decrease to Morocco, Tunisia and Algeria – a complex but transitory situation.

VCFI Far East

In the Far East area, following a decrease in March, there was an increase of 3.58% to 3,771.91 points, representing a rise of 277.19% compared to when the series was launched in January 2018. We also point to the decrease in Valenciaport’s export flows with China, its main trading partner. Again, this could be a one-off situation given the current context, and caused by the port congestion discussed above in China’s major ports, which is causing disruptions in transportation and supply chains and fuelling inflation.

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