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.

NOTE: Given the exceptional nature of the current situation, the VCFI will continue to be published with its usual frequency, although the data should be regarded as provisional and may be adjusted later

 

The Valencia Containerised Freight Index (VCFI) for the month for September has shown growth again for the second consecutive month, rising 1.68% to stand at 1,269.05 points for accumulated growth of 26.91% since January 2018.  The increase in the VCFI is in line with the general market trend and is also reflected in other reference indices at global level, such as the SCFI and Freightos. It is worth pointing out that the areas of study have once again begun to reflect a homogeneous trend: while eight of these experienced growth and four remained unchanged. Just one area saw a fall in prices with respect to the previous month.

Behind this generalised increase, once again, is the balance in supply and demand for capacity in the maritime transport market. While the current economic climate is characterised by a high degree of uncertainty due to the evolution of the virus, the rapid, unexpected recovery in demand over the summer has seen port traffic increase. This is evidenced by the record container traffic reached by the port of Valencia in the month of August, exceeding 500,000 TEUs transported and a month of September where the data for the first fortnight confirm the impressive performance of traffic. This growth trend in traffic through Valencia is not an isolated case. It is extended to other regions, as reflected by the RWI/ISL Container Throughput Index. That index shows how, from July to August (latest data published) there has been an increase in container traffic at some of the world’s major ports.

Nevertheless, this growing demand has been counterbalanced by certain limitations of slots on some of the principal container routes. The temporary suspension of services, cancellations of port calls and blank sailings to overcome the most convulsive period of the pandemic all contributed to a reduction in supply and, consequently, generated an imbalance in the market in the short term, which has seen increased pressure on freights. However, given the improved levels of demand in the last quarter, the number of blank sailings has progressively fallen and the idle fleet been reduced. In the space of just a month, the idle fleet has gone from 4.1% of the total active fleet and 969,000 TEUs in mid-August to 2.7% and 644,000 TEUs (Aphaliner) in the period immediately prior to Golden Week in China.

In terms of oil prices, the month of September saw a fall of 8.49% on August prices, from 44.74 dollars a barrel for European Brent to 40.94 dollars. This decline is also reflected in bunkering prices for IFO 380 and VLSFO marine fuel. Prices have fallen slightly from the previous month in both cases, representing a change in trend a further drift from the possibility of reaching the levels seen before the health crisis.

When the performance of freights is analysed in detail by geographic area, most display the same growth trends reflected in the general VCFI. We can therefore observe how eight of these areas have seen growth on the previous month’s freight levels, in particular the Middle East (4.47%), Far East (2.66%), Pacific Latin America (2.41%) and the Indian Subcontinent (2.16%). As has been mentioned, the recovery in demand has been a determining factor and export traffic from Valenciaport with the areas indicated has seen strong growth. And so, the growth trend with most of those areas from June, combined the limitation of space on vessels, has ultimately had an impact on freights.

VCFI Western Mediterranean

Turning to the Western Mediterranean, this is the only area where freights have seen a reduction of levels from previous months, of 5.40%, maintaining the erratic performance of the sub index throughout 2020. In this regard, there is considerable variation in terms of the evolution of traffic from Valencia with the three countries concerned. While traffic with Morocco has continued to grow since May with volumes far and above those reached for the same period in 2019, Algeria and Tunisia have seen a continued decline in export flows from Valencia since June.

VCFI Far East

For its part the Far East has seen an increase in freight levels for the second consecutive month with a rate of 2.66% compared to the previous month. The solid performance of traffic from Valencia to China, maintaining continued, intense growth since June, is placing pressure on freights, standing at 2,057.26 points, with accumulated growth of 105.73%, taking the index to its historic high since its first publication.