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.

 

Participating companies

 

Methodology

Conceptually, the VCFI is a quantitative index that enables the objective measurement and comparison of the data relating to sea freight rates from the port of Valencia.  This index has been created based on information obtained from primary data sources, formed by twelve top level panelists that operate in the port of Valencia, including freight forwarders and shipping companies. On a monthly basis, the panelists send the freight rate data of the month ending at the request of the Valenciaport Foundation. The composite index is calculated after receiving and checking the individual monthly data on the export freight rates for each of the ports, obtaining the average freight rates for each port, which will be entered into the composite index with its corresponding weighting. Taking into account that the freight rates of certain sea routes are negotiated in dollars, the exchange rates published monthly by the European Central Bank will be used for conversion to the euro. The rate provided by the panelists includes the ocean freight spot rate and the following surcharges:

  • Bunker Adjustment Factor (BAF)/ Fuel Adjustment Factor (FAF)/ Low Sulphur Surcharge (LSS)
  • Emergency Bunker Surcharge(EBS)/ Emergency Bunker Additional (EBA)
  • Currency Adjustment Factor(CAF)/ Yen Appreciation Surcharge (YAS)
  • Peak Season Surcharge(PSS)
  • War Risk Surcharge(WRS)
  • Port Congestion Surcharge (PCS)
  • Suez Canal transit Fee/Surcharge (SCS)/ Suez Canal Fee (SCF)/ Panama Transit Fee (PTF)/ Panama Canal Charge (PCC).
Comment of the month

February Review

In February the Valencia Containerised Freight Index (VCFI) showed a moderate growth with respect to January (0.35%), which represents a certain stabilisation after the decline experienced in January. In this way, the index, which takes a base of 1,000 in January 2018, stands at 1,055.11 points.

Despite this relatively stable behaviour of the global index, studying the geographic areas that comprise it reveals that the behaviour is more uneven. Furthermore, it is worth noting the increases in transport prices experienced with the majority of destinations in the centre and south of the American continent. These increases largely correspond to demand factors, with increased economic growth in some of the area’s major economies such as Brazil, which experienced a considerable increase in traffic with Valenciaport in January, or Mexico, which is the third destination country for container exports from Valencia. In terms of transport this translates into greater pressure on existing capacity and, consequently, results in an increase in freight rates. The SCFI has experienced a similar trend, in which the sub-index referring to South America increased by 16% in the last week of February.

Conversely, it is worth noting the case of Asia, since in February much of the rise in freight rates experienced in the previous month was reversed. After the pressure on demand that occurred prior to the Chinese new year, the subsequent decline in manufacturing activity has resulted in a moderation of freight rates. This decline in activity is also reflected in the increase in the idle fleet. In this context, according to Alphaliner data, on 4 February the idle fleet was 207 ships and accounted for 2.8% of the total fleet capacity, while on 18 February this reached 249 units, representing 3.9% of the fleet capacity. To this we must add that during January 17 ships were delivered, which meant an increase in the capacity of approximately 150 thousand TEUs. This increase in the fleet is compensated by an increase in the scrapping of ships, which has again increased in February for the second consecutive month, changing the trend with respect to that recorded in 2018.

Taking the above into account, and taking stock of the 13 geographical areas represented in the VCFI, during February increases in export freight were recorded in five of them while the remaining eight experienced declines in prices.

Finally, and given the correlation between oil prices and the freight rate of maritime transport (due to its relevance in the operating costs of the shipping company), it is also necessary to emphasise the slight increase experienced by the price of a Brent barrel, going from $59.41 in January up to $64 per barrel in February.

Change in the date of monthly publication of the Index

With the aim of increasing the relevance of the information collected in the index and the validity of its content, the Port Authority of Valencia reports that starting next month, the VCFI will be published on the first Friday of each month at 12:00 am.