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
VCFI November 2024
The Valencia Containerised Freight Index (VCFI) recorded an increase of 6.40% in November over the previous month, reaching 2,039.49 points. This result represents a cumulative growth of 103.95% since the beginning of the series in 2018. As for the Western Mediterranean sub-index, it experienced an increase of 9.40%, standing at 2,248.95 points, with a cumulative growth of 124.89% since 2018. For its part, the Far East sub-index has registered an increase of 25.69%, reaching 2,318.54 points, with a cumulative increase of 131.85% since the beginning of the series.
On the international trade demand side, China’s exports have exceeded forecasts, driven in part by the anticipation of new U.S. tariffs. This has generated an increase in production and product shipments. On the import side, in anticipation of these tariffs, Chinese factories have increased purchases of foreign inputs and products before the additional costs take effect, which could affect both prices and product availability globally. In terms of inflation, trends remain favorable, with core goods inflation below zero and services inflation declining in the major G5 economies (US, UK, Germany, France and Italy), helping to maintain a relatively stable economic environment. All in all, and in general, demand remains robust, especially until the Lunar New Year, driven by the earlier holidays and uncertainty regarding the implementation of new tariffs by the US.
Another relevant fact is that, according to the World Trade Organization (WTO) Trade Barometer, world trade in goods has continued to expand at a moderate pace in the fourth quarter of 2024. However, the outlook for 2025 remains uncertain due to possible changes in trade policies. This index shows continued trade growth, with a reading of 102.7, outperforming both the quarterly trade volume index and the base value of 100, suggesting that expansion will continue. In terms of the barometer components, most indices remain in line with or above trend, with the containerized shipping index standing out as showing the greatest improvement over the past three months.
In terms of global shipping supply, there was a notable contraction in the inactive fleet, which reached only 0.5% of global capacity, with 58 vessels and 168,314 TEUs out of service, according to Alphaliner. This reflects a recovery from previous months, despite the addition of more than 2.5 million TEUs to the fleet since the beginning of the year, indicating almost full utilization of available capacity. As for vessels in yards, the number has decreased slightly, reducing the fleet to 2.4% of overall capacity, reflecting improved operational efficiency compared to previous years (3.0% in 2023 and 3.1% in 2022). However, it is anticipated that fleet idling may increase in the coming months due to seasonality of demand and the addition of new capacity.
In the energy and commodities market, the average price of Brent crude oil recorded a drop of 1.69% in November, standing at $74.35 per barrel, compared to $75.63 in October. Similarly, the marine fuel market also saw a decline, with the cost of bunkering in the top 20 global ports, according to Ship&Bunker data, reflecting a 3.60% drop in the price of VLSFO (Very Low Sulphur Fuel Oil) from $605.5 in October to $583.7 in November.
In terms of port congestion, according to Linerlytica, as of mid-November, global port congestion showed significant improvements, with a notable reduction in the fleet at anchor, which fell below 2.1 million TEUs from the peak of 3.0 million recorded in October. North Asian ports have seen the greatest gains, reducing queues of waiting vessels following the recent typhoons in the region. Although delays of up to 2 days are still reported at major hubs such as Shanghai, Ningbo, Qingdao and Busan, the situation continues to improve, with no sign of a significant increase in cargo throughput in November. In Europe, congestion remains high at ports in the UK and Germany, while Antwerp has recorded delays of up to 2 days due to strong winds over the past week, which have affected operations at major ports in the north of the continent. In North America, Canadian ports have fully resumed operations following recent strikes, although work is still ongoing to clear the backlog of vessels. In South America, ports are gradually improving, with a slight decline in cargo volumes after the peak reached in the third quarter. Overall, these improvements reflect a progressive normalization in global port activity, although challenges remain in several key regions.
With all this, and while the previous VCFI reading indicated that the Golden Week in China generates a temporary decrease in shipping demand due to reduced activity in factories and ports, after this period there is a reactivation of production and an increase in cargo accumulation, which drives an upturn in trade activity. After this period, a reactivation of production and an increase in cargo accumulation is observed, which drives a rebound in trade activity. This increase in post-holiday demand, together with the almost full use of global capacity (with only 0.5% of the fleet idle) and shipping lines’ strategies to consolidate cargoes and adjust routes, has led to an increase in freight rates, evidencing a market highly sensitive to seasonal and operational changes, reflected in the recent VCFI behavior.