Fundación Valenciaport

The Valencia Containerised Freight Index (VCFI) has resumed its upward trend with an increase of 2.13% in March compared to the previous month, thus standing at 1,790.11 points and accumulating a growth of 79.01% since the beginning of the series in 2018. A generalised increase is observed in all the areas analysed, with a notable increase in the East Coast Africa area (6.08%), followed by the USA and Canada (5.92%) and the Middle East (4.96%). On the other hand, there was a marked decrease in freight rates in the Baltic States area (-39.42%).

The current situation continues to be marked by the ongoing conflict between Palestine and Israel, which keeps the Red Sea Crisis as a relevant factor influencing international shipping. The recent escalation of tensions suggests that transit through the Red Sea and Suez Canal may not be viable in the short term, leading shipping lines to divert most of their vessels via the Cape of Good Hope. This change in shipping routes reflects the need to adapt to the geopolitical situation in the region.

At the end of March, a notable event affecting international shipping was the collision of the cargo ship “DALI” with the Francis Scott Key Bridge in Baltimore. This collision caused the steel centre section of the bridge to collapse into the main navigation channel. Although access to the port of Baltimore was initially restricted, indicating a significant and possibly prolonged impact on supply chains, analysts suggest that the impact on freight rates is being limited. However, the closure of the port of Baltimore has resulted in a diversion of traffic to alternative logistics routes in the short term, leading to an increase in inland transport costs for cargo redirected to neighbouring ports such as New York or Hampton Roads.

Turning to the analysis of the factors that, in some way, influence the supply and demand side of shipping, and specifically on the demand side, according to the latest update on world trade by the United Nations Conference on Trade and Development (UNCTAD), world trade is expected to recover in 2024 after several quarters of decline. Data for the first quarter of 2024 indicate signs of improvement in global trade. Growing demand for environmental goods, such as electric vehicles, together with an improving global economic outlook, is expected to boost trade later this year.

According to the latest estimate of the World Trade Organization (WTO) Trade Barometer, a composite indicator that provides real-time information on the evolution of merchandise trade compared to recent trends, the latest estimate shows a higher quarterly trade volume index. This again suggests that merchandise trade is in the process of recovery.

According to the latest RWI/ISL Container Throughput Index published in March, an increase in port throughput has been observed compared to the previous month, indicating an increased demand for shipping from international trade. This has led to a considerable increase in global container throughput for four consecutive months. The latest reading highlights that, without the sharp drop in container throughput in Chinese ports, influenced to some extent by the impact of the Chinese New Year, the increase would have been even more significant. In addition, in European ports, container throughput increased by almost three per cent, possibly driven by the recovery of German exports as well as incidents in the Red Sea.

Turning to factors affecting shipping supply, in the energy and commodity markets, the average price per barrel of Brent crude oil rose slightly in March to $85.41 compared to $83.48 in February, an increase of 2.3 per cent. At the same time, in the field of marine fuels, the cost of bunkering in the world’s top 20 ports, according to Ship&Bunker data, showed a slight increase of 0.8 per cent for VLSFO (Very Low Sulphur Fuel Oil), from $661.85 in February to $667.18 in March.

In terms of idle fleet levels, after a downward trend since early December, when the Red Sea conflict and the resulting service diversions via the Cape of Good Hope began to absorb additional capacity, the fleet of idle container vessels has increased since early March. However, to all intents and purposes, the container fleet remains fully employed, due to the avoidance of the Red Sea. According to data provided by Alphaliner, as of 25 March, the inactive containership fleet stood at 79 vessels, equivalent to 251,049 TEUs. This represents a small increase of 6 vessels and 63,294 TEUs over the previous fortnight, and raised the percentage of the total containership fleet from 0.7% to 0.9%. However, as noted above, in such small fractions, this can be considered “full employment”.

One fact to note is that, after the return to normality and after the seasonal peak, blank sailings announcements have decreased, thus, and according to the information provided by Drewry in its “Cancelled Sailings Tracker“, in the main East-West cabotage routes: Transpacific, Transatlantic and Asia-North Europe & Med, 48 sailings have been announced as cancelled between week 14 (1 Apr-7 Apr) and week 18 (29 Apr-5 May), out of a total of 650 scheduled sailings, representing a cancellation rate of 7%. In addition, during this period, 46% of blank departures will occur on the eastbound Transpacific route, 33% on the Asia-North Europe and Mediterranean route and 21% on the westbound Transatlantic route.

As far as port congestion is concerned, according to analysis by consultancy Linerlytica, it worsened last week with a sharp increase in berthing delays at ports in North and Southeast Asia. Waiting times have increased at major ports in the Far East, such as Busan, Ningbo, Shanghai, Singapore and Port Klang, where waits of up to three days have been recorded. In the United States, port congestion has not increased, and East Coast ports have not been affected by the closure of the port of Baltimore. Cargo has been diverted mainly to the northern ports. In particular, in week 14, port congestion levels reached 1.80 million.