Attract Traffic from Spain

In recent years it was understood in Portugal that the ports can hardly further expand their
hinterlands in the country, both geographically and in terms modal, the latter appearing as
substitutes or alternatives to road transport.

In fact, the market is basically not possible to expand the traffic far beyond the normal
growth of the economy and international trade, which is to cannibalize the other ports.

In terms of intermodal strategies of the famous short sea shipping and the motorways of the
sea have not yet been bearing fruit, largely due to difficulties experienced by shipping in
competition with road transport, which benefits from reduced costs infrastructure, not
paying the high negative externalities. Tolls in Europe for heavy are being implemented
slowly and even the rise in oil prices has been mitigated tax.

It is easy to port to get new customers in Portugal, because they are loyal customers of
other ports and road transport were left with no choice but to expand "horizontally" to the
east, toward the Spanish market, to Madrid.

However, in addition to the positive experiences of a national company operating along the
border, from terminals in the country, without relying on the Spanish railway has not been
easy to extend the geographical hinterlands of Portuguese ports to Spain on the one hand,
because Spanish customers tend to be faithful to their own supply chains and, second,
according to Garcia-Alonso and Martin-Bofarull (2007), are faithful to the Spanish ports
have always served them well.

On the latter issue, Garcia-Alonso Bofarull and Martin-in a study entitled "Impact of Port
Investment on Efficiency and Capacity to Attract Traffic in Spain: Bilbao versus Valencia,"
published in 2007 in the journal Maritime Economics & Logistics, make an analysis
Empirical very interesting and come to unexpected conclusions, as we shall see.

Given that improvements in accessibility by land, the internationalization of economies and

the growth of intermodal ports allow more straightforward and more competitive in the
larger hinterlands, increasing the power of choice and customer market, the objective of the
ports has to increase your traffic in addition to economic growth (Haralambides, 2002 and
Notteboom, 2006).

According to Alonso (2007), some pull factors of loads can be controlled by the port
authorities, such as the capacity of the port and terminals, fares and marketing strategies as
well as the possibility to ensure an adequate balance between quality and price , which
implies greater investment in ports and attempt to improve efficiency (Ugboma et al, 2006).
However, on the other hand, Goss (1990) states that the competition can lead to increased
efficiency, but also can lead to excess capacity of the port.

In this context, Garcia-Alonso and Martin-Bofarull (2007) studied the ports of Bilbao and
Valencia for 10 years, from 1992 to 2002, trying to compare the efficiency gains from the
substantial investments that made both ports in this period.
Thus, using the indices of efficiency resulting from the DEA (Data Envelopment Analysis),
by minimizing the inputs necessary to achieve certain outputs and using the decomposition
of these indices in efficiency improvements resulting from either technical changes or
changes of scale, analyzed the following variables Bilbao and Valencia for each of the
years:

Output - Tons of bulk and tons of general cargo;

Input - Work (employees and longshoremen), materials (in thousands of euros) and capital
(linear meters of berths and square meters of embankment)

Should be noted that the investment made between 1995 and 2002 was very similar in the
two ports:
Milhões de euros Bilbao Valência
1995 41,86 40,56
1996 40,89 43,37
1997 57,69 44,20
1998 50,39 21,37
1999 38,18 37,26
2000 35,89 31,29
2001 28,74 29,34
2002 29,50 59,70
Fonte: Anuario estadístico de Puertos del Estado

The analysis of the resulting efficiency index, it appears that while the port of Valencia has
a value of 0.957 in 1992 to a value of 1.000 in 2002 (value of maximum efficiency in
comparison in the sample) while the port of Bilbao increased from 0.903 in 1992 to 0.521
in 2002, showing a gradual reduction in the level of efficiency in resource use, including
the new features that add to the investment.

Indeed, despite the expanded infrastructure of both ports dramatically, while the port of
Valencia has seen its traffic increased to 11.385 million tonnes (Mt) in 1992 to 33.045 Mt
in 2002, already had a Bilbao decrease in traffic, rising from 30.560 Mt in 1992 to 26.258
Mt in 2002, despite the increase in its infrastructure platforms and embankment, according
to the authors.

It can be concluded from this that the port authorities can not only manage the investments,
the expansion of the port and its capabilities and scale, but also have to move other
variables, which Valencia had such a huge success, contrasting with Bilbao.

Additionally, the authors analyzed the distribution of Spanish shipping by port and by
region of origin and destination in the hinterland of Spain. In general the Spanish regions
do not use more than 4 ports to move more than 90% of your traffic.

From the results, it appears that while the port of Bilbao remains attractive to almost only
the Basque regions, despite the Vizcaya is losing attraction in Bilbao, as the port of
Valencia has consolidated its position in regions with major ports themselves, such as
Barcelona, Alicante and Castellón.

Moreover, the study confirmed that improvements in infrastructure and port efficiency do
not change substantially the choices of the Spanish port, and most importantly the choice of
port by lines of transhipment containers and associated logistics chains.

The finding points to be recommended to port authorities should not base their strategies
for success and bringing charges only increased investment, not only in attracting new
charges of the Spanish, since they are very loyal to ports that always served well. The
strategies should be based rather on attracting international lines and the incorporation of
ports as nodes of transport networks.

What lessons can now angry this study for the Portuguese ports?