A demand impact study of southern and southeastern ports in Brazil: An indication of port competition

Abstract

In Brazil's commercial and economic structure, the country's southern and southeastern regions are the main producers of goods and the greatest goods importing regions. That structure is clearly reflected in port operations occurring in these regions, so it would be profitable for ports in these regions to establish themselves as benchmarks for importing and exporting goods. The port rankings are not static: sometimes one port leads and another trails, depending on the dynamics of the port's hinterland and the long-term strategy ports adopt in their bid for market leadership. If each port adopts such a strategy, then competition between ports may be a reality, otherwise the ports merely reflect the natural fluctuations of international markets. In order to verify whether there is a competitive relationship between southern and southeastern ports in Brazil, this article presents a structural Vector Auto Regression (VAR) model using the demands of the many ports in these regions as input. VAR analysis, Granger causality and impulse-response analysis are used to verify the relationships between demand shocks. The main references are from Yap and Lam and Haralambides. The sample period covers December 2003 to November 2008, using monthly data. The methodology adopted indicates that rises in demand in southeastern ports do not explain demand fluctuations in southern ports and vice versa, but among the southern ports themselves, there is probably a competitive relationship. Thus, causality and its direction are identified, as well as the response lag between changes in port demands. Empirical results mirror the existence of either effective or potential competition between southern ports in Brazil.