CONTEXT

The transportation sector in Portugal is composed of a wide variety of transportation modes, including road, rail, air, maritime, and river transport. The country has a highly developed transportation network that connects major cities and regions, both on the mainland and in the autonomous regions of the Azores and Madeira.

Regarding road transport, Portugal has an extensive network of roads that connects the country to other European nations and also offers a wide range of public transportation services, including buses, trains, and metros. Road transport is responsible for a large part of the freight transport in the country.

Rail transport is also an important part of the transportation sector in Portugal. The country has a high-speed rail network that connects major cities and regions of the country, in addition to offering international services to other European countries. Rail transport is a popular option for longer trips within the country, as it is a more environmentally friendly and economical alternative to road transport.

Air transport is another important part of the transportation sector in Portugal. The country has several international airports that connect the country to other parts of the world, with special emphasis on the airports of Lisbon, Porto, Faro, Madeira, and Azores.

Maritime and river transport are also an important part of the transportation sector in Portugal, especially due to the country's geographical position on the Atlantic coast. The country has several important maritime ports, which are responsible for the transport of goods, as well as being a popular destination for cruises. River transport is less developed, but there are some routes that connect the country to other regions.

In terms of regulation, the transportation sector in Portugal is regulated by the Ministry responsible for the transportation area, as well as by the Mobility and Transportation Authority. As the country is also a member of the European Union, it is naturally subject to various European regulations and guidelines in the transportation sector.

MAIN TRENDS IN THE SECTOR

The transportation sector is one of the main pillars of the Portuguese economy, playing a significant role in trade and mobility for both Portuguese citizens and foreign visitors. In recent years, the sector has undergone various changes and evolutions, from vehicle electrification to the emergence of new mobility solutions. We will now identify the current trends in the transportation sector in Portugal:

1. Vehicle Electrification

One of the most notable trends in the transportation sector in Portugal is the electrification of vehicles. Portugal has been one of the leading countries in adopting vehicle electrification, with tax incentives and a wide and accessible charging network. In 2021, over 20% of the new vehicles sold in Portugal were electric or plug-in hybrids, which is one of the highest rates in Europe. Vehicle electrification is not only a trend in Portugal but also worldwide, due to environmental concerns and CO2 emission reduction goals. The trend is that more and more vehicles will be electrified in the coming years.

2. Sustainable Urban Mobility

Another important trend in the transportation sector in Portugal is the pursuit of more sustainable solutions for urban mobility. Portuguese cities have been working on solutions to reduce private vehicle traffic, make cities more pedestrian and cyclist-friendly, and promote the use of public transportation and electric vehicles. Lisbon and Porto, in particular, have been pioneering cities in sustainable urban mobility initiatives, including the expansion of the metro system, the creation of bike lanes, and the promotion of electric vehicle usage.

Among the sustainable urban mobility trends that are gaining momentum, the following deserve special attention:

3. Use of technology

The transportation sector in Portugal has been influenced by technological innovations, from transportation apps to satellite navigation systems and fleet monitoring systems.

The use of technology has allowed transportation companies to improve the efficiency of their operations, reduce costs, and enhance the customer experience. Additionally, the use of data and artificial intelligence has helped transportation companies optimize their routes and offer better services to customers.

4. New transportation solutions

The transportation sector in Portugal may benefit from new mobility solutions in the coming years. For example, the University of Coimbra has a project for an autonomous vehicle being developed for public transportation. Additionally, delivery drones and air transportation solutions may become more common in Portugal, especially for freight transportation.

5. Regulations

The Portuguese government has implemented various policies and regulations to drive sustainability and efficiency in the transportation sector. For example, Portugal is one of the leading countries in Europe in terms of tax incentives for electric vehicles. Additionally, the country has implemented regulations to reduce CO2 emissions from vehicles and improve the energy efficiency of buildings and public transportation.

POSSIBLE EVOLUTIONS IN THE TRANSPORTATION SECTOR IN PORTUGAL

While current trends provide insight into what is currently happening in the transportation sector in Portugal, it is important to remember that the future is uncertain. However, it is possible to point out some possible evolutions that may positively affect the transportation sector in the coming years.

It is likely that the use of electric vehicles will continue to grow in Portugal in the coming years, considering the various incentive policies implemented, including subsidies for the purchase of electric cars and the expansion of the charging network. Additionally, battery technology may continue to evolve, making electric vehicles more accessible and more attractive to consumers.

A possible evolution in the transportation sector in Portugal is the integration of different modes of transportation, such as bicycles, public transportation, and private cars. This integration can be promoted through apps that offer a multimodal transportation experience, allowing users to plan and pay for their trips across different transportation modes. Additionally, the Portuguese government may implement policies that encourage the use of public transportation and shared vehicles.

It is likely that Portuguese cities will continue to seek solutions to improve sustainable urban mobility, with a reduction in private vehicle traffic and an increase in the use of public transportation, bicycles, and electric vehicles. Policies may be implemented to encourage the construction of more bike paths and the promotion of bike use as a means of transportation. In addition, there may be more investment in public transportation to make it more accessible and efficient.

Transport companies are likely to continue investing in advanced technologies such as artificial intelligence and data analysis to improve the efficiency of their operations and offer better services to customers. In addition, new mobility solutions may emerge, such as autonomous vehicles and drones.

CHALLENGES OF THE TRANSPORT SECTOR IN PORTUGAL

The transportation sector in Portugal also faces significant challenges. Like in other European countries, the transportation industry has high demand and is expected to continue to grow. Estimates suggest that passenger transport will increase by 42% and freight transport by 60% by 2050. While this is good news for the economy as a whole, it also presents significant challenges to the transportation network and the environment. Current limitations in processing capacity are already putting pressure on the sector, leading to increased costs for citizens and businesses, negatively impacting economic growth.

Experts have noted that solutions to these structural challenges must also address environmental issues, especially in reducing greenhouse gas emissions. Climate change is currently one of the biggest challenges facing the transportation sector in Portugal, and established environmental targets should not be overlooked. The transportation sector is a significant contributor to greenhouse gas emissions, and reducing emissions and making the sector more sustainable is a major challenge. The adoption of more efficient and sustainable transportation technologies, such as electric vehicles and low-carbon public transportation, can help reduce environmental impacts while creating opportunities for sustainable and inclusive economic growth.

These are challenges that must be faced with a consistent and diversified strategy, taking into account the new socioeconomic framework and technological developments.

The transport sector is a crucial part of the global economy, enabling the movement of goods and services and connecting people to job opportunities, education, and other resources.

Transportation relies on infrastructure such as roads, bridges, ports, and airports. Inadequate infrastructure can also negatively affect transport efficiency, increasing logistics costs, and affecting business competitiveness.

Transportation safety is also a major challenge in Portugal. The adoption of safety technologies such as proximity sensors and speed control systems can help reduce the number of traffic accidents and improve transportation safety.

In addition to all of that, there is also the challenge of financing and investment. These are fundamental aspects to ensure the efficiency and sustainability of the sector. However, it is often difficult to secure sufficient financing and investment to meet the sector's needs. Therefore, the search for new sources of funding, such as public-private partnerships and investments in innovative transportation technologies, can help address this challenge.

THE IMPACTS OF THE WAR IN UKRAINE ON THE TRANSPORT SECTOR IN PORTUGAL

The crisis in Ukraine has also impacted the transportation sector in Portugal by affecting the flow of trade and energy, increasing costs, and creating uncertainty regarding future supply. To address these challenges, some solutions have been implemented in Portugal.

One of the implemented solutions was the search for alternative transportation routes. Portuguese transportation companies sought alternative routes to transport goods between Europe and Asia, avoiding Ukraine and using alternative sea and land routes. This helped to reduce the dependence of Portuguese companies on Ukraine as a transit hub for the transportation of goods.

Another solution was the promotion of alternative energy sources. Uncertainty regarding energy supply from Russia led to greater promotion of alternative energy sources in Portugal, such as solar and wind energy, to reduce dependence on imported energy sources and improve energy security. Efforts were also made to improve transportation infrastructure in Portugal, including investments in ports and airports. This helped to increase transportation efficiency in Portugal, reducing costs and improving the competitiveness of Portuguese companies.

In addition, Portuguese transportation companies have diversified their activities, exploring new markets and transportation services to reduce dependence on a single sector or market.

These solutions have helped to mitigate the negative impacts of the crisis on the transportation sector in Portugal.

DYNAMICS IN THE TRANSPORT SECTOR IN TERMS OF M&A

In recent years, there has been a significant number of mergers and acquisitions (M&A) in the transport sector in Portugal, with national and international companies aiming to expand their operations and strengthen their market position.

A recent example of a major M&A operation in the transport sector in Portugal was the acquisition of a major Portuguese operator by one of the largest urban transport companies in Spain, in order to expand its presence in Portugal and increase its market share in urban transport throughout the Iberian Peninsula.

Another significant operation was the acquisition of one of the largest urban transport operators in Lisbon by another Portuguese logistics and transport company. The acquisition allowed the acquirer to expand its urban transport operations in Lisbon and increase its market share in the transport sector in Portugal.

In addition, there have been other M&A operations in the cargo transportation sector in Portugal, involving a German logistics company.

THE ELECTRIC MOBILITY PROGRAM

In Portugal, a true ecosystem is being created in the transportation sector, driven primarily by the electric mobility program. This is an ambitious program that has a direct relationship with the transportation sector in the country, as its main objective is to encourage the adoption of electric vehicles as an alternative to combustion engine vehicles.

In recent years, electric mobility has been gaining more and more ground in the world, especially in countries that seek to reduce greenhouse gas emissions and decrease dependence on fossil fuels. Portugal is an example of a country that has invested in electric mobility programs, encouraging the adoption of electric vehicles and the development of the necessary infrastructure.

The electric mobility program in Portugal was launched in 2010 by the Portuguese government and aims to encourage the adoption of electric vehicles, the creation of a charging network, and the promotion of technological innovation. Since then, Portugal has stood out in the adoption of electric vehicles, with over 100,000 electric vehicles in circulation and a well-developed public charging infrastructure throughout the country.

One of the main incentives for the adoption of electric vehicles in Portugal are the tax incentives. The Portuguese government offers a series of tax incentives for the purchase of electric vehicles, including exemption from the Vehicle Tax (ISV) and the Single Circulation Tax (IUC).

Another incentive for the adoption of electric vehicles are the financial incentives offered by the Portuguese government. Companies and individuals can benefit from subsidies and low-interest credit lines for the purchase of electric vehicles.

The incentives make the acquisition of electric vehicles more accessible for the population and companies.

In addition to incentives for the adoption of electric vehicles, the electric mobility program in Portugal has also invested in creating a public charging network. Currently, there are over 5,000 charging points throughout the country, making electric mobility more accessible and convenient for electric vehicle drivers. The Portuguese government has also created technical standards and safety requirements for the installation of charging stations in public and private locations.

The electric mobility program in Portugal also encourages research and development of electric mobility technologies. There has been significant investment in the research and development of battery technologies and intelligent charging systems, which has allowed for the development of more advanced solutions for electric mobility.

Public awareness is also an important aspect of the electric mobility program in Portugal. Public awareness campaigns about electric mobility are frequently carried out, increasing awareness and promoting the adoption of electric vehicles. In addition, the program includes an initiative to certify technicians for the installation and maintenance of electric vehicles and charging infrastructure, ensuring the quality of the services offered for electric mobility.

The adoption of electric vehicles has brought a number of benefits to Portugal. The reduction of greenhouse gas emissions has contributed to the country meeting its emissions reduction targets set in the Paris Agreement. In addition, the adoption of electric vehicles has generated jobs and contributed to the growth of the Portuguese economy. The reduction of noise and improvement of air quality also have positive impacts on the quality of life for Portuguese citizens.

In European terms, Portugal performs well in terms of electric vehicle adoption. Portugal ranked third in the electric vehicle adoption ranking in Europe, behind only Norway and the Netherlands. The well-developed charging infrastructure, fiscal and financial incentives, and investment in research and development are some of the factors that contribute to Portugal's prominence in electric mobility in Europe.

It is likely that legislative developments will occur in the transport sector in Portugal in the near future, particularly regarding electric mobility. Some of the legislative changes in prospect include:

Portugal has shown enormous potential for exporting solutions in the framework of the electric mobility program. The country has been recognized as a reference in electric mobility and has invested in innovative solutions that can be applied in other countries. Some of the solutions in which Portugal can stand out include:

In addition, Portugal has a strategic geographical location that could allow for the export of electric mobility solutions to other countries in Europe and Africa. Its proximity to the African continent, in particular, could enable Portugal to develop electric mobility solutions to meet the specific needs of that region.

We believe that trust will be the determining factor for the future of electric mobility, given its current state of development and implementation. Consumers need to have confidence in the technology, charging infrastructure, safety, total cost of ownership, and reliability of electric vehicles. If these concerns are successfully addressed, electric mobility has great potential to become an attractive option for most consumers.

Contributors: Transport department of Raposo Bernardo | please contact [email protected]