Plaza, the logistics park of Zaragoza

A case study analysis by:

Ho, Tai
Kamath, Rohit
Ramirez, Isabel
Rizvi, Mohsin

The Plaza is a new entrant into the logistics parks market, specific to the European area. Even
though there was strong presence of logistics parks in central Europe and Spain was saturated
with similar businesses (over 62 by the end of 20061), Plaza was attempting to enter a market
where there are plenty of competitors with a differentiated service offering.
As such, the developers have thought that Plaza will become a preferred option for European
companies to use as a logistic hub that could expand their distribution network for European
markets. On the other hand, we believe Plaza was also following a political agenda driven by the
local government of the province of Aragon and Zaragoza municipality 2. These governments
threatened by the entry of new countries into the EU 3 as these were receiving most of the EU
funding. By stepping up, they wanted to be ahead of the game and prevent companies from
leaving Spain. At the same time, they identified the need to diversify their economic base which
at the time was highly dependent on the General Motors plant in Figuerelas.
With so many actors in the market, it was not expected that their competitors will reach in a hostile
way, especially considering that geographic location and access to roads were two main drivers
of competitive advantage that are extrinsic to these businesses.
In order to introduce Plaza as the most attractive option, the ought to be different abut also cost-
efficient in order to be attractive. They created a pool of services that were not offered by
competitors which are summarized in Table 1:

Table 1. Differentiated service portfolio of Plaza.

Service Description Importance
Air, rail, road transport Centers in Spain did not have the direct
Intermodal facility
combined means available connection to all transportation modes.

1
Plaza, the logistics park of Zaragoza. June 29, 2009. Harvard Business Review. 609-113.
2
The majority owners of Plaza are the governments of Aragon and Zaragoza, with 51, 52% and 12, 12% ownership
respectively.
3
Czech Republic, Estonia, Lithuania, Latvia, Poland, Hungary, Slovakia and Slovenia.
 Inland terminal directly
Dry Port connected to seaports by
road or rail
A part of the complex that
Managerial Park typically will have office
space and car parking.
Sport and Leisure Restaurants, hotels
Bilbao, Tarragona, Valencia, Gijon, Aviles
and Barcelona (Signes) had agreements
with Plaza already.
Additional services such as marketing,
consulting, auditing, customs, certifications,
homologations, insurance, bank, travel
agencies, car rentals, security, maintenance
were not common service offered by
existing logistics parks.

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PLAZA in comparison - Tai
- Plaza is the largest logistics park in Europe
- Plaza is relatively new, the utilization may be low, cheap rental
- Full service integrated (in line with customer flavor of having all at one place)
- Central area in Spain (comparison within Spain)
- Intermodal setup
- Cheaper cost
Sitting at the heart of the busiest region of Spain, PLAZA has a tremendous geographical
advantage. Thanks to a well-developed infrastructure, it’s highly potential for one company to
explore an opportunity to set up their business at the location, yet not to trade their connectivity.
In fact, PLAZA has a strong supporting service for multi-model mode of transport, including
airways, railways and roadways. The direct competitors to PLAZA are mainly situated around
Madrid and Barcelona (Catalonia), which are also at a smaller size, thus stipulating a higher rental
cost. The market price of a sqm for rent in Madrid/Barcelona is 500 euros per month, it goes down
by half going to the outskirt. PLAZA rate card is even lower than that.
International companies would also benefit from a wider interconnection to different parts of
Europe, especially to France via the Somport tunnel. About half of import volume to Europe comes
from Asian countries, there is a great chance for savings by dropping off merchandise at Spanish
seaports (Barcelona, Valencia, …) rather than the further northern port like Rotterdam. By doing
so, the possible saving lead-time for sea transportation can reduce by up to 5 days, a reduction
of 25% of time travelling from port of Shanghai to port of Rotterdam as an example. It’s translated
into 145 euros saving per TEU as a rough estimation. After being unloaded at one of
aforementioned seaport, the cargo can be held at a DC located in PLAZA before final shipment
to customer. That implies middle-mile transportation between the port to PLAZA, while in the case
of Rotterdam, cargo can be kept at nearby facilities which virtually doesn’t incur significant extra
cost. The difference is estimated to be of 465 euros more cost of transport to PLAZA.
The existence of middle-mile cost would be well offset by cheaper rental and labor at PLAZA, as
well as a cheaper rate of last-mile operations from PLAZA to the central of Europe.
/ here need to insert a table comparing the total landed cost /
Looking at a cost breakdown, the warehousing cost can be brought down by 25% in PLAZA
compared to Rotterdam. Moreover, the transportation cost to ship from Spain to Central Europe
is at 1.02 euro per km, 15% lower than the rate to ship from Rotterdam. Such level of cost
reduction can make the companies to rethink their supply chain network. They may consider
either to relocate or to have an addition facility at PLAZA, Zaragoza in the near future.

https://tradingeconomics.com/european-union/imports-by-country

https://madb.europa.eu/madb//statistical_form.htm Commented [IR1]: Please advise where to cite these

sources