You are on page 1of 1

Production or commodity-based transportation dominated logistics IBUonline is a B2B foreign trade platform which has cooperated with

some logistics companies to offer shipping service. In comparison with the US and European markets, China’s logistics industry is still dominated by production or commodity-based transportation and warehousing services. This fails to meet the growing supply chain demand for a large number of commercial and manufacturing enterprises. Thanks to the fast growth of China’s e-commerce, pharmaceutical and cold chain logistics sectors, the majority of domestic logistics companies managed modest profit increases in the first half, though their growth slowed along with the economy. “These emerging sectors have transformed the supply chain from being supply-led to demand-driven, which has a positive impact on the logistics business in terms of seeking new market growth points and staying competitive,” said Cui Zhongfu, vice-president of the CFLP. The number of Chinese Internet users, for example, is forecast to exceed 700 million by 2015, from the present 500 million, making it the largest e-commerce market in the world, according to a report last year by the Institute of Industrial Economics of the Chinese Academy of Social Sciences. Growth will also create challenges for logistics and e-commerce companies, as they will need to find new measures to make more efficient deliveries to the more than 220 million online shoppers in China to stay ahead. Infrastructure constraints, rising gasoline prices, a lack of warehouse space and the shortage of “last-mile” delivery expertise often makes it difficult for logistics companies to provide efficient services in lower-tier cities and inland areas. Shipping fees paid to logistics providers in China hit 4.5 trillion yuan in the first half, up 9 percent from a year earlier. However, the growth rate was down 0.9 percentage point from the first quarter and 2.8 percentage points from the first half of 2012. Logistics fees, which constitute the industry’s revenue, still make up 18 percent of China’s GDP, indicating that the sector’s operating costs remain high, relative to current economic conditions. The report said that to maintain cost-effective and sound growth, more rail freight operations will be used by China’s logistics sector. “Rail freight, with its large volumes, long-distance capability and lower prices and carbon emissions, will form an unprecedented challenge to road transportation sooner or later,” Cui said. China has a wide variety of economic activities scattered across a huge territory. It is still costly and cumbersome to send goods from the eastern coastal provinces to the vast western region, especially provinces such as Qinghai and Gansu. IBU will seek more logistics companies to cooperate to meet traders’ demand.