The development of business and trade logistics industry is going to run onto the “fast lane”.

 

On February 8, the Ministry of Commerce and the National Development and Reform Commission and other three ministries and bureau jointly released the 13^th Five-Year Plan for Development of Business and Trade Logistics (hereinafter referred to as the Plan) , which sets the goals to, during the 13^th Five-Year Plan period, basically establish a business and trade logistics network featuring urban and rural coordination, regional collaboration and effective connection home and abroad, further promote a standardized, information-based, intensive and international development of business and trade logistics, improve the usage rate of standard pallets to about 30% and reduce the ratio of logistics cost of wholesale and retail enterprises to about 7%.

 

Related experts believe that the biggest challenge faced by the Chinese business and trade logistics industry is the low degree of intensiveness. In the future, this industry should focus on developing large logistics enterprises with remarkable comprehensive strength. It should encourage establishment of logistics information platforms and alliances. Then, it should develop large transportation groups and encourage adoption of NVOCC (non-vessel operating common carrier) mode to build big brands and improve the load factor and logistics efficiency.

 

Encourage business and trade logistics enterprises to carry out asset restructuring

 

Nowadays, many things, such as ordering takeout, buying clothes and booking flowers, can be done with a smartphone. In recent years, the popularization of smartphone and the fast development of mobile Internet technology have enabled people to live more convenient life. Following that, various logistics services have become an essential part of people’s life.

 

“In this era, when new economy and new types of businesses are emerging, the logistics industry is playing a more and more important role or even a leading role in economic development,” said Xu Yong, chief advisor of cecss.com.

 

“The fast development of the business and trade services, including the wholesale, retail, lodging, catering and resident services, and the trade in goods has increasingly expanded demand for business and trade logistics services,” Planning said.

 

However, for so long a time, the logistics cost of China has been kept at a high level and therefore become a heavy burden for enterprises. The Review of Development of Chinese Logistics Industry in 2016 and Expectations for 2017 released by China Federation of Logistics and Purchasing last month said that, in 2016, the total logistics cost was about RMB11 trillion, up about 3%; the ratio of such cost to GDP is expected to drop to less than 15% following the drops in the previous three years.

 

However, from a global perspective, it is still above the world average level. It ranges from 8% to 9% in developed countries. In the United States, the logistics cost usually accounts for 8% of the GDP of the current year; in Japan, it is about 11%.

 

The Plan aims to realize obvious reduction of logistics cost, reduce the ratio of logistics cost of wholesale and retail enterprises to about 7% and basically establish a business and trade logistics system featuring high efficiency and intensiveness, collaboration and sharing, integration and opening-up and environmental protection during the 13^th Five-Year Plan period.

 

“The ratio of logistics cost will be reduced to about 7% by 2020,” said Xu Yong. However, he said it is not a goal easy to achieve, because the Chinese logistics industry is so less intensive and the unloaded ratio is so high, and the gap between the eastern and western parts of China in economic development results in unbalanced loading during the transportation back and forth.

 

Xu said, “For example, the trucks that are fully loaded when traveling from east to west may be unloaded when they are back. This leads to very low transportation efficiency.” Xu also said that China’s fuel cost and toll charge are higher than that in other countries so that it is more difficult to reduce the logistics cost.

 

In his opinion, the reality is that it is now still difficult to reduce the unloaded ratio. The arrangement for railway and road transportation is unreasonable. Because of the high costs at “both ends”, the transportation capacity of the Chinese railways is declining. In addition, China has not had any large logistics enterprises that are as competitive as the seven major logistics enterprises of the United States. This adds the hardness to solve the problem of unloaded ratio.

 

The Plan covers this issue. It encourages business and trade logistics enterprises to carry out asset restructuring, business integration and process reengineering to establish a number of large modern logistics business groups with advanced technologies, highlighted main operations and strong core competitiveness. It also encourages SMEs to realize resource integration and optimization of resources through alliances and cooperation to promote a more intensive development. It also encourages big enterprises to lead the SMEs to seek for a more organization-based and information-based development through related platforms.

 

Guangzhou and Shenzhen listed as “national business and trade logistics station” cities

 

In addition, the Plan also requires to further promote a standardized, information-based and international development of business and trade logistics, improve the pallet standardization in the field of business and trade circulation to raise the usage rate of standard pallets to about 30%, make obvious achievements in application of advanced IT technology and continuously enhance the competitiveness of the business and trade logistics enterprises during the 13^th Five-Year Plan period.

 

“The use of standard pallets will greatly improve the loading and unloading efficiency of logistics enterprises and reduce the cost of such handlings and then reduce the logistics cost.” Xu explained that, from an international perspective, 30% does not represent a high-level application of standard pallets, but it is a reasonable goal for China considering the actual conditions.

 

The Plan also proposes to establish a multi-level business and trade logistics network. In accordance with the requirements, “national business and trade logistics station” cities with international competitiveness and regional leading ability as well as “regional business and trade logistics station” cities with regional radiating ability should be developed to serve “the Belt and Road” initiative and the national strategies for coordinated development of the Beijing-Tianjin-Hebei region and the development of Yangtze River Economic Zone.

 

It's worth noting that, in accordance with list under the Plan, 39 cities including Guangzhou and Shenzhen have been designated as “national business and trade logistics station” cities, and 64 cities including Dongguan and Foshan have been designated as “regional business and trade logistics station” cities.

 

In addition, the Plan also requires to: promote transformation and upgrading of logistics parks, enhance construction of water and power supply facilities, roads, networks, communication facilities and heating facilities in these parks, and improve public services for warehousing, transportation, delivery and information sharing; strengthen construction of urban delivery centers, support construction of public-benefit public service facilities for urban delivery, and promoting the transformation of freight stations in urban areas or rural-urban fringe zones to socialized delivery centers; enhance construction of terminal delivery stations and expand the coverage of terminal delivery network.

 

Moreover, the Plan requires further standardization of business and trade logistics. Repeated and shared use of standard pallets should be based to generalize the application of basic package modules and packaging tools to improve the standardization of the upstream and downstream logistics. Multi-level logistics information service platforms should be established. Emphasis should be laid on developing comprehensive information platforms, public data platforms and information exchange platforms boasting wide coverage and strong radiating ability.

 

Source: Translated from Invest Guangzhou, February 9, 2017