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Organization of the logistic chain in the Chinese international trade
II. LOGISTIC FRAME IN THE HINTERLAND OF SHANGHAI
II.I. China’s Logistic Industry overview
II.I.I. Introduction
China’s endless economic growth and exponential international trade has boosted the need of logistic
services and transportation infrastructures. The development of the Logistic sector however hasn’t
followed the pace of economic growth, making savings in product manufacturing or sourcing in China
be threatened by high logistic costs. Inefficiencies, unreliability, lack of transparency, regional
disparities, shortage of professionals and cultural barriers are some of the challenges faced in the
logistic sector.
Generally, China’s logistics and transportation industry still lag behind the requirements of the demand
side thought fast improvements have taken place. China’s entry into The World Trade Organization has
altered the scenery, creating a new competitive landscape, where international players spread and
Chinese companies are catching up quickly. Chinese Government, aware of the critical role of logistics
in China’s future growth is strongly promoting the modernization of the global logistic industry through
huge investment on infrastructures and encouraging companies to outsource logistics, and providers
to improve their logistic capabilities.
The shift from State-own-enterprises to private companies, the increasing number of multinational
corporations and major retailers within China, have also boosted the competition and increased the
requirements and expectations coming from the demand side.
Some logistic and transportation industry indicators
� The gross value of China’s transportation and logistics industry stood at 38.4
trillion RMB (US$ 4.64 trillion) in 2004, a year-on-year increase of 30%.
� Total logistics costs in China account for 2,9 trillion RMB (US$ 350.24 billion) in
2004, about 21,3% of the GDP, which is way higher than the 10% of developed
countries. (China’s Ministry of Commerce)
� There are around 700.000 logistic companies in China though 16.000 officially
registered.
� Logistics in China’s industrial production takes almost 90% of the whole
production cycle time and 40% of general production costs. (United Nation
Development Program)
� Road transport account for 73% of all freight movements. China has now
the second road network after the United States, with 1.8 million km of road
network (World Bank indicator 2006) with 4.600 new kilometers of expressways
every year. High quality roads only account 14% of the total road network (Asian
Development Bank).
� Cargo containerization is more than 70% in ports, less than 30% in rail
transport and less than 5% in road transportation (Volvo Trucks Asia).
CEIBS Port of Barcelona Chair of Logistics 3