China Hand: Easier moving
China has made great strides in improving its transport infrastructure, but operational efficiency in the logistics sector remains poor. While the government is taking action to cut toll fees, logistics costs remain high as a result of a fragmented distribution network and diverse local regulations, often with an eye to protecting local business interests. Attempts to boost the domestic consumer market will be helped by a more efficient logistics sector.
Despite significant improvements in infrastructure over the past decade, China’s logistics efficiency has not improved much. Most of the country’s estimated 700,000 logistics firms are single-truck operators, and to date there is no single trucking firm that can provide services to every city and village in China. The US, despite having a similar geographical size and far larger economy, has only around 7,000 operators, and Japan less than 10,000. Although the infrastructure is mostly in place across the country, it is still virtually impossible for a truck to take a load from one end of the country to the other without local interference. Cities often require local licences.
Logistics players are burdened by high costs. The ratio of total logistics costs to GDP, a reflection of logistics efficiency, remained high at 17.8% in 2011, compared with 8.5% in the US. Improvements have been gradual since 2006, when the ratio was 18.3%.
Read the full article15.03 kB