china logistics market: moving north | an aranca infographic
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Compiled by: Mayur Varandani
China’s logistics market : Moving northChina’s logistics market is estimated to grow at around 10% year-on-year (yoy) and reach around 195 trillion Yuan in 2013, primarily driven by improved services, growing industrialization, expanding domestic retail market and continued government support
Good time for growth…Recent expansion activities by foreign and local players, and continued government support toward improvement of logistics services has further driven the growth of logistics industry in the country.
The manufacturing sector remains key to China’s economic development. The logistics value of industrial products is estimated to account ~91.4% share of the total value in 2013.
Estimated CAGR of China’s total logistics value 2008–13E (Tn Yuan)16.7%
Estimated share of transportation cost in the total logistics value (2013)
China logistics prosperity index, LPI (April–December, 2013)*
KEY CHALLENGES
51.3%
2008 2009 2010 2011 2012 2013E
2008 2009 2010 2011 2012 2013E
97
125
158
177
195
90
Source: China Federation of Logistics & Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
Source: China Federation of Logistics & Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
Source: China Federation of Logistics & Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
Note: An LPI reading above 50 indicates overall expansion in the logistics sector; below 50 indicates overall contraction.Source: China Federation of Logistics & Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
12.7%
34.7%
52.6% 55.3% 53.5% 53.0% 52.1% 51.3%
32.9% 33.8% 35.0% 35.1% 36.2%
11.8% 12.7% 12.0% 12.8% 12.5%
Transportation Cost Inventory Cost Management Cost
Quarter 2013
LPI
April ‘13
54.8
July ’13
52.4
Oct ’13
53.6
Dec ‘13
52.4
Infrastructure development projects are largely undertaken in coastal areas. Inland areas still lag the appropriate infrastructure.
Warehouses in China are relatively sub-standard and do not meet the international standards. Also, poor warehouse layout design and insu�cient material handling equipment have a�ected the e�ciency of operations.
High toll fees imposed by the government for recovering construction costs of roads and bridges has further a�ected the industry’s growth.
Although there is an increasing number of graduates in logistics and transport, the supply of skilled labor still remains a key challenge for the industry.
A fragmented marketChina’s logistics market is fragmented with a large number of logistics enterprises. Road transport enterprises account for the largest share of the logistics market, in terms of the number of enterprises (790,000 during 2011–12).
A long way to go…Although China’s economic growth has been driven by increasing demand for logistics services, the country’s logistics capabilities still remain at an early stage of development when compared to other developed economies like the US and the European Union.
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