chinese logistics industry

Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.

Source: Council of Supply Chain Management Professionalshttp://www.cscmp.org

What is Logistics

http://www.cscmp.org/

Evolutionary Timeline of logistics

1958 2012

Forrester (1958, 61)* Physical distribution

Bowersox (1969)* Integrated logistics

Haulihan (1985)* Supply chain mgt.

Zin & Bowerson (1988)* Concept of postponement

Lee et al. (1997)* Bullwhip effect

Bloemhof-Ruwarrd (1995)* Green supply chain

SC sustainabilityTop 3 SC challenges in the next 10 years as described by managers:Sustainability & CSRRisk management in global

logisticsEmerging markets

Modern Logistics in China

Concept of “Wu Liu”

Modern Logistics Industry Started from late 1990’s China’s logistics industry experienced rapid growth since

China’s opening up and reform in 1978. In 2007, the nation’s total social logistics value reached

RMB 74.8 trillion, up 25.5% over 2006 (mainly boosted by the logistics demand of industrial goods, imports and exports).


Understanding of modern Logistics by people Still a lot think logistics is transportation & warehousing

Logistics Human Resource By 2010, market demand for logistics professionals with

education of diploma or above: 300,000-400,000. People working in the industry that need training: >1 million Logisticians have been listed as among 12 professionals that are

in high shortage in China In Shanghai itself, there has been a shortage of Logistics

professionals as large as 500,000.

History

1949-1979 Planned Economy Period Transport and warehousing were mainly done by wholesalers

and merchant transport & warehousing companies, among which wholesalers totaled 80% of market share.

1980-Mid 1990’s Innovation Period Manufacturers and retailers started to build their own

warehouses and fleets. Transport & warehousing companies began to provide

services directly to manufacturers. Government started experiment of logistics parks.

Chinese Logistics Industry-History and Structure

History (continued)

Mid 1990’s-Now Modern Logistics With foreign investment coming into China who also

brought in modern logistics principles and network systems and increased market competition, more and more manufacturing companies realized the importance of logistics.

At the same time, more and more joint venture 3PL companies and private logistics companies appeared in the market.

Some manufacturing and merchant enterprises started to turn towards logistics outsourcing. This has implied the start of modern logistics industry in China.


Structure

GovernorsMinistry of Commerce Ministry of RailwayMinistry of CommunicationCivil Aviation AdministrationCustoms General Administration State Administration of TaxationThe Ministry of Public SecurityState Administration for Industry and Commerce


Now combined as Ministry ofTransportation (rail, water, road)

Structure (continued)

Companies in itThird-party Logistics Companies In-house Logistics Division in Manufacturing or Merchant

CompaniesLogistics Education and Research OrganizationsLogistics Equipment and Facility CompaniesLogistics Information Service and Consulting CompaniesLogistics Real Estate Investors


Types of 3PLs in China

Central Policies

Current Policies Transport Related Policies Distribution Related Policies Foreign Investment Policies Taxation Policies Import & Export Policies Custom’s Regulations Inspection Regulations, etc.

Chinese Logistics Industry-Policies

Central Policies

Nine ministries jointly announced <recommendations on promoting the development of Chinese Logistics Industry>(2004).

It says government will improve logistics development environment from three areas: administration, taxation and regulation of market system. It also announced 7 measures to be executed. National Development & Reform Commission, 13 government ministries,

2 associations: Ministerial Associate Meeting System (2005).

Logistics has been set to be one of the 10 strategic industries that need to be greatly developed (2009).


Municipal Policies

Shang Hai: 10th. 5-year Plan (first of the kind) Logistics being one of the four strategic industries Three areas of logistics development:

• Port Logistics (airport, deep seaport) • Distribution Logistics• E-commerce Logistics

Three Logistics Parks• Pu Tuo Logistics Park • Pu Dong Airport Logistics Park• Waigaoqiao Bonded Zone


Shanghai, Shenzhen, Qingdao, Tianjin, Guangzhou, Xiamen, Ningbo and Dalian are listed among the worlds top 50 container ports.

Shanghai Port: freight volume in 2005 reached 443 million tons, exceeded Singapore Port for the first time.

Shanghai and the port

TOP 10 WORLD CONTAINER PORTS

A 20-year, US $14.5 billion project that aims to build 52 berths along 13-km waterfront with a draught of at least 15 meters at the Yangshan Deepwater Port

Shanghai and the port-Yang’shan Port

First Stage Completed on Dec. 10, 20051.6-km total length along seashore5 container berthsTotal investment 6 billion RMB 32.2 km sea bridge with 4 driveways

http://www.yangshanterminal.com/ysportal_english/index.htm

Shanghai and the port-Yang’shan Port

http://www.yangshanterminal.com/ysportal_english/index.htm

WTO Commitment From 2005, areas include road freight transport,

leasing, wholesaling and retailing of general products and their distribution, import & export truck transportation, etc. have been opened to overseas investors.

Chinese Logistics Industry-Market Openness

Chinese Logistics Industry-Market Openness

Multinational Logistics Companies’ Development in China

The Impact of Economic Crisis

The total value of social logistics achieved a fast growth of 26.7% in the first three quarters of 2008.

Impacted by the global financial crisis, China's logistics industry had dropped since Sep, 2008, especially the sharp growth drop of port cargo turnover.

The Impact of Economic Crisis

With the further influences of global economic crisis, China’s logistics industry will step in the period of slow growth and structural adjustment, which will also create new development opportunities for some 3PLs.

In conclusion, China’s logistics industry has great potential. The growth of total social logistics value will be no less than 20%.

chinese logistics industry

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