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Analysis of the characteristics and trends of the development status of China's logistics industry

Date: 2018-04-19
Browse times: 138

    Analysis of the characteristics and trends of the development status of China's logistics industry

As the arterial system of the national economy, the logistics industry connects all sectors of the economy and makes it an organic whole. Its development degree is one of the important indicators to measure the modernization degree and comprehensive national strength of a country.

During the rapid development of the 1980s, the problem of high logistics costs was concealed by the high gross profit margin of commodities. With the soft landing of the economy in 1997, enterprises were aware of the importance of cost control in the fierce competition, logistics as a resource and The third source of profit outside of manpower is receiving more and more attention.

The development status of China's logistics industry

Although it has skipped the stage of steady development of the logistics industry in the United States and Japan, compared with developed countries, China is still relatively backward in terms of infrastructure, management, theoretical research, logistics technology, and information technology. However, its market size is huge and its prospects are broad.

In recent years, China's economy has grown steadily and rapidly, providing a good macro environment for the rapid development of the logistics and supply chain management outsourcing service industry. According to the National Bureau of Statistics, the total logistics cost in China was 10.8 trillion yuan in 2015, an increase of 1.9% over the previous year.

The Logistics Industry Outlook Index (LPI) reflects the overall change in the economic development of the logistics industry, with 50% as the economic strength and weakness point. When it is above 50%, it reflects the economic expansion of the logistics industry. Below 50% reflects the economic contraction of the logistics industry. China's logistics industry outlook index has remained above 50% since January 2014, reflecting that China's logistics industry is still in a stable and rapid development cycle.

The proportion of logistics costs to GDP is one of the important indicators to measure the overall operational efficiency of the logistics industry. Although China's logistics industry has maintained a relatively fast growth momentum in recent years, the overall operational efficiency is still low. China’s index fell from 23.79% in 1991 to 16.9% in 2014. The proportion of logistics costs in the United States and Japan to GDP is stable at around 8%, and the difference between China and the United States and Japan is more than 8%.

At present, the development of China's logistics industry mainly presents the following characteristics:

First, logistics companies have increased their M&A efforts and accelerated industry integration. The low concentration of the logistics industry has led to fierce market competition, and the reduction of service prices is the main competitive means. The industry as a whole lacks differentiated products and services. One of the important reasons for the low concentration of the logistics industry is the low concentration of the logistics industry and the fierce price competition. In recent years, the concentration has been increasing, but the industry still lacks leading companies with pricing power.

Large-scale logistics companies can take advantage of economies of scale and play a timely, safe, and low-cost advantage in terms of network coverage and capacity allocation. Small business services have few functions, low degree of integration, weak management ability, weak competitiveness, weak information capability, and unreasonable economic order. They do not have the requirements of adapting to the dynamic operation of modern logistics and responding quickly.

Second, the scope of services continues to extend to both ends of the supply chain. At present, the linkage between China's logistics enterprises and the manufacturing industry is developing in depth and establishing a deep cooperative relationship. The scope of logistics services continues to extend to both ends of the supply chain.

Some logistics companies have expanded from third-party logistics that only undertakes a small amount of simple logistics function outsourcing to fourth-party logistics that fully participates in the manufacturing supply chain. In the upstream of the supply chain, we provide raw materials and parts procurement services, raw material logistics services, and raw material inventory management services for manufacturing companies. In the downstream of the supply chain, we provide production line back-end logistics processing services, finished product sales logistics services, parts and components, after-sales logistics services, etc., and the level of logistics professional services and benefits are significantly improved.

Since 2014, the industry has formed a group of leading supply chain management enterprises with certain scale and international competitiveness. At the same time, the national policy strongly supports and encourages and guides more logistics enterprises to extend the service scope to both ends of the supply chain.

Third, general logistics and professional logistics differentiation. In recent years, the trend of generalization and professional differentiation in the logistics industry has become increasingly obvious, and professionalization has gradually become the development direction of logistics enterprises. The trend of logistics to specialization is determined by demand. Enterprises are increasingly demanding to reduce logistics costs. By optimizing internal logistics management, cost savings can increase corporate profits, but by optimizing supply chain management to reduce costs. The professional ability is very demanding and requires the professionalization of logistics services.

Compared with professional logistics, general logistics has less dependence on customers and a larger market size, but the competition is relatively more intense. For some enterprises, there are few special requirements in the logistics process. Compared with professional logistics, general logistics has the characteristics of lower customer threshold, less requirements for its own resources and more cost advantages. The differentiation of general logistics and professional logistics is conducive to providing more suitable self-development services for enterprises with different logistics needs.

The development trend of China's logistics industry

The supply chain management industry is a typical light asset, high-tech modern service industry. Supply chain management companies use integrated professional capabilities and their own integration capabilities to provide tailor-made integrated solutions for customers through in-depth research on different industry operating modes. Combine single, decentralized customs declaration, transportation, warehousing, trade, settlement services, etc. into supply chain management service products, realize the “four streams” of business flow, capital flow, information flow and logistics, and save costs and value for customers.

The unique business model of the supply chain management industry requires supply chain management companies to have the following capabilities:

First, professional competence across disciplines, regions, and industries. Inter-disciplinary capabilities, that is, vertical flow of business activities, capital flow, information flow, and logistics, have the professional ability to provide solutions at each single level. Cross-regional capabilities, that is, horizontally across regions and even different countries, different systems and different legal frameworks, have the expertise to remove barriers and implement established programmes in different regions. Cross-industry capabilities, that is, a deep understanding of different industries, different customers in the same industry, different types of business models, and the ability to tailor solutions to the individual needs of customers.

Second, integration and operational capabilities. Supply chain management services are different from ordinary logistics services. Supply chain management companies only invest in key nodes in the supply chain, do not rely on large-scale fixed assets investment to seek output, but emphasize the integration of existing resources at various levels, in supply chain management. Under the guidance of the solution, we provide customers with a full range of services, which requires the companies to have strong integration and operational capabilities.

Third, information system support capabilities. The supply chain management integration service has the characteristics of large-scale, cross-domain and multi-level three-dimensional integration. Information transfer also exhibits characteristics such as multilateralism, crossover, and synchronization. Information flow is a key element in supply chain management. The information system required by the enterprise is equipped with advanced technology, distinct functional layers and efficient coordination to meet business needs.

The value creation of supply chain management is reflected in shortening customer transaction time, reducing transaction costs, improving the overall operational efficiency of enterprise supply, production and sales, and helping enterprises to improve their response speed in response to frequently changing market demands and fierce market competition.


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