Contemporary Logistics in China: Interconnective Channels and Collaborative Sharing [1st ed.] 978-981-13-7815-7;978-981-13-7816-4

Table of contents :
Front Matter ....Pages i-v
Development of China’s Logistics Market (Xiaomei Jiang)....Pages 1-28
Logistics Facilities and Technological Development (Fan Qin, Zhenyi Zhang)....Pages 29-46
Development of Transportation Logistics in China (Jun Liu)....Pages 47-70
Development Status of China’s Manufacturing Logistics (Weihua Liu, Ling Wang)....Pages 71-95
Development of Commerce Logistics in China (Jianhua Xiao)....Pages 97-118
Development of Agricultural Products Logistics in China (Zhijuan Chen)....Pages 119-142
Service Models and Innovation of China’s Highway Freight Platforms (Zhilun Jiao, Yujing Huang)....Pages 143-160
Development and Innovation of the Belt and Road Cross-Border Logistics Service System (Jinglei Yang)....Pages 161-187
China’s Logistics Development and Prospect Under the Sharing Economy (Xiang Li)....Pages 189-212

Citation preview

Current Chinese Economic Report Series

Xiang Li Shao-ju Lee Bing-lian Liu Ling Wang Editors

Contemporary Logistics in China Interconnective Channels and Collaborative Sharing

Current Chinese Economic Report Series

The Current Chinese Economic Reports series provides insights into the economic development of one of the largest and fastest growing economies in the world; though widely discussed internationally, many facets of its current development remain unknown to the English speaking world. All reports contain new data, which was previously unknown or unavailable outside of China. The series covers regional development, industry reports, as well as special topics like environmental or demographical issues.

More information about this series at http://www.springer.com/series/11028

Xiang Li Shao-ju Lee Bing-lian Liu Ling Wang •

•

•

Editors

Contemporary Logistics in China Interconnective Channels and Collaborative Sharing

123

Editors Xiang Li Logistics Research Center College of Economic and Social Development Tianjin, China

Shao-ju Lee Logistics Research Center College of Economic and Social Development Tianjin, China

Bing-lian Liu Logistics Research Center College of Economic and Social Development Tianjin, China

Ling Wang Logistics Research Center College of Economic and Social Development Tianjin, China

ISSN 2194-7937 ISSN 2194-7945 (electronic) Current Chinese Economic Report Series ISBN 978-981-13-7815-7 ISBN 978-981-13-7816-4 (eBook) https://doi.org/10.1007/978-981-13-7816-4 © Springer Nature Singapore Pte Ltd. 2019 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Contents

1 Development of China’s Logistics Market . . . . . . . . . . . . . . . . . . . . . Xiaomei Jiang

1

2 Logistics Facilities and Technological Development . . . . . . . . . . . . . Fan Qin and Zhenyi Zhang

29

3 Development of Transportation Logistics in China . . . . . . . . . . . . . . Jun Liu

47

4 Development Status of China’s Manufacturing Logistics . . . . . . . . . Weihua Liu and Ling Wang

71

5 Development of Commerce Logistics in China . . . . . . . . . . . . . . . . . Jianhua Xiao

97

6 Development of Agricultural Products Logistics in China . . . . . . . . . 119 Zhijuan Chen 7 Service Models and Innovation of China’s Highway Freight Platforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Zhilun Jiao and Yujing Huang 8 Development and Innovation of the Belt and Road Cross-Border Logistics Service System . . . . . . . . . . . . . . . . . . . . . . . 161 Jinglei Yang 9 China’s Logistics Development and Prospect Under the Sharing Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Xiang Li

v

Chapter 1

Development of China’s Logistics Market Xiaomei Jiang

Year 2017 witnessed an auspicious domestic and international development environment for China’s logistics. The world economy had fully recovered, and the global trade growth had rebounded significantly. China’s economy continued its steady growth at a rate higher than what was officially expected earlier that year. Chinese Government made concerted efforts to improve the quality of economic development through in-depth implementation of the supply-side structural reform and active promotion of green economic development. In this context, China’s overall scale of logistics expanded steadily, the share of total social logistics expense in GDP declined, and the logistics industry was characterized by significant innovation, integration, and intelligent and green development. This Chapter consists of three sections. Section 1.1 introduces the domestic and international environment for the development of China’s logistics industry in 2017. Section 1.2 describes the development of the overall size of China’s logistics market in 2017, including the total value of social logistics, the total expense of social logistics, the freight volume and freight turnover, the cargo throughput and container throughput of ports, the cargo and mail throughput in civil airports, and the business volume of express industry. Section 1.3 summarizes the major characteristics of China’s logistics market in 2017.

X. Jiang (B) College of Management, Tianjin Normal University, Tianjin, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_1

1

2

X. Jiang

1.1 Environment for China’s Logistics Development 1.1.1 Full Recovery of the World Economy and Trade 1.1.1.1

General Growth in the Global Economy

According to the report issued by the United Nations in December 2017, as crisisrelated fragilities and the adverse effects of other recent shocks gradually subsided, the global economy achieved general growth in 2017, with the economy of about twothirds of the countries worldwide growing faster than the previous year. This had been the first time since 2010 when the world saw a synchronized recovery. In addition, East and South Asia remained as the most dynamic and fastest-growing regions in the world, with economic growth accounting for nearly half of the world’s total growth. The Chinese economy alone contributed about one-third of global growth during the year (UN 2017). According to statistics from the IMF in January 2018, the world economy grew by 3.7% in 2017, the best in the past 10 years. Developed economies grew by 2.3% overall, with the US, the Euro zone and Japan growing faster than the previous year. Emerging markets and developing economies grew by 4.7% overall, with China and India maintaining a higher growth. Russia and Brazil ended their negative growth of two previous consecutive years. Table 1.1 shows the economic growth of major economies in the world for 2013–2017.

Table 1.1 Economic growth of major economies in the world for 2013–2017 (%) 2015

2016

World economic growth

2013 3.3

3.4

3.1

3.2

3.7

Developed economies

1.3

1.8

1.9

1.7

2.3

United States

2.2

2.4

2.5

1.5

2.3

−0.5

0.9

1.5

1.8

2.4

Euro zone

2014

2017

Japan

1.6

0.0

0.6

0.9

1.8

Emerging markets and developing economies

4.7

4.6

4.0

4.4

4.7

China

7.7

7.4

6.9

6.7

6.8

Russia

2.2

0.6

−3.7

−0.2

1.8

India

7.8

7.3

7.3

7.1

6.7

Brazil

2.5

0.1

−3.8

−3.5

1.1

South Africa

2.2

1.5

1.3

0.3

0.9

Source Compiled from the World Economic Outlook (Jan. 2014, Jan. 2015, Jan. 2016, Jan. 2017, Jan. 2018), published by IMF

1 Development of China’s Logistics Market

3

Table 1.2 Growth rate of world trade for 2014–2017 (%) 2014

2015

2016

2017

Volume of world merchandise trade

2.7

2.5

1.8

4.7

Export: developed economies

2.1

2.3

1.1

3.5

Developing and emerging economies

2.7

2.4

2.3

5.7

Import: developed economies

3.4

4.3

2.0

3.1

Developing and emerging economies

2.4

0.6

1.9

7.2

Source WTO. Strong trade growth in 2018 rests on policy choices. https://www.wto.org/english/ news_e/pres18_e/pr820_e.htm, 2018-04-12 30 25 20

12.10

12.04

13.71

2013

12.46

10.45

10.49

14.39

14.13

13.85

15.33

2014

2015

2016

2017

15 10 5 0

Year Export(Trillion RMB)

Import(Trillion RMB)

Fig. 1.1 China’s total value of import and export for 2013–2017. Source Compiled from the China Statistical Bulletin of National Economic and Social Development (2017), published by the National Bureau of Statistics of China

1.1.1.2

Significant Rebound in Global Trade Growth

According to statistics from the WTO in April 2018, mainly driven by cyclical factors, particularly increased investment and consumption expenditure, world merchandise trade volume was increased by 4.7% in 2017, the strongest growth since 2011. Asia was responsible for much of the recovery of world merchandise trade in 2017 on both the export and import sides, which contributed 51% of the total increase on the export side, and 60% on the import side. Table 1.2 shows the growth rate of world trade for 2014–2017. In the context of increasing global economic growth, steady domestic economic growth, and steady advancement of the Belt and Road Initiative, China’s foreign trade growth rebounded sharply after declining for two previous years. The total import and export volume of goods was 27.79 trillion RMB in 2017, growing by 14.2% from the previous year. China remained as the largest exporting and second largest importing nation in 2017, whose export and import share in the global goods market were 12.8% and 10.2%, respectively (WTO 2018). Figure 1.1 shows China’s total value of import and export for 2013–2017.

4

X. Jiang 90

82.71

80

9.4

50

9.7

40

21.94

27.02

31.95

10.6

64.40

12

48.93 54.04 41.30

34.91

59.52

10

9.5

8 7.9

7.8

7.3

6.9

6.7

6.9

4

20

2

10 0

6

%

30

12.7

14

68.9

Growth Rate

Trillion RMB

60

GDP

70

74.41 14.2

16

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

0

Year

Fig. 1.2 China’s GDP and growth rate for 2006–2017. Note GDPs are computed per current price of each year; growth rates are computed based on constant price of the respective base year (i.e., 2005, 2010, 2015, each is respectively the base year for its succeeding four years.) Source Compiled from the China Statistical Yearbook (2017), and the China Statistical Bulletin of National Economic and Social Development (2017), both published by the National Bureau of Statistics of China

1.1.2 Steady Growth of China’s Economy 1.1.2.1

Economic Growth Better Than Expected

In 2017, China’s nominal GDP was 82.71 trillion RMB, accounting for 15% of the world’s total. The growth rate is 6.9% year-on-year at constant price, higher than the 6.7% growth rate of 2016 and the 6.5% target projected by the Government at the beginning of the year. Figure 1.2 shows China’s GDP and growth rate for 2006–2017.

1.1.2.2

Speedy Growth in High-Tech Industry and Emerging Service Industry

China’s high-tech industry and equipment manufacturing industry achieved rapid growth in 2017. Investments in high-tech and equipment manufacturing industry increased by 17.0% and 8.6%, respectively, over the previous year, representing 2.8 and 4.2 percentage points increase respectively over that of the previous year. The added value of high-tech and equipment manufacturing industries increased by 13.4% and 11.3%, respectively, over the previous year, showing 6.8 and 4.7 percentage points respectively higher than that of the industrial enterprises above the designated size.1 Modern emerging service industry represented by the Internet and 1 Industrial

enterprises above the designated size refer to industrial enterprises with annual main business revenue of 20 million RMB and above.

1 Development of China’s Logistics Market

5

related services also grew significantly higher than traditional service industry. From January to November in 2017, of service enterprises above the designated size,2 Internet information services increased 43.3% in operating revenue, digital content services by 34.0%, information technology consulting services by 37.5%, and data processing and storage services by 43.6%.

1.1.2.3

Soaring Upgrade Trend in Household Consumption

In 2017, the income of China’s residents continued to increase. The median of annual per capita disposable income of Chinese residents was 22.4 thousand RMB, representing a real growth of 7.3%. The continual increase in income had promoted a rapid upgrading of consumer demands in China, resulting in the boom in the consumption of high quality products and products of convenience. According to the Ministry of Commerce, the total amount of online sales in 2017 increased by 32.2% to 7.18 trillion RMB. The total amount of online sales of physical goods increased by 28.0% to 5.48 trillion RMB; smart wearable devices, high-end home appliances, fresh food, medicine and health care products, grew by more than 70% in online sales (Ministry of Commerce 2018). Huge business opportunities brought on by the upgrading of household consumption are driving profound changes in China’s production and distribution models. The manufacturing sector is stepping up the efforts to improve product quality and service quality, accelerate the R&D of innovative products, and explore the production of small-batched and customized products. The wholesale and retail sector is focusing on shortening the supply chain, and developing various new retail models driven by big data, and integrating the online and offline sales and distribution channels. With the increasing fragmentation of supply and the ubiquity of retail scenarios, business enterprises have more stringent requirements for the coverage, flexibility and terminal service capacity of logistics service networks.

1.1.3 The Chinese Government Promotes High-Quality Economic Development 1.1.3.1

In-Depth Implementation of the Supply-Side Structural Reform

New progress has been made in the five major tasks of the supply-side structural reform.3 China has actively supported the transformation and upgrading of key 2 Service enterprises above the designated size refer to service enterprises with 50 or more employees

at the end of the year or an annual revenue of 10 million RMB and above. major tasks of the supply-side structural reform include cutting excess capacity, destocking property inventory, deleveraging corporate operations, relieving corporate burdens, and improving weaker links.

3 Five

6

X. Jiang

industries and accelerated the exit of enterprises and production capacity that failed to comply with the required standards for environmental friendliness and energy consumption. In 2017, 140 million tons outdated steel capacity was eliminated; 65 million kw coal power production capacity was purged; 250 million tons coal capacity was slashed. As of the end of November 2017, the asset-liability ratio for industrial enterprises above the designated size decreased by 0.5 percentage points. As of the end of 2017, the total area of tract houses for sale decreased by 1.1 trillion square meters. The total production cost of enterprises was reduced by some 1 trillion RMB for the year. Investments in agriculture, water conservancy, and ecological protection and environmental governance had grown notably.

1.1.3.2

Solid Promotion of Major Regional Development Strategies

Remarkable progress had been made in the Belt and Road development. In 2017, the “First Belt and Road Forum for International Cooperation” was held in Beijing, marking the establishment of the highest-standard official international dialogue mechanism under the framework of the Belt and Road development. Throughout the year, nearly 50 new cooperation agreements under the Belt and Road framework were signed, encompassing about 20 new international organizations and more than 20 new countries along the Belt and Road. With the rapid infrastructure construction in the New Asia-Europe Continental Bridge, the China-Indochina Economic Corridor, the China-Mongolia-Russian Economic Corridor and the China-Pakistan Economic Corridor, there were 19 new national-level overseas economic and trade cooperation zones and 2,330 new enterprises that settled in the cooperative parks along the Belt and Road. The trade volume between China and countries along the Belt and Road increased appreciably, with a total volume of imports and exports reaching 7.37 trillion RMB, an increase of 17.8% over the previous year. The Coordinated Development of Beijing-Tianjin-Hebei Region had been vigorously advanced. In April 2017, China announced the plan to create the Xiongan New Area. The New Area located in the central part of Hebei Province with a planned area of 1,770 square kilometers, is expected to further promote the Coordinated Development of Beijing-Tianjin-Hebei Region, explore new models for optimal development in densely populated areas, and improve the quality and level of regional economic development. The Xiongan New Area is 105 km away from both Beijing and Tianjin; it’s another historic and landmark new area following the Shenzhen Special Economic Zone and the Shanghai Pudong New Area. Positioned as the kernel receptive area for alleviating Beijing’s non-capital functions, it will develop into a new city with green, low-carbon, intelligent, high-tech industries and high-quality public services. The Yangtze River Economic Belt had made positive progress in green development and regional logistics integration. In response to the pronounced issues of ecological environment protection in the Yangtze River Economic Belt, eleven provinces and cities along the Yangtze River have accelerated the promotion of water pollution control, water ecology restoration, and water resources protection, expedited

1 Development of China’s Logistics Market

7

the green transformation and upgrading of traditional manufacturing, and carried out concerted actions for chemical pollution remediation along the Yangtze River. Besides, those provinces and cities are also actively promoting the Yangtze River trunk channel system governance, hub interconnectivity, river and ocean combined transportation, and direct customs clearance. Hence integrated regional logistics integration has been effectively advanced.

1.1.3.3

Active Promotion of Green Economic Development

China’s energy consumption structure had been further improved. In 2017, China continued to actively promote the green and efficient development and utilization of coal, implement green mining technologies, and strengthen the supervision of commercial coal quality. At the same time, measures were taken to strictly control coal consumption in key areas of air pollution prevention, increase the share of clean heating, raise the utilization of high-quality clean oil products, and vigorously promote the use of new energy vehicles. The annual coal consumption accounted for 60.4% of total energy consumption, down by 1.6 percentage points over the previous year; consumption of clean energy such as natural gas, hydropower, nuclear power and wind power accounted for 20.8% of total energy consumption, up by 1.3 percentage points over the previous year. Air pollution control had been deepened. First, large-scale national environmental protection inspections were carried out. In 2016, the Ministry of Environmental Protection implemented the pilot environmental protection supervision in Hebei Province. In 2017, it established 15 new Central Environmental Inspection Teams to fully cover the environmental inspection tasks in 31 provinces across China. In 2016–2017, the Central Environmental Inspection Teams accepted 135,000 cases of violation. Second, air pollution control was vigorously promoted in Beijing-TianjinHebei Region and the surrounding areas. As these areas were mostly air-polluted in winter, the Ministry of Environmental Protection required relevant cities in this region to achieve negative growth in total coal consumption, fully implement off-peak-hour production in industries including cement and foundry, and strengthen the vehicle pollution control in 2017. It also required these cities to prohibit all ports in the Bohai Rim from receiving coal transported by diesel trucks, to transport coal by railway, and implement mass logistics transportation from industrial enterprises solely during off-peak hours as of the late September 2017. Third, special national high-emission vehicle management actions were taken. The Ministry of Environmental Protection encouraged all provinces and cities to implement stricter national emission standards and oil quality standards for newly-manufactured vehicles, focused on strengthening the supervision of production and sales of heavy-duty diesel vehicles, and fully implemented the use of low-sulfur diesel fuel in China.

8

X. Jiang 30.0 252.8

200

26.2 24.0

197.8 15.0

150

20.0

158.4 15.0

125.4

100 59.6

0

25.0

229.7

177.3 19.5

50

213.5 219.2

75.2

89.9 96.7

10.0

12.3 9.8

7.4

9.5

7.9 5.8

6.1

6.7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

%

250

Growth Rate

Total Value of Social LogisƟcs (Trillion RMB)

300

5.0 0.0

Year

Fig. 1.3 Total value and growth rate of social logistics for 2006–2017. Note Growth rates for 2006–2009 are nominal growth rates; that for 2010–2017 are real growth rates. Source Compiled from the National Logistics Operations Bulletin for 2006–2017, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

1.2 Overall Scale of China’s Logistics Market 1.2.1 Total Value of Social Logistics4 In 2017, the total value of social logistics was 252.8 trillion RMB, up by 6.7% on the basis of the constant price, and 0.6 percentage points higher than the same period of last year. As for its composition, the total logistics value of industrial goods was 234.5 trillion RMB, a slight decrease in share from that of previous year; the total logistics value of imported goods was 12.5 trillion RMB, a small increase in share from that of previous year. The total logistics value of agricultural products was 3.7 trillion RMB, the total logistics value of renewable resources was 1.1 trillion RMB, and the total logistics value of goods for institutes and residents was 1.0 trillion RMB. Figure 1.3 shows the total value and the growth rate of social logistics for 2006–2017. Table 1.3 shows the composition of total value of social logistics for 2013–2017.

4 Total value of social logistics is composed of five parts: (1) total value of commodities of farming,

forestry, animal husbandry and fishing products in social logistics field (“total logistics amount of agricultural products” for short); (2) total value of commodities of industrial products in social logistics field (“total logistics amount of industrial products” for short); (3) total logistics value of import goods; (4) total value of commodities of renewable resources in social logistics field (“total logistics amount of renewable resources” for short); (5) logistics value of goods from institutes and residents (including luggage in railway and air transport, parcels and letters in mailing service, various donations from all sectors of the society and handling, carrying and transportation of goods incurred by moving activities of institutes and residents.).

197.8

4.2

100

2.1

6.1

213.5

4.6

12.0

196.9

100

2.2

5.6

92.2

Share (%)

219.2

4.8

10.4

204.0

Value (trillion RMB)

2015

100

2.2

4.7

93.1

Share (%)

229.7

5.2

10.5

214.0

Value (trillion RMB)

2016

100

2.2

4.6

93.2

Share (%)

252.8

5.8

12.5

234.5

Value (trillion RMB)

2017

100

2.3

4.9

92.8

Share (%)

Source Compiled from the National Logistics Operations Bulletin for 2013–2017, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

Total

Agricultural products logistics, etc.

12.1

Imported goods logistics

91.8

Value (trillion RMB)

181.5

2014

Value (trillion RMB)

Share (%)

2013

Industrial products logistics

Indicator

Table 1.3 Composition of total value of social logistics for 2013–2017

1 Development of China’s Logistics Market 9

10

X. Jiang

1.2.2 Total Expense of Social Logistics In 2017, China’s total expense of social logistics increased by 9.2% to 12.1 trillion RMB. Driven by the transformation and upgrading of the economic structure and the continual improvement of efficiency in logistics services, the share of total social logistics expense in GDP had declined for five consecutive years since 2012 to 14.6% in 2017. In terms of its composition, transportation expenses increased by 10.9%, equaling 7.6 percentage points higher than the previous year. Storage expenses increased by 6.7%, equaling 5.4 percentage points higher than the previous year. Administration expenses increased by 8.3%, equaling 2.7 percentage points higher than the previous year. Table 1.4 shows the total logistics expense, the increment and the share in GDP for 2006–2017. Table 1.5 shows the composition of total expense of social logistics in 2017.

Table 1.4 Total logistics expense, increment and share in GDP for 2006–2017

Year

Total expense for social logistics cost (trillion RMB)

Increment from previous year (%)

Share in GDP (%)

2006

3.8

13.5

18.3

2007

4.5

18.2

18.4

2008

5.5

16.2

18.1

2009

6.1

7.2

18.1

2010

7.1

16.7

17.8

2011

8.4

18.5

17.8

2012

9.4

11.4

18.0

2013a

10.2

9.3

16.9

2014

10.6

6.9

16.6

2015

10.8

2.8

16.0

2016

11.1

2.9

14.9

2017

12.1

9.2

14.6

Source Compiled from the National Logistics Operations Bulletin for 2006–2017, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing a Note In 2013, the Ministry of Transport adjusted the statistical scope of the freight volume and freight turnover, and the National Bureau of Statistics re-adjusted the total social logistics costs in 2013 and its share in GDP according to the freight volume and freight turnover under the new statistical scope. Values in this table are adjusted data

1 Development of China’s Logistics Market

11

Table 1.5 Composition of total expense of social logistics in 2017 Indicator

Value (trillion RMB)

Increment from previous year (%)

Share (%)

Total expense of social logistics

12.1

10.9

100

Including: transportation expense

6.6

10.9

54.6

Storage expense

3.9

6.7

32.2

Management expense

1.6

8.3

13.2

Source Compiled from the National Logistics Operations Bulletin for 2017, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

1.2.3 Freight Volume and Freight Turnover In 2017, growths of China’s freight volume and freight turnover had recovered, especially the growth in freight volume. The nation generated a freight volume of 47.94 billion tons, up by 9.3%, which is 4.2 percentage points higher than the previous year. It completed 19.61 trillion tons-km of freight turnover, up by 5.1%, which is 0.5 percentage points higher than the previous year. Except for waterway transport which kept a low growth, growths for railways, highways, pipelines and civil aviation transport all rebounded significantly. Table 1.6 shows the annual nationwide freight volume, freight turnover, and growth rate for 2006–2017. Table 1.7 shows the freight volume, freight turnover and growth rate of different transportation modes in 2017.

1.2.4 Cargo Throughput and Container Throughput of Ports In 2017, China’s ports achieved a cargo throughput volume of 14.01 billion tons, representing a steady growth of 6.1%, which is markedly higher than those in 2015 and 2016. The volume consists of a foreign trade cargo throughput of 4.09 billion tons, up by 6.3%. Container throughput of all ports was 238.38 million TEUs, up by 8.3%, which is 4.3 percentage points higher than the previous year, and a new high over the past five years. Table 1.8 shows the nationwide cargo throughput and growth rate of port for 2006–2017. Figure 1.4 shows the nationwide container throughput and growth rate for 2006–2017.

12

X. Jiang

Table 1.6 Annual nationwide freight volume, freight turnover, and growth rate for 2006–2017 Year

Freight volume

Freight turnover

Volume (billion ton)

Growth rate (%)

Freight turnover (trillion ton-km)

Growth rate (%)

2006

20.37

9.4

8.88

10.7

2007

22.76

11.7

10.14

14.2

2008

25.86

13.6

11.03

8.8

2009

28.25

9.2

12.21

10.7

2010

32.42

14.7

14.18

16.1

2011

36.97

14.1

15.93

12.3

2012

41.00

10.9

17.38

2013

40.99

–

16.80

2014

41.67

1.7

18.17

8.2

2015

41.76

0.2

17.84

−1.8

2016

43.87

5.1

18.66

4.6

2017

47.94

9.3

19.61

5.1

9.1 –

Note In 2013, the Ministry of Transport adjusted the statistical scope of the freight volume and freight turnover. In 2015, the Ministry of Transport adjusted the accounting method and the statistical scope of the freight volume and freight turnover. Source Compiled from the China Statistical Yearbook (2017), and the China Statistical Bulletin of National Economic and Social Development (2017), both published by the National Bureau of Statistics of China Table 1.7 Freight volume, freight turnover and growth rate of different transportation modes in 2017

Indicator

Volume

Total freight volume (billion ton)

47.94

9.3

Among which: Railway

Growth rate (%)

3.69

10.7

Highway

36.80

10.1

Waterway

6.66

4.3

Civil aviation (megaton)

7.06

5.7

Pipeline

0.79

7.3

Freight turnover (trillion ton-km)

19.613

5.1

Among which: Railway

2.696

13.3

Highway

6.671

9.2

Waterway Civil aviation (billion ton-km) Pipeline

9.746

0.1

24.350

9.5

0.476

13.4

Source Compiled from the China Statistical Bulletin of National Economic and Social Development (2017), published by the National Bureau of Statistics of China

1 Development of China’s Logistics Market

13

Table 1.8 Nationwide cargo throughput and growth rate of port for 2006–2017 Year

National cargo throughput of port

Share of cargo throughput for foreign trade

Volume (billion ton)

Growth rate (%)

Volume (billion ton)

Growth rate (%)

2006

5.57

14.8

1.61

18.1

2007

6.41

15.1

1.85

14.6

2008

7.02

9.6

1.99

7.4

2009

7.66

9.0

2.18

9.8

2010

8.93

16.7

2.50

14.7

2011

10.04

12.4

2.79

11.4

2012

10.78

7.3

3.06

9.7

2013

11.77

9.2

3.36

9.9

2014

12.45

5.8

3.59

6.9

2015

12.75

2.4

3.66

2.0

2016

13.20

3.5

3.85

5.1

2017

14.01

6.1

4.09

6.3

Source Compiled from the Statistical Bulletin of Transportation Industry for 2006–2017, published by the Ministry of Transport 30 238.38

250 23.8

19.4

22.3

200 12.1

163.67

177.47

190.21

202.44

211.56

220.05

20 15

146.13

150 114.44

128.31 122.4

10

12.0 8.4

100 93.61

25

7.2

6.4

8.3 4.5

4.0

50

5 0

Growth Rate %

Container Throughput (Million TEU

300

-5 -4.6

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

-10

Year

Fig. 1.4 Nationwide container throughput and growth rate for 2006–2017. Source Compiled from the Statistical Bulletin of Transportation Industry for 2006–2017, published by the Ministry of Transport

X. Jiang 18

16.18

16

15.1

19.4

14 12

19.0

11.3 14.3

10

8.61

8.83

25.0

11.58 11.99

12.59

13.56

14.1

20.0 15.0

9.46

8 7.53

10.0

6 4

7.8

7.0

2 0

2.6

2.5

3.6

4.9

7.2

7.1

Growth Rate %

Cargo & Mail Throughput (Million Tons)

14

5.0

3.9

0.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Fig. 1.5 Nationwide cargo and mail throughput and growth rate in civil airports for 2006–2017. Source Compiled from the Statistical Bulletin on the Productivity of National Airports for 2006–2017, published by the Civil Aviation Administration

1.2.5 Cargo and Mail Throughput in Civil Airports In 2017, China’s cargo and mail transportation maintained a steady and rapid growth. Annual cargo and mail throughput was 16.18 million tons, up by 7.1%. There were 52 airports, each with an annual cargo and mail throughput of more than 10 thousand tons, one more over the previous year. Airports in Beijing, Shanghai and Guangzhou accounted for 49.9% of all domestic airports in terms of cargo and mail throughput, which is 0.3 percentage points over the previous year. Figure 1.5 shows the nationwide cargo and mail throughput and growth rate in civil airports for 2006–2017.

1.2.6 Business Volume of Express Industry In 2017, business volume of express industry in China exceeded 40 billion items, representing a growth of 28.1% over the previous year, which is a slower growth compared with those of previous years. There was no big change in the structure of express business. Business volume for non-local, international and Hong Kong, Macao and Taiwan increased slightly, while local business volume declined slightly. Figure 1.6 shows the business volume and growth rate of express delivery enterprises in China for 2008–2016. Figure 1.7 shows the business volume by categories of express delivery for 2008–2017.

15

45

70.0% 40.06

40

60.0%

61.6%

35

57.0%

30

31.80

54.8%

51.9%

50.0% 48.0%

51.4%

40.0%

25 20.67

20

30.0% 13.96

15 10

23.2%

28.1%

25.9%

22.8%

9.19 5.69

5 0

1.51

1.86

2.34

2008

2009

2010

20.0% 10.0%

3.67

2011

Growth Rate %

Business Volume of Express Enterprises (Billion Items)

1 Development of China’s Logistics Market

2012

2013

2014

2015

2016

2017

0.0%

Year

Fig. 1.6 Nationwide business volume of express delivery enterprises and the growth rate for 2008–2017. Source Compiled from the Statistical Bulletin of Postal Service Industry for 2008–2017, published by the State Post Bureau 120 100

7.0

6.1

5.6

3.5

3.2

2.8

2.3

2.1

2.0

2.1

66.4

70.4

71.5

74.2

73.7

72.3

72.3

71.8

74.3

74.8

26.6

23.5

22.9

22.3

23.1

24.9

25.4

26.1

23.7

23.1

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

RaƟo (%)

80 60 40 20 0

Year

Within-city

Out-of-city

InternaƟonal and HongKong,Macao and Taiwan

Fig. 1.7 Distribution of business volume of express delivery by category for 2008–2017. Source Compiled from the Statistical Bulletin of Postal Service Industry for 2008–2017, published by the State Post Bureau

16

X. Jiang

1.3 Main Characteristics of China’s Logistics Market 1.3.1 Accelerated Adjustment of the Supply and Demand Structure in the Logistics Market 1.3.1.1

Rapid Pace of Differentiation and Upgrading of Logistics Demands

In 2017, China’s economy was shifting into an era of moving from the phase of high-speed growth to a phase of high-quality development. China’s industries accelerated towards high-end, intelligent, green and service-oriented development. China’s household consumption was transformed from subsistence consumption to quality consumption. As a result, demands in China’s logistics market entered a stage of rapid differentiation and upgrading. The demand differentiation in the logistics market is mainly reflected in the trend of falling logistics demands for high energy-consuming products and bulk goods, the rapid growth in logistics demands for high-tech manufacturing and equipment manufacturing, and the sustaining rapid growth in logistics demands for sub-sectors close to upgraded household consumption, including online retail, fresh food cold chain, cross-border e-commerce, auto and medicine. The demand upgrading in the logistics market is mainly reflected in the increasing demands for integrated logistics services in the supply chain and specialized logistics services, the increasingly fragmented and diversified demands for consumer logistics, the timeliness of logistics services for consumers, and the continually raised requirements for service quality.

1.3.1.2

Changing Demand Propelled the Full-Scale Upgrade of Logistics Supply System

Changes in demand drove the rapid upgrading of China’s logistics network. With the joint efforts of the government and the enterprises, China’s weaker fields such as cross-border logistics, regional logistics, urban distribution and rural logistics network were being developed more rapidly. Transportation infrastructures, overseas logistics parks, China Railway Express, and overseas warehouses along the Belt and Road were advanced in an orderly manner. Traffic and Customs integration, regional cooperation between ports and enterprises in key regions such as Beijing-TianjinHebei and the Yangtze River Economic Belt were increasingly promoted. Transportation infrastructures in the Western and rural areas were continually improved, distribution outlets in urban areas were enhanced, and the number of logistics outlets in rural areas were increasing. Changes in demand pushed forward the upgrading of China’s logistics facilities and equipment. The number of high-standard general-purpose warehouses, as well as specialized logistics facilities such as pharmaceutical warehouses, cold storage warehouses, refrigerated trucks, and hazardous materials transport vehicles

1 Development of China’s Logistics Market

17

were increased rapidly. Meanwhile, the warehouses and transportation vehicles were becoming larger, more intelligent, more standardized, and greener. Changes in demand also drove China’s logistics sector to speed up its innovation. With the infusion of capital and the new-generation information technology introduced to the logistics sector, a number of new operations and new models for logistics had been developed. For example, some logistics companies strengthened their synergy with manufacturing industries to provide supply chain integration services and customized services for the manufacturing industry; emerging services such as cloud-based warehouse services, integration services of warehousing and distribution, vehicle-to-goods matching, pallet sharing and crowd-sourcing delivery were constantly springing up; innovative transportation organization models such as non-truck operation carrier, swap trailer transport, and multimodal transport had begun to improve the transport efficiency; the quality of express and expedited delivery was constantly upgraded. Changes in demand further drove the integration and cooperation within China’s logistics industry. In 2017, there were many M&As and cooperation incidents in China’s shipping, express delivery, distribution, highway vehicle-to-goods matching, and food and beverage take-outs. It shows that developing and growing through integration and cooperation has become an obvious development feature and trend of China’s logistics industry to adapt to the rapid changes in logistics demands and the customers’ increasing logistics service requirements.

1.3.2 Capital Investment Promoted the Transformation and Upgrading of Chinese Logistics Industry 1.3.2.1

Establishment of Numerous Logistics Industry Funds

In 2017, a number of large logistics enterprises, financial enterprises and real estate enterprises in China had, individually or through cooperation, established numerous logistics industry investment funds; the targeted sub-sectors included logistics real estate, logistics M&As and logistics venture capital to boost the transformation and upgrading of China’s logistics. In the logistics real estate field, Cainiao Network and China Life Insurance (Group) Co. jointly invested 8.5 billion RMB to establish the Logistics Storage Fund in June 2017, which was a move designated to improve Cainiao’s existing logistics storage facility. In September, China COSCO Shipping Corp., Ltd. and the Henan Provincial Government invested 10 billion RMB to establish a logistics industry development fund, which was expected to bolster to 60 billion RMB in 3–5 years for investing in projects such as Henan Free Trade Zone and Zhengzhou Airport Experimental Zone. In October, Vanke Real Estate Co., Ltd. brought together some financial and logistics companies in investing 6 billion RMB to establish a professional logistics real estate investment fund. In November, Jiangsu Suning Logistics Co., Ltd. and

18

X. Jiang

a real estate fund management company in Shenzhen invested 30 billion RMB to establish a logistics real estate fund. As to logistics M&A and innovation investment, in April 2017, China Merchants Securities and Haier Group invested 10 billion RMB to establish a logistics industry M&A fund. In November, Noblelift Intelligent Equipment Co., Ltd. invested 1 billion RMB to establish a smart warehousing logistics and intelligent manufacturing industry M&A fund.

1.3.2.2

Venture Capitals Were Drawn to the Logistics Hotspots

In 2017, venture capital continued to invest in logistics start-ups. According to incomplete statistics, there were more than 100 investment and financing cases in logistics field over the year, which mainly encompassed hot fields including intra-city distribution services, fresh food cold chain, logistics network platform, intelligent logistics, and cross-border e-commerce logistics. Part of the projects invested by venture capital with large investment sizes are shown in Table 1.9.

Table 1.9 Part of the logistics projects invested by venture capital in 2017 Subfield of logistics

Financing enterprise

Financing amount

Intra-city distribution Services

Huolala

130 million USD

FlashEx

100 million USD and a round of undisclosed strategic investment

Fresh cold chain Logistics network platform

Intelligent logistics

Cross-border e-commerce logistics

Yunniao logistics of Beijing

100 million USD

Missfresh of Beijing

500 million USD

JiuyeSCM of Shanghai

200 million RMB

Yimidida of Shanghai

300 million RMB

Yunmanman of Jiangsu

120 million USD

Fuyoukache of Beijing

250 million RMB

Cainiao network

5.3 billion RMB

Hive Box of Shenzhen

2.5 billion RMB

Whalehouse of Shenzhen

700 million RMB

Quicktron of Shanghai

200 million RMB

Geek+ of Beijing

500 million RMB

Top Ideal SCM of Guangdong

200 million RMB

Youkeshu Group of Shenzhen

400 million RMB

1 Development of China’s Logistics Market

1.3.2.3

19

Stock and Bond Markets Financed Large Logistics Companies

A number of large logistics enterprises acquired financing by listing or issuing stocks or bonds in domestic and foreign capital markets. The funds raised were mainly used to upgrade logistics facilities and equipment, improve logistics service networks, and supplement working capital. In early 2017, two large express delivery companies, Yunda Express and SF Express were listed on the Shenzhen Stock Exchange. In July, East Top, a company providing supply chain services, was listed on the Shenzhen Stock Exchange. In August and September, two logistics companies located in Guangzhou and a logistics company in Shanghai were listed on the Shanghai Stock Exchange. In September, a third-party logistics company BEST LOGISTICS was listed on the New York Stock Exchange to obtain financing of 450 million USD. In December, a less-than-carload transport company, Deppon Logistics, was approved for listing on the stock market. In December, a logistics park operator, TransfarZhilian, raised some 4.92 billion RMB by issuing non-public shares for highway logistics port network construction and logistics supply chain projects. In December, SF Express publicly issued approximately 500 million USD overseas bonds to supplement its working capital and investment.

1.3.3 Accelerated Development of New Models and New Operations 1.3.3.1

Preliminary Results of Innovation of Freight Transport Organization

In recent years, the Chinese Government has endeavored to support the development of innovative models such as non-truck operation carrier, swap trailer transport and multimodal transport by means of pilot projects, as the main ways to lower logistics costs, promote the logistics industry’s transformation and upgrading, save energy, and reduce emissions. In 2017, these efforts began to bear fruit. With respect to non-truck operation carrier, in 2017, 281 pilot enterprises integrated nearly 90 thousand freight vehicles, and developed multiple innovative models including “e-commerce + non-truck brokerage,” “park base + non-truck brokerage,” and “logistics platform + non-truck brokerage.” Through the integration of non-truck operation carrier platforms, the monthly average mileage of one single pilot enterprise increased by nearly 50% as compared with the traditional freight model, the average waiting time was reduced from 2 or 3 days to 8–10 h, meaning a 6 to 8% reduction of transaction costs as compared with the traditional freight model. The efforts resulted in improved vehicle efficiency and reduced transportation costs. At the same time, the non-truck carrier transportation model also promoted the tech-

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X. Jiang

nological progression of the logistics companies, and elevated the overall level of information construction in the logistics field (China Automotive News 2017). In terms of swap trailer transport, as of the end of 2017, a total of 209 swap trailer transport projects nationwide were advanced in depth, with an average mileage utilization of the pilot enterprises’ vehicles reaching 80%. Swap trailer transport has gradually evolved from simple operations of a single enterprise and in a single line into multiple models such as mutual swap trailer transport among multiple enterprises and online swap trailer transport. Swap trailer transport not only improves vehicle utilization but also promotes energy conservation, emission reduction, and the transformation and upgrading of the transportation industry. In terms of multimodal transport, the Ministry of Transport and the National Development and Reform Commission have identified 46 demonstration projects, of which the first 16 demonstration project enterprises have cumulatively operated more than 140 demonstration routes and completed the multimodal transport of 600 thousand TEUs of containers (He Liming 2018). China Railway Corporation regards the development of multimodal transport of containers as its key direction; coastal and inland port enterprises are actively exploring multimodal transport and continually enhancing the multimodal transport service functions of ports. Non-truck carriers, non-vessel carriers, and large freight forwarding companies are actively engaging in the multimodal transport service sector; traditional freight logistics companies are accelerating their pace of transition to multimodal transport operators, and to expand their multimodal transport business (China Communications and Transportation Association Intermodal Branch 2018a).

1.3.3.2

“Internet + Logistics” Business Model Growing Stronger

China’s “Internet + Logistics” model have been booming since 2013. By 2017, a number of innovative companies had emerged, and a lot of new models including “vehicle-to-goods matching,” “intra-city services,” “cross-border e-commerce,” “logistics equipment sharing” had been developed. These innovative enterprises have become the leading and the most dynamic enterprises in China’s logistics industry. Typical representatives of these enterprises are shown in Table 1.10.

1.3.4 Integration and Cooperation of Logistics Industry 1.3.4.1

Mixed Shareholding Reform for State-Owned Large Logistics Enterprises

In September 2016, the National Development and Reform Commission (NDRC) launched the pilot projects of mixed ownership reform for state-owned enterprises in key sectors such as electricity, oil, railways, and civil aviation. This is a move to improve the corporate governance structure of the state-owned enterprises and

1 Development of China’s Logistics Market

21

Table 1.10 China’s logistics unicorn companiesa in 2017 No.

Company name

Business area

Valuation (billion USD)

Established in

1

Cainiao network

E-commerce logistics service platform

20

2013

2

e-Shang redwood Ltd.

Logistics real estate

3.2

2011

3

Manbang group

Highway vehicle-to-goods matching platform

2

2013

4

Wellong Etown

Vehicle-to-goods and ship-to-goods matching platform

1.54

2007

5

Hive box

Intelligent express cabinet

1.385

2015

6

Ane logistics

LTL Express joining network

1.3

2010

7

Yunche

Highway vehicle-to-goods matching platform

1.26

2014

8

Dada-JD Daojia

Crowdsourcing delivery

1.2

2016

9

YH Global

Integrated supply chain management services

1.0

2012

10

LaLaMove

Intra-city vehicle-to-goods matching platform

1.0

2013

11

Yunniao logistics

Intra-city express delivery

1.0

2014

Source Torch Center, Ministry of Science and Technology and Great Wall Enterprise Strategy Research Institute (2018), 2017 China Unicorn Enterprise Development Report [EB/OL]. http:// www.chinagazelle.cn/news/detail/1d7b8c18616d4c9882c89dc0aa002c41 a China’s Logistics Unicorn Companies refer to (1) companies with corporate capacity, registered in China; (2) established for no more than 10 years (established in 2007 and henceforth); (3) having obtained private equity investment and not yet listed; and (4) having a business valuation of 1 billion USD and above

enhance their core competitiveness by bringing in non-public capital including private capital and foreign capital. In June 2017, China Eastern Airlines became one of the first state-owned enterprises to be included in the pilot mixed shareholding reform; its subsidiary, Eastern Airlines Logistics, took in Legend Holdings, GLP Investment (Shanghai) Co., Ltd., Deppon Logistics, and Greenland Financial Holdings Group to own 45% of the shares of Eastern Airlines Logistics. For this mixed shareholding reform, Eastern Airlines Logistics invested 1.845 billion RMB state-owned capital and effectively

22

X. Jiang

attracted 2.255 billion RMB non-state-owned capital investment. Built upon its aviation logistics and freight business, the new Eastern Airlines Logistics integrated the functions of private capital-funded third-party logistics, logistics real estate, crossborder e-commerce, and the traditional cash-on-delivery industries.

1.3.4.2

Mergers and Acquisitions of Logistics Enterprises

In 2017, a number of mergers and acquisitions occurred in express delivery, shipping, highway vehicle-to-goods matching, and food and beverage take-outs. Some logistics enterprises expanded rapidly after the merger and acquisition, and increased the degree of concentration of the logistics industry. For express delivery, in January 2017, Suning Logistics Group invested 4.25 billion RMB to acquire Tiantian Express, expanded its warehousing, trunk line capacity, and improved its terminal network within a short time. In July, China Post and Cainiao Network invested in Sposter, a smart express box company. In September, Hive Box acquired another smart express box company, myeslife, for 810 million RMB. In November, YTO Express acquired On Time Logistics, which has 52 self-built sites in 17 countries and regions around the world, is a major trading partners for China and important national markets along the Belt and Road. Strategic acquisition of On Time Logistics is a direct reflection of YTO Express’ overseas strategy. In the shipping arena, in July 2017, Cosco Shipping Holdings Co., Ltd. and Shanghai International Port Group acquired Orient Overseas (International) Limited for 42.87 billion RMB. After this acquisition, Cosco Shipping Holdings Co., Ltd. had a total container fleet capacity of 2.9 million TEUs and operated more than 400 fleets. For urban delivery, in August 2017, 58 Suyun, a subsidiary of 58.com Inc., merged with GoGoVan, an intra-city freight and logistics company in Southeast Asia. The new company provides professional delivery and moving services for corporate and individual users in mainland China, Hong Kong, Singapore, Taiwan, Korea, and India. For highway vehicle-to-goods matching, in November 2017, Yunmanman and huochebang, the two largest companies of its kind, merged into Manbang Group. As of the end of July 2017, huochebang had 4.5 million registered vehicles and 880 thousand registered consignors, with 1,000 direct service outlets established in 360 cities across China; Yunmanman had 1 million registered consignors and 4 million vehicle owners to conduct business in 315 cities nationwide, with a daily transaction volume of some 1.5 billion RMB. As the two companies both hold advantage in online operations, information matching, offline logistics parks, and value-added truck services, a win-win conglomeration is achieved through the merger. For food and beverage take-outs, in August 2017, Ele.me announced its merger of BaiduWaimai. Ele.me, being China’s largest domestic livelihood platform, has advantages in delivery capacity based on its 3 million registered couriers. BaiduWaimai has the leading AI delivery technology in the industry. The combination of the two promotes the integration of the industry’s delivery resources and technologies, in a way to help improve the logistics services to customers.

1 Development of China’s Logistics Market

1.3.4.3

23

Strengthened Cooperation Between Large Logistics Enterprises

In 2017, a number of logistics enterprises cooperated with their supply chain partners and peer enterprises to achieve complementary advantages, improve their logistics operations efficiency and spread the risks. In December 2017, CMST Development Co., Ltd. signed a strategic cooperation agreement with JD Logistics. CMST Development Co., Ltd., with a storage area of approximately 10 million square meters and an annual throughput of 50 million tons, has over 70 logistics distribution centers and operating entities in more than 40 kernel cities and port cities across China. In the future, the two companies will carry out in-depth cooperation on warehousing, transportation capacity, logistics technology, and logistics product development. CMST Development Co., Ltd. will also seek to improve the utilization efficiency of its own storage resources as well as its supporting capacity in warehousing planning, system implementation and supply chain finance, by relying on the know-how JD Logistics accumulated over the previous ten years in logistics planning, management experience, and professional technical abilities. In response to the growing demands for cross-border e-commerce, JD Group cooperated with a Japanese company YAMATO HOLDINGS, and Alibaba cooperated with another Japanese company Nippon Express, to improve the logistics efficiency of imported goods from Japan and enhance the shopping experience of Chinese consumers. SF Express and UPS established a joint venture in Hong Kong, so as to enable both sides develop and deliver international logistics products, focusing on cross-border trade and expanding the global markets. This joint venture company will help the two well-known logistics companies supplement each other in terms of network and scale, improve efficiency, and provide customers with more diverse choices and better services. In October 2017, five express and financial companies including STO Express, YTO Express and Jiangxi Financial Holding Group invested 1 billion RMB to establish a logistics insurance company that mainly provides various freight transportation insurance, auto insurance, property insurance, liability insurance and accident insurance. This insurance company is a move of these express delivery enterprises to share and compensate the industry’s unique risks and thus promote the healthy development of their main business.

1.3.5 Exploration and Application of Intelligent Technologies in Logistics 1.3.5.1

Increasingly Broad-Based Application of Big Data Logistics Analysis

G7 Networks, a leading domestic intelligent IoT company, has built an intelligent logistics fleet transportation management system, whereby to help customers achieve

24

X. Jiang

more refined management of all transportation aspects by collecting and mining massive real-time data on vehicle location, speed, parking time, fuel consumption, driving behaviors, goods temperature, etc. As of the end of 2017, the company had attracted over 50 thousand clients from express delivery, e-commerce, transportation of hazardous chemicals, cold chain logistics, auto logistics, bulk transportation, and urban distribution, and linked up over 700 thousand vehicles; the system has fully improved the timeliness, safety and cost management of customers’ transportation services. Based on massive amount of information on vehicles and goods, a logistics platform company CMS TZhiyun provides valuable analytical data such as distribution data, flow data and the volume of hot goods to consignors, drivers and other logistics customers through intelligent logistics big data analysis. In 2017, the platform achieved a total trading amount of 6.5 billion RMB, which helped consignors save logistics costs by nearly 600 million RMB. Cainiao Network promotes the intelligent packaging algorithm in logistics operations. By quickly calculating the dimensions and volume of the merchandise, it helps the packaging job site select the most suitable box type, in accordance with the intelligent box design algorithm to save more than 15% of the packaging consumables.

1.3.5.2

Accelerated Pace of the Commercialization of Intelligent Logistics Equipment

According to statistics from the State Post Bureau, as of the end of 2017, there were 31.5 thousand public express delivery service stations nationwide, with over 206 thousand sets of intelligent express cabinets put into operation, which had helped increase the rate of delivery success by 7%. Intelligent express cabinet put into operation were mainly provided by Sposter and Hive Box. There were 77 thousand sets of express delivery cabinets from Sposter covering more than 200 cities, providing an average daily delivery of 2 million items; there were 74 thousand sets of express delivery cabinets from Hive Box, with an average daily delivery of 5 million items. For unmanned warehouses, in October 2017, JD’s unmanned warehouse in Shanghai was put into use. Covering a floor area of 40 thousand square meters, it is officially the world’s first full-process unmanned logistics center in operation. Robots with various functions and features throughout the entire process achieve system-wide automation in warehousing, storage, packaging, and sorting, entirely via intelligent equipment. For UAVs (Unmanned Aerial Vehicles), during the “6.18” promotion period in 2017, Jingdong Group delivered over 1,000 small-sized goods in a number of rural towns with UAVs. In December, SF Express experimented with UAV delivery in Yunnan Province, delivering repair parts to a base for Huawei in the remote mountain area. In addition, SF Express will also expand the deployment of UAVs in the transport of medical materials, delivery of materials in disaster areas, and the transport of maintenance parts for mining machinery.

1 Development of China’s Logistics Market

1.3.5.3

25

Accelerated R&D and Testing of Artificial Intelligence Technologies

In September 2016, Cainiao Network launched the outdoor intelligent delivery robot “Little G,” and had been testing it on delivering parcels in Alibaba’s park since then. Assisted by certain key intelligent technologies such as autonomous perception, intelligent recognition and motion planning, Little G can load and deliver 10 parcels or so at a time. Jingdong Group is accelerating the development and testing of its outdoor delivery robots too. With the use of binocular sensors to optimize the routes, the robots can automatically avoid obstacles, and move all the way free from human guidance. They are mainly used in communities, office buildings and villas. Its latest third-generation small delivery robot can hold 5 pieces of express parcels, carrying up to 100 kg, and delivering 18 parcels in one hour; when fully charged, it can travel up to 20 km at a time. In 2017, SF Express cooperated with Tencent Holdings Ltd. in exploring the application of image recognition to achieve automatic input of handwritten waybills, for the purpose of reducing the large number of data entry clerks. Based on the Augurs intelligent algorithm, G7 Networks automatically collects and determines any abnormal state during the transportation of goods, and warns the fleet manager to pre-handle potential problems through the alarming signals and reporting systems, thus significantly improving the operational efficiency of the fleet and guaranteeing the safety of the fleet assets.

1.3.6 Fully Accelerated Green Logistics Development 1.3.6.1

Optimized Freight Transport Structure and Organization

In 2017, Chinese governments gradually reduced the share of heavy-duty diesel trucks in long-distance transport of bulk cargos by vigorously improving the key role of railway in long-distance transport of bulk materials, and developed multimodal transport to promote energy saving and emissions reduction in logistics. Coal transportation at the Bohai Sea port was transferred from highway transport to railway transport. In 2017, China strengthened the air pollution management in Beijing-Tianjin-Hebei region and the surrounding areas, strengthened the sewage treatment, prohibited the receipt of diesel-transported coal at the Bohai Sea port, and required that all 70 million tons of coal transported annually at the Bohai Sea area be handled by railway transport. Multimodal transport pilot projects begin to show its effect. In 2017, Yingkou Port and Qingdao Port received more than 700 thousand TEUs of containers by waterway/railway combined transport; Ningbo-Zhoushan Port and Qingdao Port grew over 60% in waterway/railway combined transport. From January to September in 2017, 16 of the first multimodal transport pilot enterprises reduced their energy con-

26

X. Jiang

sumption by about 400 thousand tons of standard coal, lowering the logistics cost by more than 5.5 billion RMB, when compared with those via general highway transport. As 30 of the second batch of multimodal transport pilot projects are put into operation, multimodal transport will evidence a more significant subsequent effect (China Communications and Transportation Association Intermodal Branch 2018b).

1.3.6.2

Elimination of Out-Dated Vehicles and Introduction of New Energy Logistics Vehicles

Old and out-dated freight vehicles and ships are further eliminated. In 2017, all diesel trucks that failed to meet the national standards for gas, solid and liquid emissions were abolished; 297 old ships along the coast had exited from the market, including 154 dry bulk ships, 35 container ships, 107 oil tankers, and one chemical tanker (Ministry of Transport 2018). As of the end of 2017, the average tonnage of China’s trucks measured 8.6 tons per vehicle, an increase of 0.6 tons per vehicle over the previous year; the average net load of national water transport vessels was 1,770.3 tons/ship, an increase of 107.4 tons/ship over the previous year. New energy logistics vehicles are manufactured and put to use. For production, according to statistics from the MIIT, in 2017, a total of 244.7 thousand new energy logistics vehicles (including vans and postal vehicles) were produced. New energy logistics vehicles have become the first choice of usage for urban delivery. An electric logistics vehicle rental company in Henan operates more than 2,000 electric logistics vehicles throughout many cities. JD Logistics announced that it has introduced 1,000 new energy vehicles and put them into operation in more than 10 large and mediumsized cities including Beijing and Shanghai; it plans to replace hundreds of thousands of vehicles in Jingdong Logistics with new energy vehicles in the next five years. Large retailers such as Gome Holdings Group and Vip.com and express delivery giants such as SF Express and STO Express are starting to use new energy vehicles in large numbers. Cainiao Network announced its ACE project, a future green intelligent logistics vehicle plan, in a move to cope with the demands for 1 million new energy logistics vehicles.

1.3.6.3

Significant Progress Made in Green Packaging

E-commerce and express delivery enterprises are promoting the development of green e-commerce logistics by adopting shared packaging and degradable packaging, and implementing packaging standardization, volume reduction and use of product packaging. For example, in 2017, at least 50 thousand shared express delivery boxes were used in Suning Logistics Group to save 6.5 million express delivery cartons. Yunda Express adopted a large number of degradable plastic bags and reusable bags, and experimented with the pilot project of recycling cartons. As for recycling cartons, Jingdong Group provided 100 thousand turnover boxes; it pioneered cooperating with a third-party professional recycling organization to create a new recycling system for

1 Development of China’s Logistics Market

27

logistics packaging. In 2017, e-commerce companies were active in promoting packaging reduction and using product packaging directly instead of the added delivery packaging by e-commerce firms; such moves has resulted in the reduction of more than 3 billion packages.

1.4 Summary This chapter introduces the domestic and international development environment and the overall size of China’s logistics in 2017, as well as the main characteristics of its logistics market. In terms of the logistics development environment, in 2017, the world economy had a full recovery, and global trade growth rebounded significantly. China’s domestic economy continued its steady growth. The Government made efforts to improve the quality of economic development, optimize the economic structure, accelerate the development of high-tech industries, and upgrade household consumption. All these factors have laid a firm foundation for the sound development of China’s logistics market. Overall, China’s logistics market showed a positive development trend in 2017. With a steady growth in the total value of social logistics, the share of total social logistics expense in GDP declined. The freight volume, the container throughput of ports and the cargo and mail throughput in civil airports increased notably; the business volume of express industry maintained a rapid growth. Driven by multiple factors such as economic transformation, upgraded household consumption, favorable government policies, technology upgrading and capital investment, demands in China’s logistics market are rapidly differentiated and upgraded, and leading to an overall upgrading of the logistics supply system. China’s logistics field is still a hot spot for investment. With increased amount of capital invested in the logistics field, access channels and sub-sectors are also further diversified. Propelled by steady demand and supported by national policies and the next-generation network information technology, China’s logistics industry continued to flourish in 2017, highlighted by new models in freight transport organization and the new business formats derived from “Internet+.” At the same time, bolstered by market demands and favorable government policies, integration and cooperation actions in logistics are advancing rapidly. A number of large and medium-sized logistics companies have attracted new capital and integrated new resources through shareholding reform, M&As, and enhanced cooperation, to achieve rapid growth and expansion. Intelligent logistics is the development trend of global logistics and a key content of, and approach to, the transformation and upgrading of China’s logistics. In 2017, China’s logistics industry continued to increase the exploration and application of intelligent technologies; new developments in big data logistics analysis, unmanned warehouses, UAVs, and outdoor delivery robots fueled the improvement of the logistics efficiency and service levels. Green logistics is an important part of the green development of China’s economy. In 2017, China’s logistics industry

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optimized the freight transport structure and freight organization, sped up the elimination of old transportation vehicles, introduced new energy logistics vehicles, and actively adopted green packaging, and thus substantiated further advancement of green logistics.

References China Automotive News (2017). Latest release on non-truck carrier. [EB/OL]. http://auto.gasgoo. com/News/2017/10/09093034303470024442C104.shtml, 09 Oct 2017. China Communications and Transportation Association Intermodal Branch (2018a). Review of China’s multimodal transport development in 2017 and its outlook. http://www.zgsyb.com/html/ content/2018-03/20/content_813342.shtml, 20 Mar 2018. China Communications and Transportation Association Intermodal Branch (2018b). Review of China’s multimodal transport development in 2017 and its outlook. http://www.zgsyb.com/html/ content/2018-03/20/content_813342.shtml, 20 Mar 2018. He Liming (2018). Promote the high-quality development of logistics and strive to build a logistics power. http://www.chinawuliu.com.cn/lhhkx/201801/27/328223.shtml, 27 Jan 2018. Ministry of Commerce (2018). Regular press conference of the Ministry of Commerce. [EB/OL].http://www.mofcom.gov.cn/xwfbh/20180125.shtml, 2018-01-25. Ministry of Transport (2018). Nearly 300 old ships exit from the market early in 2017. http://k.sina. com.cn/article_1644649053_62075a5d001004m37.html, 19 Mar 2018. UN (2017) World Economic Situation and Prospects 2018. https://www.un.org/development/desa/ dpad/wp-content/uploads/sites/45/WESP2018_Global_PR_C.pdf, 11 Dec 2017. WTO (2018) Strong trade growth in 2018 rests on policy choices.https://www.wto.org/english/ news_e/pres18_e/pr820_e.htm, 12 April 2018.

Chapter 2

Logistics Facilities and Technological Development Fan Qin and Zhenyi Zhang

This chapter aims to describe the progress made in the construction of China’s transportation infrastructures and logistic nodes in 2017, and present the latest development in China’s logistics facilities and logistics informationization and standardization. In 2017, China’s logistics equipment continued to promote its level of networking, intellectualization and greening. The “Five Vertical and Five Horizontal” 1 (5V5H) comprehensive transportation channels were completed. The number of logistics nodes was increased, especially in the construction of intelligent logistics parks and fully automatic warehouses accelerated. Logistics equipment continued to be improved toward automation, green development and sharing. Meanwhile, China was gradually constructing the cross-regional logistics service cloud platforms.As the Leading Group Office of Promoting the Building for the Belt and Road issued the “Action Plan for Connecting and Co-building the Belt and Road with Standards (2018–2020)” in the late 2017, the internationalization of China’s logistics standards was further accelerated. This chapter has four sections. Section 2.1 introduces the new progress made in the construction of China’s transportation infrastructures and integrated trans1 In November 2007, NDRC released the Mid-and-long-term Development Plan of Comprehensive Transportation Network, which stipulated that China to build the comprehensive transportation channels consisting of Five Vertical and Five Horizontal lines (5V5H) in 2006–2020. The five vertical channels include South-north Coastal Transportation Channel, Beijing-Shanghai Transportation Channel, Manzhouli-HK-Macao-Taiwan Transportation Channel, Baotou-Guangzhou Transportation Channel and Linhe-Fangchenggang Transportation Channel. The five horizontal channels include North in Northwest China Maritime Transportation Channel, Qingdao-Lhasa Transportation Channel, Continental Bridge Transportation Channel, Along-Yangtze-River Transportation Channel and Shanghai-Ruili Transportation Channel.

F. Qin (B) Business School, Nankai University, Tianjin, China e-mail: [email protected] Z. Zhang College of Economic and Social Development, Nankai University, Tianjin, China © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_2

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portation system in 2017. Section 2.2 describes the new characteristics of China’s logistics parks (centers) and storage facilities. Section 2.3 depicts the changes of holding quantity and technology in terms of China’s logistics vehicles and storage equipment in 2017. Section 2.4 discusses the new actions taken in China’s logistics informationization and standardization construction.

2.1 Transportation Infrastructures In 2017, China maintained its fast-paced construction of transportation infrastructures, resulting in a continued betterment of the road network structure. Transportation infrastructures in the Western region and rural areas continued to improve. The “Four Vertical and Four Horizontal” High Speed Railway Network2 was completed ahead of schedule and put into operation; inland waterways continued to increase their through capacity; port berths increased their sizes further. The “Five Vertical and Five Horizontal” (5V5H) comprehensive transportation channels were completed, and new progress was made in the construction of the international transportation corridors in Southeast Asia.

2.1.1 Highway Infrastructures 2.1.1.1

Scale and Structure of Highway Network

At the end of 2017, the total mileage of national highways was 4.77 million kilometers, an increase of 78.2 thousand kilometers over the previous year; the highway density was 49.72 km/100 km2 , an increase of 0.81 km/100 km2 over the previous year,3 as shown in Fig. 2.1. In 2017, the proportion of China’s graded highways in the total mileage of national highways reached 90.9%, up by 0.9 percentage points over the previous year. Of graded highways, 622.2 thousand kilometers were class II or above highways, an increase of 22.8 thousand kilometers over the previous year; 2 The

“Four Vertical and Four Horizontal” High Speed Railway Network refers to the four vertical and four horizontal passenger lines constructed as planned in the Mid-and-LongTerm Development Plan of Comprehensive Transportation Network (as adjusted in 2008) released in 2008 by the National Railway Administration of the People’s Republic of China. The four vertical lines include Beijing-Shanghai, Beijing-Wuhan-Guangzhou-Shenzhen, BeijingShenyang-Harbin (Dalian) and Shanghai-Hangzhou-Ningbo-Fuzhou-Shenzhen; the four horizontal lines include Xuzhou-Zhengzhou-Lanzhou, Hangzhou-Nanchang-Changsha-Guiyang-Kunming, Nanjing-Wuhan-Chongqing-Chengdu and Qingdao-Shijiazhuang-Taiyuan. 3 Note: Unless specified otherwise, all data in this section on transportation infrastructures in 2017 are drawn from the Transportation Industry Statistical Bulletin 2016, released by the Ministry of Transport of P.R.C., 30 Mar 2018.

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Fig. 2.1 Total highway mileage and highway network density for 2006–2017. Source Compiled from the China Statistical Yearbook for 2011–2017, published by the National Bureau of Statistics, the Statistical Bulletin of Highway and Waterway Transportation Industry (2006–2012), and the Transportation Industry Statistical Bulletin for 2013–2017, published by the Ministry of Transport of P.R.C.

this figure accounts for 13.0% of the total highway mileage, or 0.3 percentage points higher than the previous year. Class II or above highways were linked to 96.7% of the counties in China (Xinhuanet 2017). The expressway mileage reached 136.5 thousand kilometers, ranking No. 1 in the world, covering 97% of the cities and prefecture-level administrative centers having a population size of 200 thousand or more (Xinhuanet 2017). Meanwhile, the mileage of expressway lanes reached 604.4 thousand kilometers, an increase of 29.0 thousand kilometers over the previous year.

2.1.1.2

Highway Construction in the Western Region and Rural Areas

In 2017, China continued its highway construction in the Western region. A number of expressways began to open for use in Xinjiang, Qinghai and other Western provinces. In August, Gong He-Yu Shu Expressway, one of the main line of the national trunk line network, was opened, signifying the end of having no high-graded highway on the Qingnan Plateau of Qinghai Province. After that, Huashixia-Jiuzhi Expressway, the first green, cyclic, low-carbon highway in the Northwestern region, the Jiulongpo-Yongchuan Expressway, and the Chongqing Section of Wanzhou-Lichuan Expressway were completed in November and began operation in December. In 2017, Chongqing had expressway mileage exceeding 3,000 km, and 19 inter-provincial outbound channels of expressways (Central People’s Government of P.R.C. 2017). The total highway mileage in Qinghai Province broke through 80 thousand kilometers (Chinahighway.com 2018).

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In 2017, China’s rural highway construction continued to proceed. Investment in rural roads construction amounted to 473.13 billion RMB, a rise of 29.3% over that of the previous year. Newly constructed and reconstructed rural highway mileage was 289.7 thousand kilometers. The rural highway mileage was increased to 4.01 million kilometers, including 550.7 thousand kilometers of county roads, 1.16 million kilometers township roads, and 2.30 million kilometers of village roads. Nationwide, 99.99% of the townships (towns) and 99.98% of the established villages were accessible via highways.

2.1.2 Railway Infrastructures 2.1.2.1

Scale and Structure of Railway Networks

In 2017, the scale of China’s railway network continued to expand. By the end of 2017, the mileage of operating railways nationwide reached 127 thousand kilometers, a year-on-year increase of 2.4%. This included 25 thousand kilometers of operating high-speed railway mileage, which ranked No. 1 in the world, and covered more than 65% of the cities with a population size of 1 million or more (Xinhuanet 2017). The national railway network density was 132.2 km/10,000 km2 , an increase of 3.0 km/10,000 km2 over the previous year. In 2017, China further improved its railway network structure. By the end of 2017, mileage of double-tracked railways was 72 thousand kilometers, a year-onyear increase of 5.4%; the proportion of double-tracked railways was 56.5%, growing by 1.6 percentage points. Mileage of electrified railways was 87 thousand kilometers, a year-on-year increase of 7.8%; the proportion of electrified railways was 68.2%, rising by 3.4 percentage points over the previous year (Chnrailway.com 2018). Operating railway mileage in the Western region reached 52 thousand kilometers, up by 3.3% over the previous year. Figure 2.2 shows the total mileage of operating railways and growth rate of the Western Region for 2007–2017.

2.1.2.2

Coal Transportation Railway Channel

In 2017, a number of railways were newly-completed for coal transport which further enhanced China’s “west to east” coal transport capacity. In July, the Watang-Rizhao Railway, an important east-west coal transport channel was completed, opening a large coal transport channel between Shanxi and its surrounding provinces, and significantly increasing the outbound coal transport capacity of the central and southern parts of Shanxi. In October, the Duolun-Fengning Railway and the Fengning NorthTianqiao Railway, connecting central Inner Mongolia and the Beijing-Tianjin-Hebei area, were completed and put into operation, which improved the transport capacity of the sea-bound channel for coal in eastern Inner Mongolia.

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2.1.2.3

The “Four Vertical and Four Horizontal” High Speed Railway Network

In 2017, China’s “Four Vertical and Four Horizontal” High Speed Railway Network was put into use ahead of schedule. The Baoji-Lanzhou High-Speed Railway, the Xi’an-Chengdu High-Speed Railway, the Xi’an-Jiangyou High-Speed Railway, and the Shijiazhuang-Jinan High-Speed Railway were put into operation. The Shijiazhuang-Jinan High-Speed Railway opened in December marked the completion of the Four Horizontal in the “Four Vertical and Four Horizontal” High Speed Railway Network. The completion of China’s “Four Vertical and Four Horizontal” High Speed Railway Network has further released the freight capacity of China’s existing railways, playing a positive role in promoting the development of China’s railway logistics.

2.1.3 Waterway Infrastructure 2.1.3.1

Scale and Grading of Inland Waterway

In 2017, there was a slight decrease in the mileage of China’s inland waterways. By the end of 2017, the national inland waterway mileage was 127.0 thousand kilometers, a decrease of 80 km over the previous year, including a reduction of 26 km inYangtze River waterway. In 2017, although the proportion of China’s total graded inland-river waterways declined, the proportion of high-grade waterways continued to grow. By the end of 2017, the graded inland-river waterway mileage was 66.2 thousand kilometers, accounting for 52.1% of the total, down by 0.2 percentage points from the previous

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Year Fig. 2.3 Mileage of graded inland waterways and its proportion in total mileage for 2007–2017. Source Compiled from the Statistical Bulletin of Highway and Waterway Transportation Industry (2007–2012), and the Transportation Industry Statistical Bulletin for (2013–2017), published by the Ministry of Transport of P.R.C.

year. Of these waterways, there were 12.5 thousand kilometers of grade-III and above waterways, accounting for 9.8% of the total, up by 0.3 percentage points from the previous year; there were 30.8 thousand kilometers of grade-V and above waterways, accounting for 24.2% of the total, up by 0.3 percentage points from the previous year. Mileage of graded inland waterways and its proportion in total inland waterway mileage for 2007–2017 are as shown in Fig. 2.3.

2.1.3.2

Port Berths

In 2017, the number of China’s port berths continued to increase. By the end of 2017, China had 2,366 berths with capacity of 10 thousand tons and above, an increase of 49 over the previous year. There were 1,948 berths with capacity of 10 thousand tons and above in coastal ports, an increase of 54 over last year, and 418 berths with capacity of 10 thousand tons and above in inland-river ports, a decrease of 5 over the previous year. Figure 2.4 shows the number of port berths with capacity of ten thousand tons and above for 2007–2017. In 2017, China built, renovated or expanded 180 berths in inland-river ports, adding 65.97 million tons of throughput capacity, in which the throughput capacity of 10,000-ton and above berths were increased by 8.20 million tons. Meanwhile, China improved 590.38 km of inland-river waterway mileage. For coastal ports, 107 berths were built, renovated or expanded; the throughput capacity of ports were increased by 195.81 million tons, in which the 10,000-ton and above berths augmented new throughput capacity by 181.53 million tons. Figure 2.5 shows China’s added port throughput capacity for 2007–2017.

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2.1.4 Civil Airport In 2017, China had 229 certified civil airports (excluding Hong Kong, Macao and Taiwan, same below), which included 228 airports with regular flights scheduled among 224 cities, covering 88.5% of cities and 76.5% of counties in China (Xinhuanet 2017). Cities newly covered by regular scheduled flights are Lancang in Yunnan, Shache in Xinjiang, Huolingol in Inner Mongolia, Songyuan in Jilin, Baicheng in Jilin, Shangrao in Jiangxi, Chengde in Hebei, Shaoyang in Hunan, Wudalianchi in

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Xinjiang Region, 8.30%

North China, 15.28%

Northwest, 9.61%

Northeast, 11.35%

Southwest, 20.53%

Eastern China, 19.65% Central-South, 15.28% Fig. 2.6 Airport distribution by region in 2017. Source Compiled from the National Airport Productivity Statistical Bulletin 2017, published by the Civil Aviation Administration of China

Heilongjiang, and Jiansanjiang in Heilongjiang (CAAC 2018a). Airport distribution by region in 2017 is as shown in Fig. 2.6.4 On the construction of private logistics airports, in November, S.F. Holding Co., Ltd. confirmed that it would begin to build the S.F. Airport, China’s first private logistics airport, in Ezhou, Hubei. The completion of this private airport will further optimize the node layout of China’s express logistics and improve its efficiency.

2.1.5 Comprehensive Transportation Channels In 2017, China’s “Five Vertical and Five Horizontal” (5V5H) Comprehensive Transportation Channels were primarily completed, thus providing the vital assurance of a transportation network system for the coordinated development of logistics industry in different regions and the regional economic development of the Belt and Road and the Yangtze River Economic Belt. In addition, the construction of the Southeast Asia

4 In

the pie chart, the North China region includes Beijing, Tianjin, Hebei, Shaanxi and Inner Mongolia Autonomous Region; the Northeast China region includes Heilongjiang, Jilin and Liaoning; the East China region includes Shanghai, Jiangsu, Zhejiang, Shandong, Anhui, Fujian and Jiangxi; the Central-South China region includes Henan, Hubei, Hunan, Guangxi, Hainan and Guangdong; the Southwest China region includes Sichuan, Chongqing, Guizhou and Yunnan; the Northwest China region includes Shaanxi, Gansu, Ningxia and Qinghai; and the Xinjiang region refers to Xinjiang Autonomous Region.

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international transportation corridor continued to proceed in 2017, which improved the international logistics transportation capacity between China and the ASEAN countries.

2.2 Logistics Parks (Centers) and Warehousing Facilities In 2017, the number of China’s logistics parks (centers), warehousing facilities and other logistic nodes was further increased; the level of platformization, networking and automation at these nodes continued to improve. The construction of intelligent logistics parks (centers) was rapidly promoted, and several bonded logistics centers along the Belt and Road, the Yangtze River Economic Belt, and in the BeijingTianjin-Hebei Region were put into operation. Besides, the total warehousing area continued to expand, while fully automatic warehouses were rapidly implemented.

2.2.1 Development Status of Logistics Parks (Centers) 2.2.1.1

Intelligent Logistics Parks (Centers)

Intelligent logistics parks feature “nodal platform structure, intelligent park management and coordinated business services;” through system integration and platform integration with the use of mobile communication technologies such as sensors, RFID, wireless video transmission, GIS and GPS, intelligent logistics parks can achieve the interconnectivity of information from the government, logistics companies, manufacturing companies, financial institutions and other organizations, and the integration and optimization of logistics services. With the development of China’s intelligent logistics, the construction of intelligent logistics parks (centers) in China was notably accelerated in 2017; the initiation or initial operation of a number of intelligent logistics park projects elevated the development scale of intelligent logistics in China. For example, in August, Cainiao Network Tech Co., Ltd. signed a contract to build Gu’an Intelligent Logistics Science and Technology Park; in November, Dongguan International Intelligent Logistics Park in Guandong, built by 4PX International Express Co., Ltd. and Cainiao Network Tech Co., Ltd., was put into operation. In addition to the 16 existing “Asia No. 1” Logistics Centers in 11 cities including Beijing, Qingdao and Shanghai, JD.COM built another two “Asia No. 1” Logistics Parks in Chengdu and Dongguan in 2017.

2.2.1.2

Multimodal Transport Logistics Park (Center)

In 2017, as the construction of China’s multimodal transport parks (centers) was accelerated, a number of new multimodal transport parks (centers) were put into use.

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In the Eastern region, Shandong Jitie Heze Logistics Park, the largest multimodal transport logistics parks in southwestern Shandong, was put into use in May; as a regional commodity vehicle logistics base and a cold chain logistics base, its logistics capacity can cover North China, Central China and East China. In the Central region, Hunan Xiangzhong International Logistics Park Multimodal Transport Center was completed and put into operation in November. In the Western region, Guangxi Guilin West Railway Integrated Logistics Center was opened for operation in April, which enhanced the competitiveness of the export-oriented economy in Guangxi.

2.2.1.3

Bonded Logistics Centers

In 2017, a number of bonded logistics centers in China were put into operation, further enhancing the international logistics operations capacity of the Belt and Road, the Yangtze River Economic Belt, and the Beijing-Tianjin-Hebei Region. Along the Silk Road Economic Belt, Chongqing and Yunnan each had a new bonded logistics center put into operation; along the Yangtze River Economic Belt, the Hubei Xiangyang Bonded Logistics Center (Type B)5 was put into operation; in the Beijing-TianjinHebei Region, Wu’an Bonded Logistics Center (Type B), the first Type B logistics center in Hebei Province, was put into operation. In addition, the construction of new bonded logistics centers in Jiangxi, Inner Mongolia, Baotou and Shandong were approved.

2.2.1.4

Cold Chain Logistics Parks (Centers)

In 2017, China continued constructing more cold chain logistics parks (centers); a number of cold chain logistics projects with robust radiating capability in the Yangtze River Economic Belt Region were initiated, commenced or put into use, promoting the scaled development of China’s cold chain logistics and the comprehensive improvement of logistics efficiency. For example, in January, Kunming in Yunnan started the construction of the largest “Internet+” cold chain logistics base in Southwest China; in August, the Mianyang Western Cold Chain Capital in Sichuan, the largest cold chain logistics center in Western China was officially put into operation; in October, the construction of Ganzhou Cold Chain Logistics Center, the largest cold chain logistics center in Jiangxi, was commenced. The continual promotion and scaled development of cold chain logistics parks (centers) will enhance the professional level of agricultural logistics and cold chain logistics in China’s relevant regions, and advance the development of China’s fresh food industry.

5 Bonded

Logistics Center (Type B) refers to a concentrated surveillance site of the Customs, approved by the General Administration of Customs, and operated by a Chinese domestic enterprise with legal person status, within which multiple enterprises may enter to undertake the business operations of bonded logistics warehousing.

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2.2.2 Warehousing Facilities 2.2.2.1

Warehousing Area

In 2017, the total warehousing area in China continued to expand. With an area of 31.05 million square meters, the largest completed warehousing area over the past five years, these warehouses afforded the needed facility support for the scaled development of China’s logistics and related industries. Total completed area of China’s warehousing facilities for 2013–2017 are shown in Fig. 2.7.

2.2.2.2

Implementation of Unmanned Warehouses

In 2017, as unmanned warehouses were further implemented in China, its warehousing automation and systematization levels were broadly enhanced. In May, the JD Group’s Wuhan “Asia No. 1” Warehouse Logistics Center was the first to adopt the unmanned warehouse; in June, the JD Wuhan “Asia No. 1” Unmanned Warehouse for small parcels and the AGV Warehouse of North China Logistics Center were put into use; in July, the Kunshan Unmanned Sorting Center began operation (CAWD 2017). In October, the JD Group built the world’s first full-process unmanned warehouse with intelligent logistics system, including warehousing, storage, packaging and sorting. During the “Double 11” period in 2017, large e-commerce platforms including the Alibaba Group Holding Ltd., the JD Group and the Suning Holdings Group all employed unmanned warehouses and unmanned delivery systems.

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2.3 Logistics Equipment In 2017, China’s logistics equipment continued to improve its level of intelligence, greening and platformization. Its holding of highway freight trucks, railway freight trains and cargo planes increased, and unnamed transport vehicles were more widely used. As the practice of circular express boxes was gradually adopted, the environmental protection level of warehousing equipment was further improved.

2.3.1 Transportation Vehicles 2.3.1.1

Possession of Transportation Vehicles

In 2017, the holding of China’s highway freight trucks bounced back to 13.69 million, up by 1.2% over the previous year; the holding of freight trains continued to increase to 799 thousand, up by 35 thousand or 4.58% over the previous year. The civil aviation industry had a fleet size of 5,588 aircrafts, of which 3,296 were cargo planes; this represents a steep increase of 346 planes over the previous year, and the largest increase during the past five years. The remaining 2,292 planes were general aircrafts, which is an increase of 196 from the previous year (CAAC 2018b). The number of freight ships continued to decrease by 9.5% to 144.9 thousand (Ministry of Transport of P.R.C. 2018).

2.3.1.2

Loading Capacity and Greenness of Transport Vehicles

In 2017, the load capacity of various types of transport vehicles in China increased rapidly. At the end of 2017, total load tonnage of China’s freight trucks increased by 8.8% to 117.75 million tons; average tonnage reached 8.60 tons per vehicle, the largest increase in average tonnage over the past five years. The average net load tonnage of freight ships was 1,770.30 tons/ship, an increase of 6.46% from that of the previous year (Ministry of Transport of P.R.C. 2018). In 2017, adoption of new energy logistics vehicles, as the main means of transportation for urban distribution in the future, began to widely spread. In September 2017, 14 departments including the Ministry of Transport of the P.R.C. issued the Action Plan for Promoting the Healthy and Stable Development of the Highway Freight Industry (2017–2020), requiring governments at all levels to organize pilot projects for green urban freight delivery. At the same time, multiple provinces and cities including Beijing, Tianjin and Shanghai proposed policies or plans to promote the use of new energy logistics vehicles and offer them privileged policies in terms of city access permit, the right of way, licensing, and purchase tax. With the encouragement of relevant policies, large e-commerce companies such as JD.COM began to switch to new energy logistics vehicles in large quantities. The increasing adoption

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of new energy logistics vehicles will alleviate the environmental pressure brought on by urban logistics and promote the rapid development of China’s green logistics.

2.3.1.3

Intelligent Transport Vehicles

In 2017, intelligent transport vehicles were initially employed in logistics distribution in China, which further elevated the level of intellectualization in China’s logistics distribution. E-commerce or logistics enterprises including JD.COM and S.F. Holding Co., Ltd. began to experiment with drones in logistics services. Meantime, companies such as JD.COM and Cainiao were also actively promoting the utilization of unmanned vehicles.

2.3.2 Warehousing Equipment 2.3.2.1

Forklifts

In 2017, with the institution of emission standards for non-road mobile machinery by the State and local governments, energy-saving and environmentally-friendly warehousing and logistics equipment continued to expand the scope in both production and usage. In 2017, the proportion of electric forklifts sold over the total forklifts sold rose from 38.2% in 2016 to 41.0% in 2017, showing an increase of 2.8 percentage points. In addition, with the rising labor costs of warehouse management in China, many enterprises have begun to replace manual operations with mechanized, automated material handling tools for small-batched storage and handling operations. Safe, efficient, durable, affordable and lightweight material handling tools were adopted increasingly in enterprise storage and handling operations.

2.3.2.2

Open Circular Pallet Sharing System

The open circular pallet sharing system aims to achieve the sharing of pallets circulating along the upstream and downstream entities of the supply chain, and enable the pallet-supplying enterprises (production enterprises, operating enterprises and maintenance enterprises), pallet operating outlets and the pallet management platforms to use certified pallets that comply with the standards of open circular pallets, so as to provide sharing services to numerous users. In October 2016, the Ministry of Commerce issued the Specification for the Operations and Management of the Pallet Sharing Systems. In November 2017, the first 10,000 standard pallets (1200 * 1000 mm) with the logo of China’s Trade Logistics Standardization Action Alliance (hereinafter referred to as the Alliance) and GS1 code were put into use in the distribution centers of Tianjin Bright Dairy Co., Ltd.

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and China Resources Vanguard Co., Ltd. These pallets would be managed by the “National Open Pallet Sharing System Public Platform.” This signified the formal launching of the operations of China’s open circular pallet system (China Warehousing and Distribution Association 2017). The operation of this sharing system has an important role in promoting the development of China’s green logistics.

2.3.2.3

Recyclable Express Box

With the development of e-commerce, the resulted volume of express packaging material has risen alarmingly, causing increasingly serious environmental problems. In 2017, steered by the government’s relevant policies, a number of e-commerce logistics companies began to use recyclable express boxes to help alleviate the environmental pressure. For example, in April, Suning Logistics Co., Ltd. began to employ shared express boxes; during the “Double 11” period, Cainiao Network Tech Co., Ltd. launched the fully biodegradable bags and adhesive-tapeless cartons, while JD.com introduced the use of recyclable packaging bags.

2.4 Logistics Informatization and Standardization In 2017, China’s National Comprehensive Logistics Public Information Platform continued to improve. The construction of cross-regional logistics service cloud platforms in the Central and Western regions were rapidly promoted, and the construction of professional logistics information platforms such as cold chain logistics and express logistics platforms kept moving forward. In the late 2017, the Leading Group Office of Promoting the Building for the Belt and Road issued the Action Plan for Connecting and Co-building the Belt and Road with Standards (2018–2020) to guide China’s logistics standardization in the direction of internationalization. A number of new national fundamental and professional logistics standards were introduced to enhance the standardization of China’s logistics operations.

2.4.1 Development of Logistics Informatization 2.4.1.1

National Public Logistics Information Platform

In 2017, the scope of information sharing on China’s National Comprehensive Logistics Public Information Platform was expanded further. In September, the River-Sea Intermodal Information Center of the National Traffic and Transportation Logistics Public Information Platform (logink.org, (LOGINK) was established to promote the basic exchange network of LOGINK and constitute the standards for river-sea intermodal transportation. In November, LOGINK signed memorandums of cooperation

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in Hangzhou with the International Port Community Systems Association (IPCSA), the Malaysian Port of Kelang, the UAE Port of Abu Dhabi, and the Antwerp Port of Belgium. It worked together with the Spanish Port of Barcelona, the Portugal Port of Sines, and the Dutch port of Rotterdam to promote the port logistics information sharing along the Belt and Road for achieving the interconnectivity of the port logistics information between Europe and Asia (Chineseport 2017).

2.4.1.2

Regional Logistics Cloud Platforms

In 2017, the cross-regional logistics service cloud platform construction in China’s Central and Western regions achieved notable results, providing necessary technology and platform support for the coordinated development of China’s crossregional logistics. Aidaihuo, an Internet cloud logistics platform, and a cross-regional transportation cloud data center for Sichuan, Guizhou, Yunnan, Shaanxi, Guangxi, Hunan and Chongqing was launched. Fangchenggang Logistics Public Information Platform, the first public logistics information platform covering the three coastal cities (Qinzhou, Beihai and Fangchenggang) in the Beibu Gulf began construction. Besides, logistics public information platforms in some regions including Guizhou, Chongqing, and Guangxi were launched or began construction.

2.4.1.3

Professional Logistics Information Platforms

In 2017, new progress was made in the construction of logistics public information platforms for China’s cold chain logistics and express delivery logistics. In terms of cold chain logistics, the National Public Management Platform for Cold Chain Operations (Cold Chain No. 1), jointly developed by the China Association of Warehousing and Distribution (CAWD), the China Animal Agriculture Association, the Aquaculture Chamber of Commerce of All-China Federation of Industry and Commerce, the China Fruit Circulation Association, and the China Vegetable Marketing Association was launched in April, 2017 (Zhileng.com 2017). In July, the CCLC Refrigerated Car Certification Platform, the first refrigerated car certification platform in China established by the Cold Chain Profession Committee of CFLP, was officially launched, providing an essential assurance for standardized operations in China’s cold chain logistics market. In November, Shandong Public Information Service Platform for Cold Chain Logistics of Agricultural Products was put into operation. Thus a cold chain monitoring system for agricultural products was established in Shandong for the purpose of making the cold chain resources of agricultural products online, transparent and visible. In terms of express logistics, in November, the Jiangsu Express Industry Safety Supervision and Service Cloud Platform was launched; it strengthened the safety supervision of express parcels through big data, and ensured the safety of the express delivery industry.

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2.4.2 Status of Logistics Standardization 2.4.2.1

Issuance of the Action Plan for Connecting and Co-building the Belt and Road with Standards (2018–2020)

In order to implement the spirit of the “Vision and Proposed Actions Outlined on Co-building the Silk Road Economic Belt and 21st-Century Maritime Silk Road” and the “Belt and Road Forum for International Cooperation,” in December 2017, the Leading Group Office of Promoting the Building for the Belt and Road issued the Action Plan for Connecting and Co-building the Belt and Road with Standards (2018–2020). The Action Plan was instituted based on the overall requirements and priorities of the Belt and Road development in the new phase, and taken into consideration the actual standardization conditions. This Action Plan proposes to enhance the cooperation of standardization in logistics services, pallets, and international freight forwarding, build the Belt and Road International Cooperation Integrity E-commerce Network. It would promote the cooperation of standardization of railway logistics in cross-border ecommerce among China, Russia and Europe, standardize e-commerce data services, logistics applications, and traceability systems, and achieve the online/offline, and China/foreign nations integrated development. The issuance of the Action Plan would promote the internationalization of China’s logistics standards and play a positive role in the development of China’s international logistics.

2.4.2.2

Compilation of National Fundamental Logistics Standards

In 2017, China formulated, promulgated or implemented a number of national fundamental logistics standards, including the standards for standardization tasks, logistics services, professional competence of logistics practitioners, logistics operations, and logistics informationization. The Green Warehouse Requirements and Evaluation, the first green standard for warehousing, was implemented to guide the greening development of China’s warehousing logistics.

2.4.2.3

Compilation of National Professional Logistics Standards

In 2017, China’s standardization tasks in cold chain, pharmaceuticals, chemicals, e-commerce and other logistics fields continued. In particular, for e-commerce logistics and grain and oil logistics, a number of logistics standards were officially implemented to help ensure the standardized operations in China’s livelihood logistics. In April, the Cold Chain Operations and Management Regulations, the first group standard in the cold chain domain, and the National Cold Chain Operations Standardization Evaluation and Management Measures were issued to elevate the standardization level of China’s cold chain logistics operations.

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2.5 Summary This chapter discusses China’s development in logistics facilities and relevant logistics technologies and standards in 2017. The scale of China’s highway network continued to expand, and the highway network structure was also optimized. The increase in operating highway mileage in the Western region and rural area will contribute to the expansion of logistics network and improvement of logistics efficiency in China. The “Four Vertical and Four Horizontal” High Speed Railway Network was completed ahead of schedule and put into operation. The throughput capacity of port berths and inland waterways continued to expand. The number of certified airports for civil aviation continued to increase, and the construction of private logistics airports had begun. The “Five Vertical and Five Horizontal” (5V5H) comprehensive transportation channels were primarily completed. The continual construction of the international transportation corridor in Southeast Asia enhanced the international logistics transportation capacity between China and the ASEAN countries. The construction of logistics parks mainly focused on building intelligent logistics parks/centers, multimodal logistics parks/centers, bonded logistics centers, and cold chain logistics parks/centers. The application of unmanned warehouses was expanding. The transportation capacity of various types of transport vehicles in China continued to grow. Intelligent vehicles began to be utilized. Green warehousing equipment gained more and more attention. The simultaneous development of national, regional and professional logistics information platforms provided good information sharing support for the further improvement of China’s logistics efficiency. The Action Plan for Connecting and Co-building the Belt and Road with Standards (2018–2020) issued in the late 2017 would afford the impetus for the internationalization of China’s logistics standards.

References CAAC (2018a). The National Airport Productivity Statistical Bulletin 2017 [EB/OL], Civil Aviation Administration of China. 7 Mar 2018. CAAC (2018b). The First Press Conference of the Civil Aviation Administration of China Holds in 2018 [EB/OL], Civil Aviation Administration of China. http://www.caac.gov.cn/XWZX/MHYW/ 201801/t20180118_48697.html. 18 Jan 2018. CAWD (2017). Ten Important Events in the Warehousing and Distribution Industry of China in 2017 [EB/OL], China Association of Warehousing and Distribution. http://www.cawd.org.cn/index. php/article/detail/style/3/id/1550.html. China Association of Warehousing and Distribution. 27 Dec 2017. Central People’s Government of P.R.C. (2017). The Highway Mileage in Chongqing Exceeded 3,000 Kilometers [EB/OL], Central People’s Government of P.R.C. http://www.gov.cn/xinwen/ 2017-12/25/content_5250148.htm. 25 Dec 2017. Chinahighway.com (2018). The Total Highway Mileage in Qinghai Province Since the 18th CPC National Congress Exceeded 80 Thousand Kilometers [EB/OL], Chinahighway.com. http://www. chinahighway.com/news/2018/1155884.php. 22 Jan 2018.

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Chineseport (2017). National Traffic & Transportation Logistics Public Information Platform Interconnects with Ports for Capacity Expansion, Realizing the Sharing of Logistics Information from 31 Ports in Europe and Asia [EB/OL], Chineseport. http://www.chineseport.cn/bencandy.php? fid=47&aid=261538. 9 Nov 2017. Chnrailway.com (2018). China Railway’s Statistical Bulletin 2017 [EB/OL], Chnrailway.com. http://www.chnrailway.com/html/20180327/1822681.shtml. 28 Mar 2018. Ministry of Transport of P.R.C. (2018). Transportation Industry Statistical Bulletin 2017 [EB/OL], Ministry of Transport of P.R.C. 30 Mar 2018 Xinhuanet (2017). Ranking First in the World in Four ITEMS—China’s Transportation Made Outstanding Achievements [EB/OL], Xinhuanet. http://www.xinhuanet.com/fortune/2017-12/25/c_ 1122165006.htm. 25 Dec 2017. Zhileng.com (2017). Two Group Standards are Introduced for Cold Chain Logistics of China [EB/OL], Zhileng.com. http://www.zhileng.com/news/hy/2017/0519/46070.html# 3931240-tsina-1-35024-9a6778678301057cf475515d44b91f2d. 19 May 2017.

Chapter 3

Development of Transportation Logistics in China Jun Liu

Transportation is an important part of logistics services and a key link to improving the logistics efficiency. The main modes of transportation in China are highway, railway, air and waterway. Both the Chinese Government and the transportation enterprises are accelerating the transformation of transportation to modern logistics services. China’s comprehensive transportation network continually strengthens its logistics service functions by improving its transport infrastructure, upgrading the technical level of its facilities and equipment, and innovating its transportation organizational models. This Chapter consists of four sections. Section 3.1 describes the development of China’s highway logistics, including highway freight volume, enhanced logistics service functions of highway freight hubs, changes in the pattern of highway logistics service market, and the innovations of highway transportation organizational models. Section 3.2 describes the development of railway logistics, including railway freight volume, construction of railway logistics infrastructures, major railway logistics enterprises, and innovations of railway logistics service models. Section 3.3 describes the development of port logistics, including freight throughput of ports, construction of port logistics facilities, changes in port operators, and main contents of port logistics services. Section 3.4 describes the development of air logistics, including airport freight volume, improvement of airport logistics service functions, mixed-ownership reform for air freight enterprises, and major logistics service functions, as well as the development of cross-border e-commerce.

J. Liu (B) Logistics Research Center, Nankai University, Tianjin, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_3

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Fig. 3.1 Changes in China’s highway freight volume and growth rate for 2011–2017. Source Compiled from the Statistical Bulletin of China Transportation Industry (2011–2017), published by the Ministry of Transport of the P.R.C.

3.1 Development of China’s Highway Logistics 3.1.1 Highway Freight Volume and Highway Freight Turnover Highway transportation is China’s main mode of freight transportation. In 2017, China’s highway freight volume was 36.87 billion tons, accounting for 78.04% of the total freight volume of the four modes of transportation (highway, railway, waterway and air), with highway freight turnover accounting for 34.67% of the total freight turnover.1 In 2011–2017, China’s highway freight volume maintained an overall growth trend. The annual freight volume increased from 28.2 billion tons in 2011 to 36.87 billion tons in 2017; this period exhibited considerable fluctuations in its growth rate, which fell to 1.2% in 2015 and rose to 10.3% in 2017. Figure 3.1 shows the changes in China’s highway freight volume and growth rate in 2011–2017. In 2017, China’s highway freight turnover was 6.68 trillion ton-km. In 2011–2017, China’s highway freight turnover showed fluctuations in line with the freight volumes. During the period, the volume of freight turnover grew with some dips, with growth rate declined substantially around 2015. Figure 3.2 shows the changes in China’s highway freight turnover and growth rate in 2011–2017. 1 Ministry

of Transport of the P.R.C. (2016, 2017). Statistical Bulletin of China Transportation Industry. The freight volume and turnover is calculated for railway, highway, waterway, and civil aviation (excluding pipeline) on the basis of data in 2016 and 2017.

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Fig. 3.2 Changes in China’s highway freight turnover and growth rate for 2011–2017. Source Compiled from the Statistical Bulletin of China Transportation Industry (2011–2017), published by the Ministry of Transport of the P.R.C.

3.1.2 Significantly Enhanced Logistics Service Functions of Highway Freight Hubs In recent years, China has continued to accelerate the construction of its highway transport infrastructure. According to the plan of the Central Government, China will have built a national trunk highway network by 2030, bringing expressways to all prefecture-level cities and national highways to all counties. As of late 2017, the total length of China’s highways had reached 4.77 million km, including 136 thousand km of expressways, ranking No. 1 in the world. While the highway network is being expanded, a number of highway freight hubs with integrated logistics services have been completed. As of the end of the 12th Five-Year Plan, the Ministry of Transport had invested in 155 freight hubs to enhance the nation’s logistics services. Of freight hubs (logistics parks) to be built nationwide during the 13th Five-Year Plan period, more than 400 of them will provide multimodal transport and 90 will have port services. Most of the parks offer multimodal transport, city delivery, express dispersion, and integrated information services. In addition, some of China’s cross-regional platform-based logistics enterprises are starting to accelerate the layout of their highway logistics service network throughout China. The Zhejiang Transfar Group has established its Highway Logistics Parks in nearly 150 cities. The Guangdong Linan Logistics Group has built logistics nodes and service networks in Hainan, Guangdong, Jiangxi, Hubei, Anhui, Jiangsu, Henan, Hebei, and Shandong provinces.

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3.1.3 Continually Integrated Highway Logistics Service Market China’s highway freight market is now ever-changing. This phenomenon is reflected in (1) high market concentration for express delivery with a stable competitive pattern; (2) gradually increasing market concentration for less-than-truck-load express transportation and truck-load transportation despite fierce competition; (3) crossborder operations of large highway freight enterprises and gradually less defined boundaries between market sub-segments. The Chinese express delivery market, after maintaining a high growth of around 50% for six consecutive years, showed a slowdown in 2017. According to the Statistical Bulletin on the Development of Postal Services in 2017, the annual business volume of express parcels was 40.06 billion pieces, up by 28% over the previous year. The Bulletin also shows that China’s private express delivery enterprises have covered more than 90% of the total express delivery market. Representative express delivery enterprises are SF, Zhongtong, Shentong, Yuantong and Yunda. In 2017, the market concentration of China’s express delivery industry reached 78.7% (Beijing Daily 2018).2 China’s highway less-than-truck-load express transportation has been showing fragmentation and low concentration. In 2016, China’s top 10 LTL enterprises accounted for only 3% of the market share (www.chyxx.com).3 In 2017, the lessthan-truck-load express transportation was increasingly integrated. Deppon, ANE, China Railway Logistics, Yuancheng Express and other leading LTL enterprises expanded their market shares rapidly through affiliation, contracting, partnership and other means. Deppon Express, an LTL logistics leader, has nearly 10,000 outlets with its service network, covering 34 provincial-level administrative regions. Individual businesses provide some 90% of the transportation capacity in China’s truck-load transportation market. As there are a large number of small transportation enterprises, the truck-load transportation market shows low industrial organization and market concentration. With the help of Internet technology, the development of highway freight platforms has accelerated the market integration. As some individual and small freight enterprises gradually exit the market, the truck-load transportation market is gradually moving towards higher concentration. Jiangsu Manyun Software Technology Co., Ltd. (YMM) and Guiyang Huochebang Technology Co., Ltd. (Truck Alliance) merged as the Manbang Group, becoming the largest vehicle-to-cargo matching platform in China. According to statistics from the company, it has more than 5 million trunk truck members and 1.25 million members of logistics enterprises. On the whole, China’s highway freight market is still experiencing very fierce competition. Especially, the less-than-truck-load express transportation has become 2 Beijing

Daily. The market concentration of express delivery industry rises again for the first time. Beijing Daily. http://www.bj.xinhuanet.com/2018-05/03/c_1122775801.htm, 3 May. 2018. 3 www.chyxx.com (2017). Analysis on concentration of less-than-truck-load express transportation and operation modes of enterprises in 2017 [EB/OL]. http://www.chyxx.com/industry/201711/ 585273.html, 22 Nov 2017.

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a focus in highway freight competition. A number of express delivery enterprises have entered the less-than-truck-load express market, followed by some railway freight enterprises after their transformation. Less-than-truck-load express transportation enterprises compete ever fiercely in outlets, customers, talents and capital. At the same time, there are also traditional less-than-truck-load express transportation enterprises that have entered the arena of express delivery. The sub-segments of express delivery and fast freight are rapidly integrating.

3.1.4 Continual Innovations of Highway Transportation Organizational Models Due to the low level of market concentration, China’s highway logistics resources are deployed with low efficiency. With the wide application of new-generation information technology in logistics, various new transportation organizational models, such as highway port, highway freight platform, NTOCC (Non-Truck Operating Common Carrier) and drop and pull transport, have emerged in China’s highway transportation. The “highway port logistics service platform” model was created by the Zhejiang Transfar Group. Based on the concept of sharing, it integrates dispersed transport capacity, goods, logistics-related services and other logistics resources into the highway hub nodes to unify the integration and scheduling, thus achieving efficient deployment of highway logistics service resources. Since 2013, the Chinese Government has promoted the experience of Transfar Highway Port. As of December 2017, the Transfar Group had successfully operated 33 highway port city logistics centers, essentially covering the major provinces and cities in China’s economically developed regions. The “highway freight platform” model is a trading service system built with the help of the Internet technology and the Internet of Things. It serves the multilateral markets along the upstream and downstream of the highway freight industry chain, in a way to effectively alleviate the information asymmetry and greatly raise the efficiency in highway freight organization. With the rapid development of China’s highway freight platforms, various service platforms have emerged; these include the intermediary services-centered “vehicle-to-goods matching platform,” the vehicle services-centered “fleet management platform,” the line cooperation-centered “special line joining platform,” and the intra-city shop delivery and home deliverycentered “city delivery platform.” The service model of “Non-Truck Operating Common Carrier” (NTOCC) operates like this: the highway transportation operator signs a transportation contract with the cargo owner as the carrier, assumes the carrier’s responsibilities and obligations, and then consummates the transport activity through the actual carrier. The Ministry of Transport has screened and confirmed 283 enterprises as pilot NTOCC. According to the survey results and analyses of several typical pilot enterprises, compared with

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the traditional transportation enterprises, such pilot enterprises can increase the utilization of their vehicles’ traveled mileage by 50%, reduce the average waiting time from 2–3 days to 8–10 h, and lower the transaction costs by about 6–8%. Meanwhile, these pilot enterprises are also actively exploring models such as “NTOCC+ drop and pull transport” and “multimodal transport and joint distribution,” in a move to further increase the efficiency of NTOCC. “Drop and pull transport” refers to a transportation organizational model whereby the tractor drops a trailer at the cargo loading/unloading point and pulls another trailer for ensuing operation as scheduled. The Ministry of Transport has now completed 140 pilot “drop and pull” transport projects in four batches. Highway transportation enterprises have developed various drop and pull transport models, including “enterprise alliance drop and pull,” “network circulation drop and pull,” “container drop and pull,” and “multimodal transport drop and pull.”

3.2 Development of China’s Railway Logistics 3.2.1 Railway Freight Volume and Railway Freight Turnover China’s railways mainly transport bulk commodities and raw materials such as coal, ore, oil, steel and non-ferrous metal. In the past ten years, China’s railway freight has shown a generally declining trend in the transportation market. Especially during 2014–2016, the railway freight volumes dropped for three consecutive years. In 2017, China’s railway freight volume reversed the sliding trend and rallied with a strong growth. The total national freight volume was 3.69 billion tons, up by 10.7% over the previous year; the railway freight turnover was 2,696.2 billion ton-km, up by 13.3% over the previous year. What contributed to this rally in the railway freight volume were growing demands for major bulk goods, increased freight marketing by the railway department, and the banning of highway haulage overloads. Table 3.1 shows the changes in China’s rail freight volume and freight turnover in 2011–2017.

3.2.2 Strengthened Logistics Service Functions of Railway Infrastructure As of the end of 2017, China’s railway operating mileage had reached 127,000 km, including 25,000 km of high-speed railways (SCIO 2018),4 both mileages ranking 4 www.scio.gov.cn

(2018). China Needs to Solve the Problem about Development Quality after China Ranks First in the World in Terms of The Total Length of Railways and Highways Operated and Opened [EB/OL]. http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/37601/37964/zy37968/ Document/1623190/1623190.htm, 7 Feb. 2018.

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Table 3.1 Changes in China’s railway freight volume and freight turnover Year

Freight volume Freight volume/billion ton

Freight turnover Growth rate/(%)

Freight turnover/billion ton-km

Growth rate/(%)

2011

3.93

8.0

2,946.6

6.6

2012

3.90

−0.7

2,918.7

−0.9

2013

3.97

1.6

2,917.4

0.0

2014

3.81

−3.9

2,753.0

−5.6

2015

3.36

−11.9

2,375.4

−13.7

2016

3.33

−0.8

2,379.2

0.2

2017

3.69

10.7

2,696.2

13.3

Source Compiled from the Statistical Bulletin of National Economy and Social Development (2011–2017)

No. 1 in the world. The expansion and improvement of the railway network has provided a basis for the development of railway logistics services. According to the planning of CHINA RAILWAY (CR), China will build a threetiered railway logistics bases and receiving/delivery networks. The first-tier railway logistics bases are comprehensive logistics bases which mainly serve national circulation node cities. The second-tier railway logistics bases are comprehensive or large professional logistics bases which serve national and regional circulation node cities. The third-tier railway logistics bases mainly serve regional circulation node cities, playing a supporting role in addition to national and regional circulation node cities. China has now established several hundred railway logistics service bases. These bases integrate warehousing, distribution, loading/unloading, dispatch, tracking, quick claims, freight self-service and other functions, and can provide “Door to Door,” “Door to CFS,5 ” “CFS to CFS,” “CFS to Door” and other transportation services. As of late 2017, there were a total of 538 logistics bases (completed or under construction), including 33 first-tier railway logistics bases and 175 second-tier railway logistics bases. Presently, cities with operating first-tier railway logistics bases include Zhengzhou, Hefei, Chengdu, Shenyang, Jinan, and Nanjing. Railway ports are key nodes in international railway logistics channels. With the implementation of the Belt and Road Initiative, China is gradually building up an international railway logistics channel system, which includes inland railway ports in Zhengzhou, Xi’an, and Chongqing, and frontier railway ports in Manzhouli, Erenhot, and Alashankou. Logistics service functions have become an important part of the construction of these railway ports. Figure 3.3 shows the distribution of these first-tier railway ports.

5 CFS

is the abbreviation for Container freight station.

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J. Liu Manzhouli Port Alashankou Port Khorgas Port Erenhot Port

Harbin Port Suifenhe Port Hunchun Port Dandong Port

Chengchow Railway East Station Port Xian Railway Port

Ji'an Port Tumen Port

Chengtu Railway Port Chungking Railway Port

Wuhan Railway Port Heyuan Railway Port

Hekou Port

Dongguan Railway Port

Pingxiang Port

Fig. 3.3 Distribution of first-tier railway (freight) ports in China. Source Xiaodong Railway Logistics Network, Distribution and introduction of major freight ports in railways, http://www.amiue. com/p/1834, 2017-8-24

3.2.3 Transformation of Railway Transportation Enterprises Towards Modern Logistics Services Since 2013, CHINA RAILWAY has started to implement the freight organizational reform. Relying on the advantages of railway, railway freight enterprises have established the fast freight networks by improving the information level of freight systems. Railway logistics service functions are gradually improving and transforming into modern logistics. “95306” is a website mainly for CHINA RAILWAY to provide freight services. It offers services such as express delivery, freight inquiry, and tracking, and also supports online trading and supporting logistics services for eleven major categories of bulk goods including coal, ore, steel, and grain. Presently, 70% of the freight services are provided online. In November 2017, CHINA RAILWAY started to promote the e-notes, in a move to realize informatization and electronization of e-notes. All of China’s railway freight stations have taken up the fast freight business to form a nationwide fast freight network. There are now more than 2,500 stations throughout China (excluding Hong Kong, Macao and Taiwan) with the “Door to Door” service capability, which can provide receiving and delivery services for all goods including fast freight, container, and truck load transportation of bulk and batch goods.

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Railway logistics enterprises have become an important part of China’s large logistics enterprises. As of January 2018, 40 railway logistics enterprises have been included in the List of 5A Logistics Enterprises,6 including 18 railway administration groups under CHINA RAILWAY, 14 railway logistics enterprises under local railway administrations, and eight other railway logistics enterprises. Of these enterprises, China Railway Material Group Co., Ltd., China Railway Guangzhou Group Co., Ltd. and China Railway Tielong Container Logistics Co., Ltd. were among China’s top 50 logistics enterprises in 2017, ranking No. 9, No. 22 and No. 32, in terms of their main business revenue (China Federation of Logistics and Purchasing 2017).7

3.2.4 Constant Innovation of Railway Logistics Service Models In transforming towards modern logistics services, railway logistics enterprises have continued to innovate on service models and actively expanded the service areas. They achieve the goal mainly by building a network of speedy transport for railway freight, carrying out strategic cooperation with well-known domestic enterprises, and vigorously developing multimodal transport. To build a network of speedy transport for railway freight, the following actions are taken: (1) launching the fast freight trains and express trains and opening new China-Europe Freight Rail Lines. China Railway Guangzhou Group Co., Ltd. operates fast freight trains at three speeds of 160 km/h, 120 km/h and 80 km/h, respectively. As to express trains, railway enterprises cooperate with China Post, SF, JD and other express delivery and e-commerce enterprises, leveraging on the high-speed rail and railway trunk transportation to launch high-speed rail express services, including “Same-Day Delivery,” “Next Morning Delivery” and “One Day Delivery.” Driven by the Belt and Road Initiative, China-Europe Freight Rail Lines is showing a promising development posture. As of late 2017, there were 57 routes of China-Europe Freight Rail Lines; 3,600 circuits were made in 2017, adding up to more than 6,000 circuits for the past six years. Aimed at expanding their market shares, railway enterprises also actively carry out strategic cooperation with well-known domestic enterprises. In order to solve the “Last KM” delivery problem and provide door-to-door services, railway enterprises extend their railway lines to the large mine factories, important ports and terminals, large logistics parks and industrial parks. For major bulk goods 6A

logistics enterprises refer to transportation, warehousing and comprehensive service logistics enterprises identified upon assessment applied for by them independently and carried out by assessment agencies in accordance with national standards of the Classification and Assessment Indicators for Logistics Enterprises. Logistics enterprises are classified into five levels, namely, A, 2A, 3A, 4A and 5A (which is the highest level). By the end of 2017. China had 266 5A logistics enterprises, 1,545 4A logistics enterprises, 1,845 3A logistics enterprises, 503 2A logistics enterprises and 39 A logistics enterprises. 7 www.chinawuliu.com.cn (2017). Circular on Ranking of Top 50 Logistics Enterprises in China [EB/OL]. http://www.chinawuliu.com.cn/lhhkx/201710/16/325400.shtml, 16 Oct. 2017.

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and sundry goods, railway enterprises implement the “top-to-top”8 strategy to further deepen the strategic cooperation with industrial firms having substantial transportation needs for major bulk goods. For the logistics markets of mass consumer goods such as electrical appliances, autos and accessories, and wine, railway enterprises and well-known brand manufacturers have achieved powerful alliances, reaping complementary advantages, and mutual benefits. As of late 2017, railway enterprises had established strategic cooperation relationships with major manufacturing enterprises such as Haier, GREE, CHANGAN, SAIC Motor Ltd., and Wuliangye Group Co., Ltd. Railway logistics bases have played increasingly significant role in multimodal transport, thanks to the development of the railway-centered multimodal transport services such as sea-railway, highway-railway, air-railway and land-air. With multimodal transport of containers as the core and supported by commercial vehicles and cold chain-based multimodal transport, railway enterprises have developed various service models, by actively strengthening the cooperation with various modes of transportation (highway, maritime transport, and air). From January to September 2017, China’s first 16 multimodal transport demonstration projects had opened more than 140 demonstration routes, attracted over 700 participating enterprises, and achieved more than 600 thousand TEUs of multimodal transport of containers (China Communications Association Intermodal Branch 2018).9

3.3 Development of China’s Harbor Logistics 3.3.1 Steady Growth in Throughput of Ports; Swift Growth in Major Bulk Goods and Containers Construction of ports in China has reached a steady state, with a stable growth trend in the freight throughput of ports. In 2011–2017, average annual growth for coastal and inland ports nationwide grew by 6.1% and 5.0%, respectively. In 2015, coastal ports grew as low as 1.4% in freight throughput. In 2017, due to the solid growth in China’s GDP and the global economic recovery, the throughput of major ports nationwide rose rapidly. China’s ports achieved 14.01 billion tons of freight throughput, including 9.06 billion tons from coastal ports, up by 7.1%, and 4.95 billion tons from inland ports, up by 4.3%. Figures 3.4 and 3.5 show the national freight throughput and growth of coastal and inland ports for 2011–2017. In 2017, of all types of goods handled at China’s ports, volumes of major bulk goods and containers grew rapidly. In terms of major bulks, China’s ports above 8 “top-to-top” usually refers to cooperation between two parties with independent legal person status

at the highest level. Communications Association Intermodal Branch (2018). Review and Outlook of China’s Multimodal Transport Development in 2017 [EB/OL]. http://www.chinawuliu.com.cn/information/ 201803/21/329579.shtml, 21 Mar. 2018.

9 China

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Fig. 3.4 National freight throughput at coastal port for 2011–2017. Source Compiled from the Statistical Bulletin of Highway and Waterway Transportation Industry (2017), published by the Ministry of Transport of the P.R.C. 14.0 11.9

5 4

3.68

4.21

3.9

4.95

4.75

4.60

4.42

12.0 10.0 8.0

8.0 3

6.0

5.8

5.1

2

3.1

1 0

4.3 4.0

4.2

Growth Rate(%)

Freight Troughoutput at Inland Port (Trillion Ton)

6

2.0

2011

2012

2013

2014

2015

2016

2017

0.0

Year

Fig. 3.5 National freight throughput at inland port for 2011–2017. Source Compiled from the Statistical Bulletin of Highway and Waterway Transportation Industry (2017), published by the Ministry of Transport of the P.R.C.

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Table 3.2 National container throughput and growth at coastal and inland ports in 2017

Coastal port

Inland port

Port

Container throughput (thousand TEU)

Year-on-year growth (%)

Shanghai

40,180

Shenzhen

25,250

5.3

Ningbo-Zhoushan Port

24,640

14.3

Guangzhou

20,100

7.7

Qingdao

18,300

1.4

Tianjin

15,040

3.6

Xiamen

10,400

8.2

Dalian

9,700

1.3

Yingkou

6,270

3

8.2

Lianyungang

4,720

0.4

Suzhou

6,000

9.4

Foshan

3,910

21.7

Source Compiled from the Data of freight and passenger throughput at port above the designated size in 2017, published by the Ministry of Transport of the P.R.C.

the designated size handled 2.33 billion tons of coal and its products, up by 8.5%, 1.0 billion tons of oil, natural gas and their products, up by 7.7%, and 2.03 billion tons of ore, up by 6.0%. In terms of containers, Shanghai Port’s container throughput reached 40.18 million TEUs in 2017, a record high in the global container throughput of ports. Table 3.2 shows the national container throughput and growth at coastal and inland ports in 2017.

3.3.2 Port Logistics Systems Becoming a Focus in Construction with Slowed Construction of Coastal Ports and Terminals China’s major coastal ports have clearly defined their functional positioning, forming a spatial layout of five major coastal port groups.10 As the growth in throughput of coastal ports slowed down, construction of coastal ports and terminals also subsided accordingly. At the same time, as an important value-added service in addition to loading/unloading, port logistics has gained increasing significance. With increasing investments in port logistics parks and inland collecting and dispatching systems,

10 From

north to south: Bohai Rim, Yangtze River Delta, Southeast Coasts, Pearl River Delta and Southwest Coasts.

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inland ports have also become a focus in the construction of port logistics systems. Large port logistics parks have been built in major ports along the coasts of China. They are, for instance, Yangshan Deepwater Port Logistics Park and Shanghai Waigaoqiao Logistics Park located in Shanghai International Shipping Center, Shenzhen Yantian Port Logistics Park located in the Pearl River Delta, Dalian International Logistics Park, Tianjin Port Logistics Park, and Caofeidian Port Logistics Park located in the Bohai Rim. Compared with seaport logistics parks, river port logistics parks are still in the early stage of development; For example, Chongqing Port and Wuhan Port are accelerating the construction of port logistics parks. Number of China’s port logistics parks now account for over one-third of the total national logistics parks. Coastal ports have constructed dry ports in inland provinces, with their logistics service networks extending to the hinterland through the collection and dispatching system. This is an essential feature in the development of China’s port logistics system. Tianjin Port is one of the earlier ports in China which constructed dry ports. As of late 2017, Tianjin Port had built 25 inland dry ports in 9 provinces and cities including Beijing, Hebei, Shanxi, Henan and Inner Mongolia, in a way to form a logistics network extending to the hinterland of northeast China, north China and northwest China. Dalian Port, Qingdao Port, Ningbo Port, Shenzhen Port and other ports have also developed and built their inland dry port systems. In 2017, while there was a significant decline of investments in overall construction of waterways, investments in China’s inland ports and the collecting and dispatching systems continued to grow. Nationwide, 123.89 billion RMB was spent in the construction of waterways, down by 12.6% over the previous year; of which 56.93 billion RMB was expended to the construction of inland ports, up by 3.1%. Inland ports added 180 new and renovated (expanded) berths with a throughput capacity of 65,970 kilotons, including 8,200 kilotons for berths with throughput capacity of 1,000 tons or more. In addition, 64.89 billion RMB was invested in the construction of highway and waterway supporting systems and other structures, up by 31.2% over the previous year (Ministry of Transport of the P.R.C. 2018).11

3.3.3 Continually Deepened Integration of Port Resources and Diversified Development of Port Logistics Operators As China’s opening-up enters a new stage, its harbor industry is becoming more open, gradually deepening the integration of port resources. With changes in investors of

11 Ministry

of Transport of the P.R.C. (2018). Statistical Bulletin of China Transportation Industry (2017) [EB/OL]. http://zizhan.mot.gov.cn/zfxxgk/bnssj/zhghs/201803/t20180329_3005087.html, 30 Mar. 2018.

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Table 3.3 China coastal port resource integration Province

Integration of port resources

Zhejiang

In September 2015, Ningbo Port and Zhoushan Port merged to form the Ningbo Zhoushan Port Group; in October 2016, Ningbo Port, Zhoushan Port, Jiaxing Port, Taizhou Port and Wenzhou Port were integrated

Jiangsu

In May 2017, Jiangsu Port Group Co., Ltd. integrated Nanjing Port, Lianyungang Port, Suzhou Port, Nantong Port, Zhenjiang Port, Changzhou Port, Taizhou Port and Yangzhou Port as well as the provincial harbor enterprises

Liaoning

In June 2017, Liaoning Provincial Government and China Merchants Group cooperated to establish the Liaoning Port Group for the purpose of integrating the coastal port operators in Liaoning

Tianjin, Hebei

In 2014, Tianjin Port Group and Hebei Port Group jointly established the Bohai Tianjin-Hebei Port Investment Development Co., Ltd. to oversee the investment operations and management of port projects in Tianjin and Hebei. In July 2017, the Ministry of Transport of the P.R.C., the General Office of Tianjin People’s Government, and the General Office of Hebei Provincial People’s Government issued the Notice on Advancing the Program for the Coordinated Development of Ports in Tianjin and Hebei (2017–2020), which defined 18 tasks including optimizing the layout of ports in Tianjin and Hebei and the division of functions, and accelerating the integration of port resources

Guangdong

In September 2017, the governments of Guangzhou and Dongguan signed an agreement to promote the integration of ports in Guangzhou and Dongguan, and build the Guangzhou-Dongguan Combined Port

Shandong

In January 2018, the Work Report of Shandong Provincial Government gave the directives to promote the construction of Qingdao Port, Bohai Bay Port, Yantai Port and Rizhao Port, and establish Shandong Port Investment Holding Group Co., Ltd. in due course

Source Compiled by this study

China’s ports, port logistics operators are showing a diversified development pattern. On the one hand, the integration of port resources in coastal regions has spawned a number of large port industry groups such as the Liaoning Port Group, the Hebei Port Group, the Shandong Bohai Bay Port Group, the Jiangsu Port Group, the Zhejiang Sea Port Group, and the Beibu Gulf Port Group. On the other hand, large shipping companies and cargo owners at home and abroad are beginning to enter into the harbor industry by building and operating ports, terminals and logistics transshipment centers. Since 2015, China’s coastal ports have begun to integrate. The port integration reform is accelerated on a provincial basis. In August 2017, the Ministry of Transport issued the Notice on Learning from Zhejiang Experience to Promote the Regional Port Integration Reform to encourage the integration of regional ports. Since then, provinces like Jiangsu, Liaoning, Guangdong and Fujian have accelerated their integration of ports. Table 3.3 shows the integration actions in recent years.

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While provincial-level regional ports are integrated, some port groups are also exploring ways for synergistic development. For example, the Shanghai Port Group has invested in the construction of container terminals in Nanjing, Jiangyin, Wuhan and Jiujiang by means of exporting technology and management knowhow; the Ningbo Port Group is actively investing in bulk terminals in Taicang and Nanjing. Collaboration among inland river ports and terminals in the Yangtze River Economic Belt is also moving forward. Domestic and foreign large shipping enterprises and bulk cargo owner enterprises are also important operators in China’s port logistics. Large shipping enterprises including the Maersk Group and the Hutchison Whampoa Terminal Co., Ltd. have invested in container terminals in China’s main coastal ports; the China Merchants Group has built container terminals in major ports along China’s coasts and established the China Merchants Logistics Group Co., Ltd. Major bulk cargo owner enterprises that engage in port operations include China’s large steel enterprises and energy enterprises such as the Shougang Group, the Baogang Group, the Angang Group, the Shenhua Group, PetroChina, and Sinopec. They mainly invest in specialized bulk cargo terminals such as iron ore, crude oil and coal.

3.3.4 Further Expanded Port Logistics Service Functions and Continually Extended Harbor Industry Chain Amid stable growths in the throughput of ports and intensified competition in the harbor market, China’s harbor enterprises are beginning to seek new growth points. Expanding port logistics service functions is a principal development direction for harbor enterprises. Local governments in coastal and major inland port cities have also established a number of shipping exchanges to promote the integration of port logistics and shipping service functions. Port enterprises mainly expand logistics service functions in two aspects. On the one hand, they provide customers with full-process logistics services such as storage, distribution, transportation, freight forwarding, shipping agency, and Customs declaration, in addition to the port-based loading and unloading services; they also develop new value-added services in terms of commerce, logistics finance, and supply chain management to garner additional revenue. In 2017, for Shanghai Port Group (SIPG), port logistics revenue accounted for 54.05% of its total revenue; Ningbo Port’s integrated logistics and other business revenue accounted for 48.54% of its total revenue. On the other hand, with ports as core nodes, they have established logistics service networks in a move to extend port logistics services to the hinterland. The chief measures in this regard are to develop multimodal transport systems such as sea-rail combined transport and river-sea combined transport, and to build a domestic trade container transport feeder network. On sea-rail combined transport, Dalian Port/Yingkou Port-Northeast China, Tianjin Port-North China/Northwest China, and Lianyungang/Qingdao Port-New Eurasian Land Bridge Region have become China’s

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three major container sea-rail combined transport channels. In 2017, China’s ports above the designated scale completed 3,480 thousand TEUs of water-rail combined transport container volume, accounting for 1.47% of the total container throughput of ports above the designated scale (Ministry of Transport of the P.R.C. 2018).12 Riversea intermodal markets are mainly located in the Yangtze River, Pearl River and Songhua River basins. Domestic trade container trunk routes are mainly distributed among the Bohai Rim, the Yangtze River Delta and the Pearl River Delta. Shipping enterprises primarily rely on their shipping advantages to enter the logistics services. Long before the restructuring of COSCO and China Shipping (Group) Company,13 these two major state-owned shipping groups were active in expanding their logistics services, aiming to transform from ocean carriers to full-process logistics service providers. COSCO Shipping Logistics Co., Ltd., a subsidiary of the China Ocean Shipping Group, was established in December 2016. As an international logistics enterprise leading in the Chinese market, it has set up branches in 30 provinces, municipalities and autonomous regions and 17 overseas countries and regions, and had more than 500 sales and service outlets worldwide to form a service network system throughout China and extending to the world. COSCO Shipping Logistics mainly focuses on integrated freight, warehousing logistics, ship agency, engineering logistics and project logistics, and will build a global leading logistics and supply chain service platform. Shipping exchanges are an important means to promote the development of harbor services. As of late 2017, China had built ten shipping exchanges, including seven located in coastal port cities of Dalian, Tianjin, Qingdao, Shanghai, Ningbo, Xiamen and Guangzhou, and three located in inland port cities of Wuhan, Chongqing and Guigang. Shanghai Shipping Exchange, relying on Shanghai International Shipping Center and established in November 1996, plays a crucial role in promoting the development of China’s high-end shipping service industry. Branches or offices of the world’s top 20 liner companies have settled in Shanghai; the world’s nine largest classification societies have established representative offices in Shanghai; nearly 1,000 international maritime transport enterprises are engaging in business activities in Shanghai; ships registered at Shanghai account for about 70% of all ships approved in China.

12 Ministry

of Transport of the P.R.C. (2018). Statistical Bulletin of China Transportation Industry (2017) [EB/OL]. http://zizhan.mot.gov.cn/zfxxgk/bnssj/zhghs/201803/t20180329_3005087.html, 30 Mar. 2018. 13 On February 18, 2016, the above two companies were reorganized as China COSCO Shipping Group.

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3.4 Development of China’s Air Logistics 3.4.1 Steady Growth in Airport Cargo and Mail Throughput; Freight Volume of International Routes Growing Faster Than that of Domestic Routes With rapid growth in the consumption of Chinese residents, the needs for transporting medical supplies, vegetables, fruits, seafood, and frozen meats have escalated. In 2011–2017, China’s civil aviation freight volume had maintained a steady growth trend. In 2017, China’s airports handled a cargo and mail throughput of 16.177 million tons, growing by 7.1% over the previous year; the total air transportation freight turnover was 108.31 billion ton-km, exceeding 100 billion ton-km for the first time, and up by 12.5% from the previous year. Figure 3.6 shows the cargo and mail throughput and growth of China’s civil airports. Seen from the distribution routes of air freights, China’s international routes are growing significantly faster than domestic routes in terms of freight volume. In 2017, domestic routes completed 10.001 million tons of cargo and mail throughput, up by 2.7% over the previous year; international routes completed 6.176 million tons, up by 15.2%. Since 2014, China’s international routes have been growing faster than domestic routes. Figure 3.7 shows the growths of cargo and mail throughput of domestic and international routes of China’s civil aviation for 2011–2017.

Fig. 3.6 Cargo and mail throughput and growth rate of China’s civil airports for 2011–2017. Source Compiled from the Statistical Bulletin of Nationwide Airports (2011–2017), published by the Civil Aviation Administration of the P.R.C.

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Fig. 3.7 Growth rates of cargo and mail throughput of China’s airports’ domestic and international routes for 2011–2017. Source Compiled from the Statistical Bulletin of Nationwide Airports (2011–2017), published by the Civil Aviation Administration of the P.R.C.

3.4.2 Rapid Development of Air Transportation Facilities and Equipment; Gradual Improvement of Airport Logistics Service Functions Recently, China’s civil aviation sector has continued to build airports and route networks to expand the scale of civil aviation transport fleets and accelerate the construction of air logistics parks. With the improvement of facilities and equipment, logistics service functions of airports have gradually been enhanced. As of 2017, there were a total of 229 airports in China (excluding Hong Kong, Macau and Taiwan). The three major hub airports in Beijing, Shanghai Pudong and Guangzhou had further enhanced their functions, with their combined airport cargo and mail throughput accounting for 49.9% of the nation’s total airport cargo and mail throughput. Meanwhile, regional hub airports were developing swiftly, having 32 airports at the10 million-level; the cargo and mail throughput of 52 airports with more than 10-kt throughput capacity accounted for 98.5% of the total cargo and mail throughput. Table 3.4 shows the rankings of the top 20 airports for cargo and mail throughput in 2017. In recent years, the network of China’s civil aviation routes had developed rapidly, with a significant increase in international routes. As of late 2017, China had 4,418 scheduled routes including domestic and international altogether. Domestic scheduled flights covered 224 cities (excluding Hong Kong, Macau and Taiwan), while international scheduled flights reached 158 cities in 60 countries. Figure 3.8 shows the recent growth in scheduled flight routes.

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Table 3.4 Cargo and mail throughput of China’s top 20 airports in 2017 Airport

Ranking

Completed in 2017 (thousand tons)

Completed in 2016 (thousand tons)

±(%) 11.2

Shanghai/Pudong

1

3,824.3

3,440.3

Beijing/Capital

2

2,029.6

1,943.2

4.4

Guangzhou/Baiyun

3

1,780.4

1,652.2

7.8

Shenzhen/Baoan

4

1,159.0

1,126.0

2.9

Chengdu/Shuangliu

5

642.9

611.6

5.1

Hangzhou/Xiaoshan

6

589.5

488.0

20.8

Zhengzhou/Xinzheng

7

502.7

456.7

10.1

Kunming/Changshui

8

418.0

382.9

9.2

Shanghai/Hongqiao

9

407.5

428.9

−5.0

Nanjing/Lukou

10

374.2

341.3

9.7

Chongqing/Jiangbei

11

366.3

361.1

1.4

Xiamen/Gaoqi

12

338.7

328.4

3.1

Tianjin/Binhai

13

268.3

237.1

13.2

Xi’an/Xianyang

14

259.9

233.8

11.2

Qingdao/Liuting

15

232.1

230.7

0.6

Wuhan/Tianhe

16

185.0

175.3

5.5

Dalian/Zhou Shuizi

17

164.8

149.0

10.6

Shenyang/Taoxian

18

159.1

155.8

2.1

Urumqi/Diwobao

19

156.7

157.5

−0.5

Haikou/Meilan

20

154.5

148.8

3.8

Source Compiled from the 2017 Statistical Bulletin of Nationwide Airports, published by the Civil Aviation Administration of the P.R.C.

China’s civil aviation transport fleets have grown rapidly. In 2017, there were a total of 3,261 aircrafts in China’s operating fleets. Figure 3.9 shows the number of listed aircrafts in 2010–2017. Air logistics parks are important nodes in air logistics services which play an important role in the air logistics system. Recently, local governments and air companies in Beijing, Shanghai, Tianjin, Chengdu, Guangzhou, Shenzhen, and Zhengzhou have actively built air logistics parks around the hub airports. Local governments in Tianjin and Zhengzhou also develop air logistics as an important means for stimulating the local economic development. For example, in September 2014, Tianjin Municipal People’s Government approved the Tianjin Air Logistics Park, aimed to build an air freight center in northern China and develop industries such as air transportation, mail delivery, e-commerce, air finance, business services, air maintenance, education and training, and comprehensive services. As of late 2017, Tianjin Air Logistics Park had ushered in 695 registered enterprises with a total registered

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J. Liu 2017

3,615

Year

2016

3,055 2,666

109

2014

2,652

114

2,449

2012

2,076 0

739

109

2015

2013

803

96

660 490 427

107 381

99

1000

2000

3000

4000

5000

Number of domestic and international scheduled flight routes

Domestic Route (Hong Kong, Macau, and Taiwan)

International Route

The number of Listed Aircrafts of China Nationwide Airports

Fig. 3.8 Number of China’s Scheduled flight routes for 2012–2017. Source Compiled from the Statistical Bulletin of Development of Civil Aviation (2012–2017), published by the Civil Aviation Administration of the P.R.C. 3500

3,261 2,950

3000

2,650 2,370

2500

2,145

2000 1,597

1,764

1,941

1500 1000 500 0

2010

2011

2012

2013

2014

2015

2016

2017

Year

Fig. 3.9 Listed aircrafts of China’s civil aviation for 2010–2017. Source Compiled from the Statistical Bulletin of Development of Civil Aviation (2010–2017), published by the Civil Aviation Administration of P.R.C.

capital of 150 billion RMB (Enorth 2018).14 Tianjin Air Logistics Park has attracted a number of air and logistics enterprises to settle in the Park, and basically established a concentrated development of air logistics. The list of noted enterprises include Tianjin Airlines Co., Ltd., Tianjin Cargo Airlines, Hainan Bohai Modern Logistics, 14 enorth.com.cn

(2018). Supporting Polices of Tianjin Free Trade Zone for Further Promoting the Development of Air Logistics Industry issued [EB/OL]. http://news.enorth.com.cn/system/2018/ 06/20/035708604.shtml/, 21 Jun. 2018.

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FedEx, TNT, COSCO Air Transport, Sinotrans, SF, Yuantong, Huayu cargo station, and TCS cargo station.

3.4.3 Deepened Integration of Air Freight Enterprises and Gradual Formation of the Air Logistics Industry Chain Currently, China’s air freight enterprises are transforming towards integrated logistics service providers. Airline companies have gradually achieved the integration of air freight with highway and railway logistics through the “mixed-ownership reform.” Air freight enterprises have begun to provide customers with integrated logistics services such as logistics distribution, warehouse management, supply chain finance, supply chain management and cloud system optimization by integrating freight logistics, in a way to gradually build up the air aviation logistics industry chain. The “mixed-ownership reform” of airline companies aims to help them transform from traditional air freight enterprises to modern integrated logistics service providers, by bringing in private capitals from the express delivery and logistics companies. China Eastern Airlines Co., Ltd. has now achieved marked results in its reform. In June 2017, Eastern Airlines Logistics, a subsidiary of China Eastern Airlines, cooperated with Deppon Express in the format of “State-Owned Air + Private Express Delivery.” After the mixed-ownership reform, Eastern Airlines Logistics does business in four segments, namely air transportation, cargo terminal, ground truck transportation, and express delivery; this reform effectively improves the operational capability and sustainable development of China Eastern Airlines. Air China and China Southern Airlines are also steadily promoting the mixed-ownership reform of their air freight segments. In order to transform to integrated logistics service providers, airline companies are augmenting their investments in information technology. By applying technologies, such as the Internet of Things (IoT), mobile Internet, cloud computing, and big data, in product customization, intelligent distribution, online query/scheduling, and automatic distribution, air logistics enterprises are accelerating the intelligentization and informationization of air logistics. For example, Hainan Airlines has achieved the integration of business flow, logistics flow, capital flow and data flow to create a modern logistics system by integrating data on all its commercial activities, as a way to provide the output of high-value data applications. The online service platform of HNA Logistics (haipingx) optimizes its air freight, airport management, warehousing investment, and logistics financial service to support the fully-integrated modern logistics services.

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3.4.4 Rapid Development of Airport Cross-Border E-Commerce Becoming a New Growth Point for Air Logistics Cross-border e-commerce has become a notable market segment of China’s international trade. China’s major airports are accelerating their development of cross-border e-commerce logistics through various means such as Customs clearance reform, cross-border e-commerce industrial parks, and cross-border e-commerce logistics parks. Cross-border e-commerce logistics services have become a new growth point for China’s air logistics. So far, China has built and operated a number of airport cross-border e-commerce projects including Cross-Border E-Commerce Demonstration Park of Zhengzhou Airport Economic Comprehensive Experimental Zone, Guangzhou Airport Pilot Cross-Border E-Commerce Park, Airport Park of Hangzhou Comprehensive Experimental Zone for Cross-Border E-Commerce, Nanjing Airport Cross-Border ECommerce Industrial Park, and Harbin Airport Cross-Border E-Commerce Logistics Park. Zhengzhou Airport Economic Comprehensive Experimental Zone spearheaded its “9610”15 cross-border export model, serving specifically the cross-border e-commerce enterprises, and has achieved remarkable results. Zhengzhou’s crossborder e-commerce industry has been growing rapidly; as of late 2017, Zhengzhou Airport Economic Comprehensive Experimental Zone had completed 18.536 million cross-border import and export orders valued at 1.453 billion RMB (Zhengzhou Daily 2018).16 Zhengzhou Xinzheng Comprehensive Bonded Zone Customs has explored and implemented efficient cross-border export business models to the extent of cutting the Customs clearance time from 3 to 4 h down to 40 min. By perpetually optimizing the form generation and declaration rules, it improved the system data processing capability from 70 to 500 forms/s, thus enhancing the processing efficiency by seven times. As of December 2017, there were 338 cross-border e-commerce enterprises registered at the Xinzheng Comprehensive Bonded Zone, consisting of platform enterprises, e-commerce enterprises, payment enterprises, and logistics enterprises, and essentially constituted a complete cross-border e-commerce industry chain. A concentrated cross-border e-commerce industry in Zhengzhou Airport Economic Comprehensive Experimental Zone boosts the growth in Zhengzhou airport’s logistics. A number of enterprises have opened special charter freight routes, including the Zhengzhou-Taipei and Zhengzhou-Latvia routes already under operation, as well as the Zhengzhou-Europe and Zhengzhou-USA routes under initial intent of cooperation. 15 In

order to help cross-border trade e-commerce retail export enterprises with Customs clearance, the General Administration of Customs has added “9610” as the Customs supervision model code, an export supervision model for cross-border e-commerce services, since February 10, 2014. 16 Zhengzhou Daily. Cross-border e-commerce business in Zhengzhou Airport skyrockets [EB/OL]. http://hn.cnr.cn/hngbxwzx/20180129/t20180129_524115786.shtml, 29 Jan. 2018.

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3.5 Summary This chapter describes the development of China’s highway logistics, railway logistics, harbor logistics and air logistics. In each mode of transportation, logistics scale and infrastructure as well as related logistics services are discussed. In recent years, these modes of transportation-related logistics markets have maintained a steady growth trend, with gradually improved logistics infrastructure and constantly innovated service models. Major hot spots in the development of these modes of transportation are platformization of highway transportation organizations, market-based reform of railway freight, integration of regional port resources, and transformation and upgrading of service functions, as well as mixed-ownership reform of cargo airlines. In general, both the governmental authorities and transportation enterprises are adjusting and upgrading the transportation organizational models coping with the concept of modern logistics services, and promoting the industry to transform from traditional transportation services to modern logistics services. All above modes of transportation have now possessed highly integrated service capabilities and basically formed networked logistics service systems. As different modes of transportation are linking to each other more and more smoothly, China’s comprehensive transportation logistics service network has gradually been established.

References Beijing Daily. The Market Concentration of Express Delivery Industry Rises Again for the First Time. Beijing Daily. http://www.bj.xinhuanet.com/2018-05/03/c_1122775801.htm, 3 May. 2018. China Communications Association Intermodal Branch (2018). Review and Outlook of China’s Multimodal Transport Development in 2017 [EB/OL]. http://www.chinawuliu.com.cn/ information/201803/21/329579.shtml, 21 Mar. 2018. enorth.com.cn (2018). Supporting Polices of Tianjin Free Trade Zone for Further Promoting the Development of Air Logistics Industry issued [EB/OL]. http://news.enorth.com.cn/system/2018/ 06/20/035708604.shtml/, 21 Jun. 2018. Ministry of Transport of the P.R.C. (2016, 2017). Statistical Bulletin of China Transportation Industry. The freight volume and turnover is calculated for railway, highway, waterway, and civil aviation (excluding piping) on the basis of data in 2016 and 2017. Ministry of Transport of the P.R.C. (2018). Statistical Bulletin of China Transportation Industry 2017 [EB/OL]. http://zizhan.mot.gov.cn/zfxxgk/bnssj/zhghs/201803/t20180329_3005087.html, 30 Mar. 2018. www.chinawuliu.com.cn (2017). Circular on Ranking of Top 50 Logistics Enterprises in China [EB/OL]. http://www.chinawuliu.com.cn/lhhkx/201710/16/325400.shtml, 16 Oct. 2017. www.chyxx.com (2017). Analysis on Concentration of Less-Than-Truck-Load Express Transportation and Operation Modes of Enterprises In 2017 [EB/OL]. http://www.chyxx.com/industry/ 201711/585273.html, 22 Nov 2017.

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www.scio.gov.cn (2018). China Needs to Solve the Problem about Development Quality after China Ranks First in the World in Terms of The Total Length of Railways and Highways Operated and Opened [EB/OL]. http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/37601/37964/ zy37968/Document/1623190/1623190.htm, 7 Feb. 2018. Zhengzhou Daily. Blowout Growth of Cross-border E-commerce Business in Zhengzhou Airport [EB/OL]. http://hn.cnr.cn/hngbxwzx/20180129/t20180129_524115786.shtml, 29 Jan. 2018.

Chapter 4

Development Status of China’s Manufacturing Logistics Weihua Liu and Ling Wang

Manufacturing logistics is an important part of modern logistics. Developing effective manufacturing logistics is of great significance for manufacturing enterprises to reduce costs, increase profit, and improve the benefits to the entire society. Under the guidance of the recent economic development strategies such as “Made in China 2025,” “Internet+,” and the Belt and Road Initiatives, China’s manufacturing industry continues to promote transformation and upgrading, and is moving towards high-end and intelligent development. In this context, the scale and demand of manufacturing logistics is steadily growing, while its costs are much reduced and its operating efficiency continues to improve. Meanwhile, service models of manufacturing logistics continue to undergo innovations, and high-end manufacturing logistics is notably growing. In the future, manufacturing logistics will further enhance its operational performance along the directions of deeper cooperation in the supply chain, cycling, and sustainability, and will move towards a new phase of high-quality development. This Chapter includes four sections. Section 4.1 gives an overview of manufacturing logistics, including the operating procedures, operators, operational models, and the crucial role of manufacturing logistics. Section 4.2 elaborates on the development environment of China’s manufacturing logistics. Section 4.3 discusses the current development status of China’s manufacturing logistics, including market size, logistics costs, service models, development of the sub-sectors, and the deeper integration of manufacturing and logistics. Section 4.4 points out the existing problems and development trends of China’s manufacturing logistics.

W. Liu College of Management and Economics, Tianjin University, Tianjin, China e-mail: [email protected] L. Wang (B) Logistics Research Center, Nankai University, Tianjin, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_4

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4.1 Overview of Manufacturing Logistics Manufacturing logistics refers to the logistics activities of a manufacturing firm in the process of production and consumption, constituting a complete cycle which includes supply of raw materials, production or processing, finished products, sales, waste recycling and reuse. It contains functional activities such as transportation, warehousing, packaging, loading, moving, distribution processing, information handling, and delivery. Owing to the many linkages in the operational process, the complex operating procedure and the great differences in its various sectors, manufacturing logistics can have several operating models.

4.1.1 Operating Processes and Operators of Manufacturing Logistics 4.1.1.1

Operating Processes of Manufacturing Logistics

In general, according to the production/operations process, manufacturing logistics includes five sections, namely, procurement/supply logistics, production logistics, sales logistics, recycle logistics and waste logistics. Figure 4.1 depicts more detailed activities in the entire manufacturing cycle.

Purchase & supply logistics Purchase, transportation, receiving, warehousing, inventory management and materials management of production materials

Supplier

Purchase

Raw materials storage and warehousing

Supply

Production logistics

Sales logistics

Production plan and control, in-factory transportation (movement), warehousing and management of inproduction products

Inventory management of finished products, order handling, shipping, transportation and customer service

Storage of inproduction products

Storage of finished products

Sales

Customer

Recycle logistics and waste logistics Recycle of waste and used materials as well as leftover pieces, and disposals of various wastes Materials flow

Information flow

Fig. 4.1 Operating processes of manufacturing logistics. Source Qi Ershi (2006) Logistics Engineering [M], Science and Technology of China Press, Beijing

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Table 4.1 Operators in different logistics models No.

Logistics model of manufacturing firm

Operator

1

Completely operated by manufacturing firm with logistics business sparsely operated

Manufacturing firm

2

Manufacturing firm establishes their own professional logistics enterprise

Manufacturing firm

3

Single logistics service outsourced; management right withheld

Manufacturing firm and third-party logistics enterprise

4

Multiple logistics services outsourced; management right withheld

Manufacturing firm and third-party logistics enterprise

5

All logistics services outsourced; management right withheld

Manufacturing firm and third-party logistics enterprise

6

Manufacturing firm establishes JV logistics enterprise

Manufacturing firm and third-party logistics enterprise

7

All logistics systems are peeled off from manufacturing firm

Third-party logistics enterprise

4.1.1.2

Operators of Manufacturing Logistics

There are two categories of operators of manufacturing logistics—manufacturing firms and logistics enterprises. Based on the degree of logistics outsourcing and management control in the manufacturing firms, there are seven types of manufacturing logistics models and their corresponding operators. Table 4.1 shows more details.

4.1.2 Major Operational Models of Manufacturing Logistics Generally, major operational models of manufacturing logistics can be divided by the complexity of the operations into the “single function” model, the “logistics + capital flow” model, and the “whole-process supply chain” model.

4.1.2.1

The “Single Function” Model

There are a number of links during the operations process of product manufacturing, including design, purchase, production, distribution, and sales. Different logistics demands are generated in different aspects. A logistics model that performs a certain single function is referred to as the single function model, such as transportation. Transportation demands may occur in different links, such as the transportation of raw materials during purchase, the transfer and distribution of finished goods, and the sales and transportation of finished products. Enterprises may disperse or integrate

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transportation business in different aspects by self-operating or third-party logistics companies, depending on their own conditions. This is the most basic operational model of manufacturing logistics, which can be employed to satisfy the basic logistics demands of enterprises during manufacturing.

4.1.2.2

The “Logistics + Capital Flow” Model

On the basis of achieved single logistics functions such as transportation and warehousing, with the flow of funds, the operations of manufacturing logistics may evolve into a more complex model, referred to as the “logistics + capital flow” model. In this model, dispersed logistics demands of manufacturing enterprises are integrated to some extent, and different operators cooperate more closely due to the participation of funds. As small and medium-sized manufacturing enterprises may be constrained by tight capital turnover, there are oftentimes the needs for capital in the acquisition of raw materials which entails large sum of capital outlay. Therefore, the “purchasing logistics + advance payment” model is born. Namely, large third-party logistics companies may provide advance payment services for small and medium-sized manufacturing enterprises during the execution of purchasing logistics, so as to relieve the pressure on capital turnover of the manufacturing enterprises and engenders a closer cooperation between the parties.

4.1.2.3

The “Whole-Process Supply Chain” Model

Logistics enterprises may participate in the whole process of the manufacturing enterprises’ supply chain, in a move to help them achieve the whole-process supply chain management basing on the logistics demands in all links. This is an advanced model of manufacturing logistics. In this model, due to the integrated management of the whole-process supply chain, the sharing and timely delivery of information becomes very important, so it requires higher level on enterprises informationization. At the same time, as the logistics enterprises need to participate in the whole-process supply chain of the manufacturing enterprises, it is necessary for manufacturing enterprises to relinquish some management authorities to help achieve the integration of manufacturing and logistics.

4.1.3 Important Role of Manufacturing Logistics 4.1.3.1

Reducing Production Costs and Enhancing Production Efficiency

Manufacturing logistics cost is an important part of manufacturing cost. Welldeveloped manufacturing logistics will help enterprises improve their management

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of production and logistics, optimize logistics operations, and thus reduce production cost. In addition, developing sound manufacturing logistics will also help manufacturing enterprises concentrate on their main business and promote the integrated operations of the enterprise supply chain, thereby improve the production efficiency.

4.1.3.2

Improving Supply Chain Responsiveness and Enhancing Product Competitiveness

The popularization and application of Internet information technology and the rapid development of e-commerce are driving the change and transformation of consumption patterns. Consumers have newer requirements for timeliness and accuracy in product supply, and expect higher operational efficiency of the product supply chain. Developing manufacturing logistics can strengthen the integration of supply chain in purchasing, production, distribution and delivery, so as to help improve the responsiveness and flexibility of the supply chain, and thus enhance the overall competitiveness of the products.

4.1.3.3

Promoting High-Quality Economic Development and Construction of Modern Economic System

The “Report of the 19th National Congress of the C.P.C.” made it clear that China’s economy has shifted from a stage of high-speed growth to a stage of high-quality development. To promote high-quality economic development, it is necessary for China to focus on supply-side reform, support the optimization and upgrading of traditional industries, and vigorously develop advanced manufacturing. As an important part of the integrated development of manufacturing and logistics, manufacturing logistics is an important foundation and guarantee for the upgrading and transformation of manufacturing. Developing manufacturing logistics can help improve the total factor productivity, and promote the transformation of manufacturing from the low-end to the mid-to-high end in the value chain. It is also conducive to promoting the quality and efficiency improvement in manufacturing, driving the high-quality economic development, and supporting the establishment of a modern economic system.

4.2 Development Environment of China’s Manufacturing Logistics The deep integration of new-generation information technology and manufacturing is triggering far-reaching industrial changes. In recent years, China’s manufacturing industry has been developing well overall, bringing about much room for develop-

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ment for manufacturing logistics. With the accelerated transformation and upgrading of the manufacturing industry, high-end manufacturing is rising gradually, and extending manufacturing logistics out to supply chain services. In addition, while “Internet+” strategy is pushing the intelligent development of manufacturing, which in turn leading to the intelligent upgrading and transformation of manufacturing logistics. In terms of the policy environment, due to the advancement of the “Manufacturing Power” strategy, policies and plans for developing manufacturing logistics are continually instated in China.

4.2.1 National Economy Keeps Medium and High-Speed Growth; Manufacturing Logistics Environment Continually Prospers Affected by the low overall growth of the world economy and its adjustment of the domestic industrial economic structure, China’s economic growth in 2017 slowed down, but still maintained a medium to high growth. The GDP growth fell from 7.7% in 2013 to 6.9% in 2015, dropped further to 6.7% in 2016, and bounced back to 6.9% in 2017. In terms of industries, China’s three major industries had shown different growth rates. The primary industry, as the foundation industry, grew steadily at 3.9% in 2017. Due to the transformation and upgrading of the economic structure, more emphasis was placed on the service industry; therefore, the tertiary industry had maintained a high growth rate at 8% in 2017. The secondary industry, predominately manufacturing, basically maintained a growth rate at 6.1%, same as those in 2015 and 2016. See Fig. 4.2 for the specific trends. Purchasing Managers’ Index (PMI) is one of the internationally accepted macroeconomic monitoring index systems, also known as the “threshold.” If PMI is higher than 50%, it reflects an expanding manufacturing economy; if PMI is below 50%, it reflects a shrinking manufacturing economy. In 2017, China’s manufacturing PMI showed a steady rise overall, with an average annual value of 51.6%, which is 1.3 percentage points higher than that in 2016, and the highest in the past six years. Thanks to the accumulation of positive factors in economic operations in 2017, steady economic growth has become more apparent.

4.2.2 Gradual Rise of High-End Manufacturing Brings About New Momentum to Manufacturing Logistics Growth The transformation and upgrading of manufacturing industry has accelerated. On the one hand, China’s manufacturing industry is in the process of transitioning from the industrial era to the information era and further to the data era. As the tradi-

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9 8 7 6 5 4 3 2 1 0

2012

2013

2014

2015

2016

GDP

7.8

7.7

6.9

6.9

6.7

2017 6.9

Primary industry

4.5

4

3.9

3.9

3.5

3.9

Secondary industry

8.1

7.8

6

6

6.1

6.1

Tertiary-industry

8.1

8.3

8.3

8.3

7.6

8

Fig. 4.2 GDP in 2012–2017 and growth of three major industries. Source National Bureau of Statistics of the P.R.C. (2018) National Bureau of Statistics of the P.R.C. published the preliminary GDP accounting results in 2017: the growth rate in 2017 was 6.9% [EB/OL]. http://money.163. com/18/0119/09/D8GMBTJC00258105.html. 19 Jan 2018

tional mass production model is gradually being shattered, mass-customized production and personalized production have become mainstream production models, thus bringing about new requirements for logistics services. On the other hand, with the change of focus in the manufacturing industry value chain from production to R&D design and marketing services, the industrial form is gradually shifting from production-oriented manufacturing to service-oriented manufacturing. This causes the demands for manufacturing logistics to not only extend to both ends of the production and processing activities of the manufacturing industry, but also to the core of the production and processing activities. An example is seen in the cooperation between Shanghai Volkswagen Co., Ltd. and Anji-TNT Automotive Logistics Co., Ltd., which optimizes and integrates the supply chains. Anji-TNT provides Shanghai Volkswagen with integrated logistics solutions including VMI (Vendor Managed Inventory) and Line Feeding; every two hours, it delivers raw materials and components, in an orderly manner, to the general assembly workshop, thus shortening the response time of materials supply, and ensuring Shanghai Volkswagen to pull off its JIT production. New kinetic energy for industrial growth is increasingly amassed. In 2017, the added value of high-tech and equipment manufacturing increased by 13.5% and 11.4%, respectively, which are 2.6 and 1.8 percentage points higher over the previous year, and 6.9 and 4.8 percentage points higher, respectively, compared with those

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of industrial enterprises above designated size.1 New industrial products such as industrial robots, civil UAVs, new energy vehicles, urban rail vehicles, lithium-ion batteries and solar cells grew rapidly in outputs, by 68.1%, 67%, 51.1%, 40.1%, 31.3%, and 30.6%, respectively (Wen Jianwu 2018).

4.2.3 “Internet+” Accelerates the Development of Intelligent Manufacturing; Prospect of Intelligent Logistics Propitious The in-depth integration of the new-generation information technology and manufacturing is triggering far-reaching industrial changes and forming new production methods, industrial forms, business models, and economic growth points. In May 2015, the State Council issued the “Made in China 2025” strategy, in which “intelligent manufacturing” was positioned as the main direction of Made in China; the strategy also stipulated coordinated layout and promotion of the R&D and industrialization in the fields of intelligent service robots, intelligent household appliances, intelligent lighting appliances, and wearable devices. In July 2015, the State Council issued the Guiding Opinion on Actively Pushing Forward the “Internet Plus” Campaign, which specifically mandated to strengthen the “Internet+” collaborative manufacturing, and actively upgrade China’s traditional manufacturing to intelligent manufacturing. In November 2017, the State Council issued the Guiding Opinion on Deepening the Industrial Internet with “Internet + Advanced Manufacturing,” which proposed to vigorously develop the industrial Internet to optimize production and service resource allocation with broader scope, higher efficiency and more precision. It also provided crucial support for promoting the supply-side structural reform of the manufacturing industry and achieving the intelligent development of the manufacturing industry. Under the strategic background of “Made in China 2025,” China has implemented the intelligent manufacturing project since 2015; the intelligent manufacturing industry represented by the new sensors, intelligent control systems, industrial robots and automated ready-made equipment has been endowed with rapid development opportunities. The intelligent development of manufacturing is looking very promising. Many enterprises have created a number of “intelligent manufacturing + big data + Internet + application” models in intelligent manufacturing, such as “personalized customization,” “on-demand manufacturing,” “crowd-sourcing,”2 and “off-site collaborative design.” In 2015, 2016 and 2017, the Ministry of Industry and Information Technology selected the first batch of 46, the second batch of 36 and the third 1 Industrial

enterprises above designated size refer to those industrial enterprises having annual revenue of over 20 million RMB. 2 Crowd-sourcing refers to the act that a company or institution outsources its tasks previously performed by its employees in-house to an unspecified (usually large, non-permanent) pool of public workforce.

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batch of 98 intelligent manufacturing pilot demonstration projects. Judging from the broad industry distribution of these demonstration projects, intelligent manufacturing has apparently extended its depth and breadth. In addition to the traditional automobile, food and beverage, and chemical industries, in 2017, there were new intelligent manufacturing projects under construction in industries such as batteries (lithium batteries), equipments and instruments, robots, and refined-processing of the traditional agricultural industry.

4.2.4 The “Manufacturing Power” Strategy Is Advocated; Manufacturing Logistics-Related Policies Are Instituted The “Made in China 2025” strategy pointed out that three steps are needed for China to achieve the strategic goal of becoming a “manufacturing power.”3 The 19th CPC National Congress stressed that after the accelerated construction of a manufacturing power, relevant policies would be further strengthened. In November 2016, the State Council issued the 13th Five-Year Development Plan for National Strategic Emerging Industries, proposing to develop industries such as high-end brands, aviation, satellite and application, rail transit equipment, marine engineering equipment, and high-tech materials. In November 2017, the National Development and Reform Commission issued the Three-Year Action Plan to Enhance Core Competitiveness in Manufacturing (2018–2020); the Ministry of Industry and Information Technology, the National Development and Reform Commission and several other Ministries and Commissions jointly issued the Guiding Opinions on Promoting the Strategy of Manufacturing Power with Private Investment. On this basis, policies to promote the development of manufacturing logistics were introduced to encourage the application of new technologies, enhance manufacturing logistics services, and promote the in-depth integrated development of logistics with manufacturing. Policies introduced by the Central government and local governments are listed in Table 4.2.

4.3 Current Development Status of China’s Manufacturing Logistics With the in-depth promotion of the “Made in China 2025” strategy, the scale of China’s manufacturing logistics is growing steadily, and demands for logistics are on the rise, especially in the development of high-end manufacturing logistics. Manu3 Step 1: strive to become one of the manufacturing powers in ten years; step 2: help China’s overall

manufacturing industry attain to the middle level of the world’s manufacturing powers; step 3: solidify the status of China as a manufacturing power on the 100th anniversary of the founding of the P.R.C., when China becomes one of the world’s leading manufacturing powers in terms of comprehensive strength.

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Table 4.2 Policies issued by Central Government and local governments on the development of manufacturing logistics No.

Issued in

Policy documents

Major contents

1

September The State Council 2014

Issued by

The Medium and Long Term Development Plan of Logistics Industry (2014–2020)

Encourage logistics enterprises to deepen strategic partnership with manufacturing enterprises; establish manufacturing logistics service system adapting to the new-type of industrialization; engage in projects of manufacturing logistics and supply chain management

2

December 2014

The National Development and Reform Commission

Three-year Action Plan to Promote the Development of Logistics Industry (2014–2016)

Continue to push forward coordinated development of manufacturing industry and logistics industry; foster a number of demonstration enterprises in coordinated development of manufacturing industry and logistics industry by 2016 yearend

3

May 2015

The State Council

Made in China 2025

Accelerate the application of intelligent logistics management, technologies and equipment in the production process; build up green supply chain

4

July 2015

The State Council

Guiding Opinion on Actively Pushing Forward the “Internet Plus” Campaign

Promote the “Internet Plus” efficient logistics

5

August 2015

The State Council

Action Plan of Promoting the Big Data Development

Collect and analyze real-time data of government agencies, enterprises and institutions, regarding market supervision and sales logistics

6

August 2015

The National Development and Reform Commission

Notification about Speeding up the Implementation of Key Modern Logistics Projects

Implement project of manufacturing logistics and supply chain management (continued)

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Table 4.2 (continued) No.

Issued in

7

Issued by

Policy documents

Major contents

November The Ministry of Industry 2015 and Information Technology

Action Plan of the Ministry of Industry and Information Technology to Implement the Guiding Opinions on Actively Pushing Forward the “Internet Plus” Campaign (2015–2018)

Push forward collaborative innovation and interaction development of industrial e-commerce platform, third-party logistics and Internet finance; support leading manufacturing enterprises to focus on supply chain management

8

December 2015

The Ministry of Industry and Information Technology and the Standardization Administration

Guidelines for Building National Intelligent Manufacturing Standards (2015)

Coordinate various enterprises along the industrial chain to realize collaborated R&D, intelligent production, lean logistics and intelligent service, by sharing online information. The intelligent factory standards encompass six areas such as intelligent factory building plan and intelligent logistics

9

February 2016

The National Development and Reform Commission and other nine Ministries and Commissions

Some Opinions on Strengthening the Shortfalls in Logistics Development and Promoting Effective Investments and Residents’ Consumption

Push forward demonstration project in express delivery serving manufacturing industry; actively integrate into new fields of manufacturing such as intelligent manufacturing and personalized customization

10

June 2016

The National Development and Reform Commission

Implementation Plan for Building a Good Market Environment to Promote the Integrated Development of Transportation Logistics

Promote multi-point interactive operations of enterprises online and offline to support unified information standards and coordinated systems between manufacturing logistics service platforms and upstream and downstream enterprises in the supply chain (continued)

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Table 4.2 (continued) No.

Issued in

Issued by

Policy documents

Major contents

11

July 2016

The Ministry of Industry and Information Technology and the National Development and Reform Commission, and the Chinese Academy of Engineering

Special Action Guide for the Development of Service-Oriented Manufacturing

Develop specialized services for supply chain management, support manufacturing enterprises to integrate internal logistics resources, improve supply chain management, and promote intelligent logistics equipment and warehousing facilities

12

September The National Development 2016 and Reform Commission

Special Action Plan for Cost Reduction and Efficiency Improvement in Logistics (2016–2018)

Based on the strategic deployment of “Made in China 2025,” encourage logistics firms to transform and upgrade their demands for manufacturing, expand and enhance their comprehensive service capability, and provide sophisticated logistics services such as purchasing logistics, inbound logistics, delivery logistics, and recovery logistics

13

May 2017

State Post Bureau of the People’s Republic of China

Opinions of the State Post Bureau on Accelerating the Supply-Side Structural Reform in the Post Industry

Serve the strategy of “Made in China 2025,” promote cooperation between post services and modern manufacturing; develop service models such as inbound logistics and regional supply chain

14

June 2017

The National Development and Reform Commission and others

Notice on Carrying out Cost Reduction in 2017 (Fa Gai Yun Xing [2017] No. 1139)

Promote the development of new logistics forms and container transportation; promote the in-depth integrated development of logistics and manufacturing, and reduce the logistics costs of manufacturing enterprises (continued)

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Table 4.2 (continued) No.

Issued in

Issued by

Policy documents

Major contents

15

August 2017

General Office of the State Council of the People’s Republic of China

Opinions of the General Office of the State Council on Further Promoting Logistics Cost Reduction and Efficiency Improvement and Promoting the Development of the Real Economy (Guo Ban Fa [2017] No. 73)

Promote the joint development of logistics and manufacturing, strengthen the R&D of core logistics technologies and equipment, and enhance the management of manufacturing logistics

16

January 2015

General Office, Guizhou Provincial People’s Government

Some Opinions of the General Office of Guizhou Provincial People’s Government on Accelerating the Development of Modern Logistics Industry

Vigorously push forward coordinated development of manufacturing industry and logistics industry; help industrial enterprises peel off logistics assets and business to establish third-party logistics enterprises, to engage in socialized logistics service

17

May 2015

Gansu Provincial Development and Reform Commission

Notice on Issuing the Implementation Plan for Further Promoting Logistics Development in Gansu Province in 2015

Promote the joint development of manufacturing and logistics and the coordinated development of logistics enterprises and production, commercial and trade enterprises

18

June 2015

Shanxi Provincial Government

Medium and Long-Term Planning for Logistics Development in Shanxi Province (2015–2020)

Promote the in-depth cooperation between logistics enterprises and manufacturing enterprises, and promote the joint development of manufacturing and logistics

19

November General Office of the 2015 People’s Government of Shandong Province

Notice on Forwarding the Implementation Plan of Shandong Provincial Industry and Information Technology Commission for Logistics Transformation and Upgrading in Shandong Province (2015–2020)

Accelerate the coordinated development of logistics and other industries

(continued)

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Table 4.2 (continued) No.

Issued in

20

21

Issued by

Policy documents

Major contents

November General Office of the 2016 People’s Government of Guangdong Province

Development Planning for Modern Logistics in Guangdong Province

Carry out in-depth pilot demonstration of coordinated development of manufacturing and logistics, encourage manufacturing enterprises to strip off and outsource logistics, and support logistics enterprises to transform into manufacturing logistics service providers and supply chain integrators

July 2017

Implementation Opinions of the General Office of the People’s Government of Shanxi Province on the Development of Modern Logistics

Promote the integration of manufacturing and logistics, and accelerate the implementation of a number of demonstration projects and key projects for integrated development. Focus on the development of manufacturing supply chain logistics, guide the postal express delivery enterprises to form in-depth integrated development with manufacturing enterprises, and be embedded into the manufacturing supply chain

General Office of the People’s Government of Shanxi Province

Source Compiled based on policies issued by the Central Government and local governments on the development of manufacturing logistics

facturing logistics costs continue to fall, operational efficiency continues to improve, and manufacturing logistics is moving towards a new phase of high quality development. New manufacturing logistics service models are emerging, with services developing from standardization to customization. At the same time, the results of demonstration enterprises in coordinated development of manufacturing industry and logistics industry evidence that manufacturing and logistics are evolving towards in-depth integration.

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Total value of logistics trillion RMB

30

100% 90%

25

80% 70%

20

60%

15

50% 40%

10

30% 20%

5 0

10% 2012 17.73

2013 19.78

2014 21.35

2015 21.92

2016 22.97

2017 25.28

Total value of industrial products logistics

16.2

18.15

19.69

20.4

21.4

23.45

Proportion of industrial products logistics in social logistics

91.4%

91.8%

92.2%

93.1%

93.2%

92.8%

Growth rate of total value of industrial products logistics

10.0%

9.7%

8.3%

6.1%

6.0%

6.6%

Total value of social logistics

Proportion and growth rate (%)

4 Development Status of China’s Manufacturing Logistics

0%

Total value of social logistics Total value of industrial products logistics Proportion of industrial products logistics in social logistics Growth rate of total value of industrial products logistics

Fig. 4.3 Total amount of national industrial products logistics and its proportion to the total value of social logistics in 2012–2017. Source Compiled from the National Logistics Operations Bulletin for 2012–2017, published by the National Development and Reform Commission and the China Federation of Logistics and Purchasing

4.3.1 The Overall Scale of Manufacturing Logistics Is Steadily Expanding and Demands for Logistics Are Rising Manufacturing logistics is the main driving force for the growth of China’s social logistics. As shown in Fig. 4.3, the total value of industrial products logistics has exhibited a steady growth trend for years since 2010, rising from 14.36 trillion RMB in 2011 to 23.45 trillion RMB in 2017. In 2017, the total value of social logistics in China was 25.28 trillion RMB; the total value of industrial products logistics was 23.45 trillion RMB, increased by 6.6% year-on-year, and 0.6 percentage points higher than the previous year if calculated at comparable prices. The proportion of the total value of industrial products logistics to the total value of social logistics has remained at above 90% since 2012. With the continual betterment of logistics demand structure, the proportion of industrial products logistics has slowed down. Seen from the changes in different industrial structures, first of all, logistics demands of high-energy-consuming industries continue to decline owing to the low growth. In the first three quarters of 2017, logistics demands of the mining industry dropped by 1.6% year-on-year, with a decrease of 1.2 percentage points; that of the six high-energy-consuming

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industries4 increased by 3.1% year-on-year, down by 2.7 percentage points. Second, logistics demands for equipment manufacturing and high-tech industry have grown continually. In the first three quarters of 2017, logistics demands of equipment manufacturing and high-tech industry increased by 11.6% and 13.4%, respectively, 4.9 percentage points and 6.7 percentage points higher than that of the total value of industrial logistics, respectively, representing an increase of 2.5 percentage points and 2.8 percentage points over the same period of the previous year, respectively (eastmoney.com 2017).

4.3.2 Manufacturing Costs Kept Declining, Logistics Efficiency Continued to Improve Under the guidance of a number of combined measures such as “costs reduction and efficiency enhancement,” China’s logistics costs have continued to decline in recent years, and the quality of logistics operations has improved. According to the “Survey Report on Logistics for Major Enterprises in China” issued by China Federation of Logistics and Purchasing and China Logistics Information Center in December 2017, logistics costs of industrial, wholesale and retail enterprises in 2016 increased by 3.7% year-on-year. Comparing with the 1.2% decline of 2015, though the logistics costs of 2016 turned upward to a growth, yet it had kept at a low growth rate, basically maintaining the overall declining trend of recent years. In 2016, transportation costs of industrial, wholesale and retail enterprises accounted for 47.6% of their logistics costs, up by 0.2 percentage points over the previous year if calculated at comparable price; inventory carrying costs accounted for 36.8%, down by 0.6 percentage points; administrative costs accounted for 15.6%, up by 0.2 percentage points. In addition, manufacturing logistics continues to improve its operational efficiency. As shown in Fig. 4.4, the logistics expense ratio (the proportion of logistics cost in sales) of industrial enterprises in 2016 was 8.6%, down by 0.1 percentage points over the previous year. The logistics expense ratio of industrial enterprises has generally declined since 2008 and dropped to the lowest level recently in 2016, down by 1.2 percentage points from that of 2008. The average logistics expense ratio of bulk commodities was 11.6%, down by 0.5 percentage points; the logistics expense ratio of high value-added industries such as pharmaceutical manufacturing and automobile manufacturing increased slightly, up by 0.3 percentage points and 0.4 percentage points, respectively, over the previous year, but still below the average ratio of 8.6% for industrial companies in 2016.

4 The six high-energy-consuming industries refer to coal mining and washing, petroleum processing,

coking and nuclear fuel, chemical raw materials and chemical manufacturing, non-metallic mineral manufacturing, ferrous metal processing, and non-ferrous metal processing.

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9.3 9.2 9.1 9 8.9 8.8 8.7 8.6 8.5 8.4 8.3 Industrial enterprises

2012

2013

2014

2015

2016

9.2

9.1

8.9

8.7

8.6

Fig. 4.4 Logistics expense ratio of China’s industrial enterprises in 2012–2016 (Unit: %). Source China Federation of Logistics and Purchasing, China Logistics Information Center (2017) Survey Report on Major Enterprises Logistics in China [EB/OL]. http://www.clic.org.cn/wltjwlyx/290332. jhtml. 06 Dec 2017

4.3.3 Manufacturing Logistics Service Models Continue to Undergo Innovation, with Customized Logistics Becoming a Trend With the development of “Internet+,” intelligent and information-based technologies have been rapidly applied in manufacturing production and logistics, leading to swift changes in manufacturing logistics service models. Emerging technologies such as the Internet, the Internet of Things, big data, blockchain, and artificial intelligence are beginning to combine with manufacturing logistics. For example, Qingdao Gooday Logistics Co., Ltd. has established a three-level distributed cloud warehouse system with full network sharing; this move has substantially improved its logistics turnover and accuracy by achieving warehouse management intelligence with its adopted technologies such as unmanned intelligent warehouses and electronic waybills. In addition, changes in the form of demands for manufacturing logistics are driving the development of customized services, making customized logistics a new trend. For example, Hangzhou Zhongce Rubber Company Co., Ltd. and Hangzhou Bafang Logistics Co., Ltd. cooperated to form a customized service model of “production logistics service operations management + designated asset investment” to cover the entire supply chain. Hangzhou Bafang Logistics Co., Ltd. purchased some toroidal forklift equipment for the handling of tires with its own funds tailored to the production plan and production capacity of Hangzhou Zhongce Rubber Company Co., Ltd. to design

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and manage the real-time inventory. By designing and developing highly customized operational processes, it helps to improve the logistics handling efficiency.

4.3.4 Differentiated Development of Logistics for Various Sub-sectors of Manufacturing, with Obvious Growth in High-End Manufacturing Logistics Affected by the diversified development of sub-sectors within manufacturing, the growths of manufacturing logistics in various sub-sectors become differentiated. In 2017, the above-scale industrial added value increased by 6.6% year-on-year, up by 0.6 percentage points over the previous year. From January to November, the total value of industrial products logistics was 21.31 trillion RMB, up by 6.6% year-onyear, if calculated at comparable prices. Demands for bulk logistics slowed down, transformation and upgrading of industries with excess capacity such as coal and steel was accelerated, and demands for raw materials and finished goods logistics declined in different degrees. Demands for other traditional industries grew slowly, including 3.7% growth in non-metallic mineral products and 1.5% in non-ferrous metal smelting and rolling. In addition, demands for high-tech industry logistics continued to grow briskly, including 13.8% in computer, communications and other electronic equipment manufacturing, 12.2% in auto manufacturing, 10.6% in electrical machinery and equipment manufacturing. Overall, demands for high-tech industry logistics grew higher than those for all other industrial product logistics. It is estimated that by 2025, the proportion of China’s equipment manufacturing in the global equipment manufacturing will increase from 30% to more than 35%, and that of China’s high-end equipment manufacturing in China’s equipment manufacturing will increase from the current 20% to more than 35%. (Chen Lanqing 2016). Driven by the development of high-end manufacturing, a number of logistics enterprises are integrated into the manufacturing supply chain to carry out vendor managed inventory (VMI), warehousing and distribution integration, supply chain finance, and vigorously develop high-end manufacturing logistics. For example, in March 2016, Qingdao Gooday Logistics Co., Ltd. announced its large-scale logistics solutions covering intelligent cloud warehouses, trunk line distribution, visual distribution, last-KM delivery and interactive value-added solutions, whereby to provide complete, uninterrupted services for warehousing, distribution and installation. In July 2016, China Merchants Logistics Holding Co., Ltd. signed a cooperation agreement with Wuxi High-tech Zone to invest 600 million RMB to build a logistics supply chain integration service project.

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4.3.5 Demonstration Enterprises of Coordinated Development Continue to Spring Up; Manufacturing and Logistics Are Deeply Integrated in Development Under the continuing promotion of the policy on coordinated development of manufacturing and logistics, coordinated development demonstration enterprises at the national and local levels have emerged in large number. In December 2011, the National Development and Reform Commission held the “3rd National Conference on the Coordinated Development of Manufacturing and Logistics,” during which it announced the first 131 national demonstration enterprises in coordinated development of manufacturing industry and logistics industry. In May 2017, China Communications and Transportation Association held the “11th Annual Conference on Coordinated Development of Manufacturing and Logistics” to elect a number of demonstration enterprises and excellent service platforms and excellent logistics service providers in coordinated development of manufacturing and logistics. These actions are meant to further promote the coordinated development of manufacturing and logistics through the demonstration effect. At the local level, Guangdong Provincial Economic and Information Technology Commission selected the first batch of 27-pairs (54) and the second batch of 10-pairs (20) of enterprises in coordinated development of manufacturing and logistics in 2013 and 2014, respectively, in a way to effectively foster the coordinated development of manufacturing and logistics. In recent years, Shandong Province has supported 185 demonstration projects in coordinated development of manufacturing and logistics; these projects broke apart logistics outsourcing services in various ways, and formed a number of models in coordinated development of manufacturing and logistics. With the penetrating influence of logistics on manufacturing, “coordinated development of manufacturing and logistics” has been transformed into an “intermingled development of logistics and manufacturing.” Logistics enterprises have actively participated in the purchasing, production, ordering, sales, distribution, and return links of manufacturing enterprises. During the cooperation process, both sides constantly exchange with, learn from, infiltrate, and absorb each other, so as to form a higher form of manufacturing and logistics development built on deeper trust. For example, Guangzhou Jiacheng International Logistics Co., Ltd. and LONKEY Industrial Co., Ltd. established a joint venture, whereby the former would provide the latter with whole-process supply chain management and third-party logistics services from the supply of raw materials to the distribution of finished products, and even participate in the planning and design of the new plants. The cooperation between the two parties has achieved notable results, leading to a broad-based improvement of the logistics efficiency, and an optimization of the entire chain from production logistics to sales logistics.

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4.4 Problems and Development Trends of China’s Manufacturing Logistics In spite of the recent rapid development of manufacturing logistics in China, there still exist certain problems such as insufficient openness of logistics resources released by manufacturing enterprises, outsourcing mechanisms that need to be improved, and poor overall ability in supply chain management. At the same time, with the high percentage of logistics operations cost in manufacturing, the quality of manufacturing logistics needs to be improved. It is expected that in the future, the operational performance of manufacturing logistics will continue to improve and move towards a new phase of high-quality development. With the in-depth integrated development of manufacturing and logistics at the supply chain level, the sharing economy will promote the sustainable development of manufacturing logistics; technologies such as the Internet and cloud computing will drive the transformation and development of intelligent logistics.

4.4.1 Existing Problems in the Development of China’s Manufacturing Logistics 4.4.1.1

Insufficient Openness of Logistics Resources Released by Manufacturing Enterprises; Outsourcing Mechanisms Are in Need of Improvement

As logistics resources released by manufacturing enterprises are not sufficiently open, logistics outsourcing is still not well-established. This self-service-oriented logistics model greatly restricts and delays the creation and development of demands for high-efficiency, specialized and socialized logistics services, and has been a severe bottleneck choking the development of the manufacturing logistics market. Most commonly, logistics outsourcing by manufacturing enterprises has not resulted in a standardized market-oriented business model, but is oftentimes carried out by relying on the existing outsourcing network, to the extent of causing a serious mismatch between demands and supplies for logistics services. In addition, large state-owned enterprises are obligated to operate under rather restrictive bidding mechanisms, which often require rebidding every year; this leads to short-term one-time cooperation which makes it difficult for enterprises to form strategic partnerships, thus limiting the possibility of building continuing cooperative relationship between enterprises and hampering the long-term development of manufacturing logistics.

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In-Plant Logistics Process in Manufacturing and Overall Management Level Needs Improvement

In recent years, China’s manufacturing industry has paid more and more attention to logistics management by establishing in-house logistics management departments to conduct centralized and specialized logistics management, so as to promote the continuous optimization of their internal logistics processes and layout. However, there exists much room for manufacturing enterprises to improve their internal logistics management. Most manufacturing enterprises are not well-acquainted with the application of integrated logistics and supply chain management; most enterprises lack supply chain integration and management capability since purchasing logistics, manufacturing logistics and sales logistics are typically separated. This deficiency is reflected in problems such as high logistics cost, large inventory, high raw materials cost and unreasonable capital turnover.

4.4.1.3

High Logistics Cost Ratio in Manufacturing Industry; Inadequate Quality of Logistics Operations

With the continual implementation of a number of national and local government policies on reducing costs and increasing efficiency, logistics costs of China’s manufacturing enterprises have been reduced somewhat, but remain high in terms of the logistics cost ratio. The reasons being that, despite the favorable objective factors such as the economic structure, the industrial layout, and the more advanced development stage, other deterring factors, such lack of reasonable division of various transportation models in manufacturing operations, insufficiently optimized transmission and distribution paths, and multiple loading and unloading causing many logistics links, stack up to high logistics costs. Logistics costs for China’s manufacturing enterprises account for a high percentage in manufacturing costs, far higher than that (10–15%) in developed countries (www.ce.cn 2017). The cost breakdown shows that transportation costs account for about 47% of total logistics costs, warehousing costs account for about 37% of total logistics costs, and management expenses account for about 15% of total logistics costs. Overall, in 2017, China’s total expense of social logistics account for 14.6% of GDP, nearly double that of developed countries such as the US and Japan, and about 5 percentage points higher than the global average.

4.4.1.4

Service Capacity of Logistics Enterprises Unable to Fully Meet Manufacturing Demands Due to Insufficient Intelligence

As a number of national policies are successively implemented, manufacturing is developing rapidly in the direction of digitalization and intelligence. Hence their efficiency in production operations is improved, information exchange is upgraded, and supply chain response is faster. Consequently, they place higher requirements on the level of service intelligence of the corresponding logistics enterprises. As far as

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the current situation is concerned, it is still difficult for the service intelligence level of most logistics enterprises to keep up with the transformation and upgrading of manufacturing. For example, Huawei Technologies Co., Ltd. launched its intelligent logistics project in the 12th Five-year Planning period, requiring its global logistics service providers (i.e., logistics enterprises) to keep up with the development of its intelligent transformation, and comprehensively promote the pace of intelligent logistics. However, under such change towards intelligence transformation, the talents, technologies, and equipment of logistics enterprises are inadequate to match the progression of the manufacturing enterprises. That is, for most small and mediumsized logistics enterprises, due to their limitation in scale and resources, it is difficult for them to bear the expense of costly informationization, intelligent transformation, and upgrading of related facilities and equipment.

4.4.2 Development Trends of China’s Manufacturing Logistics 4.4.2.1

Manufacturing Logistics Performance Will Continue to Improve and High-Quality Development of Manufacturing Logistics Will Be Accelerated

With the continual deepening of the supply-side reform, the constant improvement of manufacturing innovation and the acceleration of industrial restructuring, higher requirements are mandated for the operations of manufacturing logistics. In the future, by pushing forward the transformation of the manufacturing logistics operations models and management methods, the responsive logistics enterprises will further reduce their operating costs such as transportation cost, warehousing cost and management cost, and improve the transportation intensification, warehousing decentralization, and management integration. In cooperation with the development of service-oriented manufacturing and mass customization, manufacturing logistics will further strengthen their flexibility and responsiveness. Manufacturing logistics firms will exert greater efforts to develop intelligent logistics and innovatively transform towards modern supply chain. The advancement towards high quality development of manufacturing logistics will gradually be accelerated.

4.4.2.2

Manufacturing and Logistics Will Be Further Integrated and Cooperation in the Supply Chain Will Be Further Deepened

In the future, coordinated development of manufacturing and logistics will continue to pick up its pace. In October 2017, the General Office of the State Council issued the Guiding Opinions of the General Office of the State Council on Vigorously Advancing the Innovation on and Application of Supply Chains, which promoted the full

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upgrading of supply chain construction nationwide from the national level. The indepth integration of manufacturing and logistics will also increasingly deepen the cooperation at the supply chain level. Logistics enterprises will penetrate deeply into the supply chain of manufacturing enterprises including design, purchasing, production, sales and recovery logistics. Both sides will continually strengthen their efforts in exchanges, studies, penetration and absorption, so as to achieve the integrated development of the entire supply chain. In the integration project between Qingdao Branch of CMST Development Co., Ltd. and Qingdao Beihai Shipbuilding Heavy Industry Co., Ltd., the former has made it into the supply chain management of the latter, and helps the latter with integrated management of raw material supply of shipboard, production logistics, and warehousing, through the former’s customized shipboard management system, and thereby achieves deep mutual cooperation at the supply chain level.

4.4.2.3

The Sharing Economy Model Promotes the Optimized Development of Manufacturing Logistics

The sharing economy, as a new business form emerging under the new-round of scientific and technological revolution and industrial transformation, is sweepingly driving the innovation of organizational forms and consumption patterns; it will also further promote the sustainable development of manufacturing logistics. Relying on advanced network information technology, the sharing economy can reduce transaction costs among market entities and ameliorate the information asymmetry among transaction entities. By efficiently providing and sharing logistics resources, such as logistics information resources, logistics technologies, equipment resources, warehousing facility resources, and terminal distribution resources, the sharing economy makes it possible to substantially reduce logistics costs. For example, under sharing logistics, standard pallets are shared among users; after pilot implementation of pallet-sharing in the past two years, a number of innovative models have emerged, including “no pallet change for three transactions,” “supply chain sharing driven by chain host,” and “shared customer resources.” Promoted by the Ministry of Industry and Information Technology, the Ministry of Commerce and other relevant Ministries, more and more enterprises such as China Merchants Loscam and JITUOWANG.com are actively exploring and innovating on the sharing of pallets, in a move to improve the efficiency of pallet usage, and directly promote the efficient development of manufacturing logistics (Boundary Investment 2017).

4.4.2.4

Technological Advancement Will Further Drive Changes in Manufacturing Logistics and Intelligent Logistics Development

The rapid development of technologies such as the new-generation Internet, cloud computing, big data, Internet of Things and artificial intelligence will further pro-

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mote the transformation of manufacturing logistics. With the continual advancement of the intelligent manufacturing strategy, the intelligent transformation of factories is steadily implemented, and the construction of intelligent logistics systems of manufacturing enterprises will also be inevitable. In intelligent logistics, advanced IoT technologies such as bar code, RFID, sensor, and global positioning are employed, and technologies such as automation, information and artificial intelligence are integrated. Through information integration, logistics process optimization and resource optimization, it is possible to achieve automated operations and highly efficient management of the transportation, warehousing, distribution, packaging, loading and unloading of goods. Currently, in China, intelligent logistics is most widely practiced in the tobacco industry, with a penetration rate of usage over 46%, higher than the national average usage rate of 20% (www.ck365.cn 2017). Likewise, intelligent logistics is also widely adopted by the pharmaceutical and auto manufacturers. In the future, with the widespread push of emerging technologies, other industries such as machinery manufacturing and food and beverage will likely follow suit and accelerate their development of intelligent logistics.

4.5 Summary This chapter begins with a brief introduction to manufacturing logistics. Then, it describes the development environment of manufacturing logistics in China, discusses the development status of China’s manufacturing logistics, analyzes the problems in the development manufacturing logistics, and finally projects the development trend of China’s manufacturing logistics. In recent years, the accelerated transformation and upgrading of China’s manufacturing industry, the gradual rise of high-end manufacturing, the further promotion of the “Internet+” strategy and the constant issuance of policies and plans for manufacturing logistics development foster a favorable environment for the development of manufacturing logistics. In this context, the scale of China’s manufacturing logistics is growing steadily, especially the growth of high-end manufacturing logistics. Overall, costs of manufacturing logistics continue to fall, its operational efficiency continues to improve, signifying that manufacturing logistics is moving towards a new phase of high quality development. Presently, new manufacturing logistics service models keep emerging, with services progressing from standardization to customization. At the same time, demonstration enterprises in coordinated development of manufacturing industry and logistics industry continue to spring up, and manufacturing and logistics are moving towards in-depth integration. In spite of the rapid development of manufacturing logistics in China, there exist some long-term problems such as insufficient openness of logistics resources released by the manufacturing enterprises, outsourcing mechanisms that need to be improved, and inadequate overall supply chain management. Meanwhile, with logistics operations cost assuming a high percentage in total manufacturing cost, the quality of manufacturing logistics needs to be improved. In the future, China’s manufacturing logistics is expected to continue moving towards

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a new phase of high-quality development with integrated development of manufacturing and logistics at the supply chain level. The sharing economy will promote the sustainable development of manufacturing logistics; technologies such as the Internet and cloud computing will also push forward the transformation and development of intelligent logistics.

References Boundary Investment (2017) Analysis on Innovative Models and Development Trends of Sharing Logistics in the Tide of Sharing Economy [EB/OL]. https://465938.kuaizhan.com/87/30/ p4241350539e923. 19 Apr 2017 Chen Lanqing (2016) Analysis on Opportunities and Challenges in the Development of China’s Equipment Manufacturing Industry in 2016 [EB/OL]. https://www.qianzhan.com/analyst/detail/ 329/160328-33f178e8.html. 28 Mar 2016 China Federation of Logistics and Purchasing, China Logistics Information Center (2017) Survey Report on Major Logistics Enterprises in China [EB/OL]. http://www.chinawuliu.com.cn/lhhkx/ 201712/06/326866.shtml. 06 Dec 2017 China Federation of Logistics and Purchasing, China Logistics Information Center (2017) Survey Report on Major Enterprises Logistics in China [EB/OL]. http://www.clic.org.cn/wltjwlyx/ 290332.jhtml. 06 Dec 2017 Eastmoney.com (2017) Analysis on Economic Operation of Logistics Industry from January to September 2017 [EB/OL]. http://finance.eastmoney.com/news/1365,20171027789316016.html. 27 Oct 2017 National Bureau of Statistics of the P.R.C. (2015) National Bureau of Statistics of the P.R.C. Publishes Preliminary Accounting Results of GDP in 2017: The Growth Rate in 2017 Was 6.9% [EB/OL]. http://money.163.com/18/0119/09/D8GMBTJC00258105.html. 19 Jan. 2018 Qi Ershi (2006) Logistics Engineering [M]. Science and Technology of China Press, Beijing Wen Jianwu (2018) The Stable and Growing Industrial Economy Lays A Solid Foundation for HighQuality Development [EB/OL]. http://www.stats.gov.cn/tjsj/sjjd/201801/t20180119_1575462. html. 19 Jan 2018 www.ce.cn (2017) Measures for Reducing Logistics Costs that Account for 30% of Production Costs of China’ Manufacturing Industry [EB/OL]. http://finance.sina.com.cn/roll/2017-02-27/ doc-ifyavwcv9008797.shtml. 27 Feb 2017 www.ck365.cn (2017) Intelligent Logistics Will Be Blessed With Development Opportunities in the Era of Intelligent Logistics Industry [EB/OL]. http://www.ck365.cn/news/9/44262.html. 11 May 2017

Chapter 5

Development of Commerce Logistics in China Jianhua Xiao

Commerce logistics, an important part of modern logistics, is a bridge connecting production and consumption, playing a fundamental and leading role in the national economy. Developing commerce logistics is of great significance in improving circulation efficiency, reducing logistics costs, and promoting the restructuring and transformation of the circulation industry. In recent years, the development environment of China’s commerce logistics has been markedly improved; the infrastructure of commerce logistics has been continually optimized; the standardization, informationization, intensification, and internationalization of commerce logistics have been notably enhanced. At the same time, a commerce logistics system that features efficiency, intensity, collaboration, sharing, integration, openness, greening, and environmental friendliness is gradually taking shape. This chapter consists of four sections. Section 5.1 gives an overview of commerce logistics, including the major characteristics, operators and operations models of commerce logistics. Section 5.2 describes the development environment of commerce logistics in China, including changes in market demands, policies, measures and regulatory standards. Section 5.3 discusses the current development of commerce logistics in China, including market size, infrastructures, logistics rates, service levels and innovations in distribution models. Section 5.4 points out the existing problems and future development trends of commerce logistics in China.

5.1 Overview of Commerce Logistics Commerce logistics refers to logistics service activities pertaining to wholesale and retail, accommodation, catering, residential services and other commercial services as well as import and export trade. It is an important part of product circulation J. Xiao (B) Logistics Research Center, Nankai University, Tianjin, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_5

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that falls under industry logistics. Through the wholesale, storage and retail links, commerce logistics gathers the products of all production enterprises at the logistics nodes and delivers the goods to various market entities through storage, sorting, distribution processing, and distribution.

5.1.1 Main Characteristics of Commerce Logistics Commerce logistics involves a number of industries. It is closely related to wholesale, retail, accommodation, catering, residential services and other commercial services as well as import and export trade; it encompasses sub-industries such as e-commerce, cold chain, automobile, chain retailing, catering, and import and export. The terminal distribution system of commerce logistics is very complex, involving numerous urban commerce logistics nodes. Urban commerce logistics mainly serves urban commercial enterprises and urban consumers. Distribution services from commerce logistics include wholesale-based commercial enterprises, wholesale markets, chain supermarkets, hypermarkets, convenience stores, department stores, office buildings, community families, universities and other various demand entities, resulting in a multitude of logistics nodes. Meanwhile, demands for end distribution services in urban commerce logistics are widely spread in different parts of the cities. Due to the complex urban road network as well as various traffic restrictions, the terminal distribution system becomes even more unwieldy (Wen and Wu 2014). Production-related commerce logistics features large cargo volume and distinctive specialty. It refers to the logistics activities whereby material goods for production are turned into finished goods at the production sites and enter into the consumption sites. It mainly serves various production enterprises of a relatively small number but generally in large sizes. In addition, as materials for production feature distinct specialty and technicality, they also require a higher level of specialty on productionrelated commerce logistics.

5.1.2 Major Operators of Commerce Logistics 5.1.2.1

Commerce Enterprises

Commerce enterprises refer to enterprises, enterprise entities and self-employed persons1 that deal with the wholesale or retail of goods. These mainly encompass department stores, supermarkets, chain supermarkets, retail stores which directly engage

1 Commercial enterprises also include enterprises, enterprise entities and self-employed persons that

engage chiefly in the wholesale or retail of goods, and concurrently producing goods or providing taxable labor services.

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in the general sales of goods. For instance, large pharmaceutical wholesalers such as Jointown, and chain retailers such as Suning, are all commerce enterprises.

5.1.2.2

Commerce Logistics Enterprises

Commerce logistics enterprises mainly refer to enterprises that provide commerce logistics services to clients such as commercial enterprises, chain supermarkets, wholesale market outlets, and e-commerce enterprises. Their service items include warehousing, custody, packaging, processing, sorting, and distribution. Commerce logistics enterprises can be divided into three types: (1) consumer goods-related commerce logistics enterprises that mainly deal with the trade, distribution and delivery of consumer goods; (2) production-related commerce logistics enterprises which provide production-related commerce logistics services to production enterprises; (3) international commerce logistics enterprises which provide logistics, warehousing, delivery and other services to import and export trade enterprises.

5.1.2.3

Express Delivery Enterprises

Express delivery enterprises refer to the service companies derived from door-to-door logistics activities which feature mail delivery. This type of enterprises can provide rapid delivery of customer goods through railway, highway, and air transportation. At present, there are four types of express delivery enterprises in China: (1) foreign express delivery enterprises such as FedEx, DHL, and UPS; (2) State-owned express delivery enterprises such as EMS andCAE (China Air Express); (3) large private express delivery enterprises such as SF Express, STO Express, YTO Express and ZTO Express; (4) small express delivery enterprises which mainly provide intra-city express services and intra-provincial express services in specific areas.

5.1.3 Operations Models of Commerce Logistics 5.1.3.1

Direct Distribution Model

Direct distribution model refers to a distribution method whereby production enterprises or suppliers send the goods required by users directly to their specified locations within the predetermined time. It is mainly used for goods with a short shelf life and of large volume that can be transported by suppliers in the truck-load mode. In this model, users only need to select the suppliers and goods are distributed by the suppliers or production enterprises. For example, Coca-Cola Co., Ltd. delivers goods directly to the chain supermarkets and hypermarkets.

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Self-operated Distribution Model

Self-operated distribution model refers to a distribution model whereby large wholesale markets, chain supermarkets and other enterprises distribute internal and external goods through their self-built logistics systems. This model is conducive to the integration of an enterprise’s supply, production and sales activities; it affords a high level of systemization, but generally entails a large initial investment for the establishment of the distribution systems. In case the distribution volume is not sufficiently large, the unit logistics distribution cost will be relatively high. This model is mostly used by large chain supermarkets in the form of unified distribution through their self-built logistics systems. For example, Wal-Mart, the world’s largest retailer, employs its own self-operated distribution system.

5.1.3.3

Third-Party Distribution Model

Third-party logistics distribution model refers to a model whereby commercial enterprises, large wholesale markets, chain supermarkets entrust their logistics and distribution services to some third-party logistics enterprises. This model can provide customers with professional, customized and information-based logistics services, and is gradually becoming the first choice for online commercial enterprises. For example, Shuhai Supply Chain Co., Ltd. provides distribution services of food ingredients to several chain catering enterprises such as HidilaoHot Pot and 7-Eleven.

5.1.3.4

Joint Distribution Model

Joint distribution model refers to a model whereby commercial circulation enterprises, production and processing enterprises and logistics distribution enterprises establish an alliance to carry out their distribution activities. This model makes use of the public distribution centers and joint distribution information platforms to integrate the demands of multiple customers in a certain area, and coordinates the distribution resources, distribution times, frequencies, routes, distribution outlets and goods. This model can help achieve the effective allocation of distribution resources, supplement the insufficient functions of the distribution enterprises, better satisfy customer demands, improve distribution efficiency, and reduce distribution costs (Zhang and Wu 2011).

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5.2 Development Environment of Commerce Logistics in China In recent years, the retail scale of consumer goods in China has grown rapidly, the scale of production materials market has expanded continually, and the import and export trade has also shown a rally. Meanwhile, the Chinese Government has issued a number of macro policies on commerce logistics and commerce logistics standards. Hence, the development environment of commerce logistics in China has been perpetually improved.

5.2.1 Rapid Growth in the Retail Sales of Consumer Goods During 2012–2017, China’s total retail sales of consumer goods has grown rapidly, with an average annual growth rate of 11.75%. In 2017, the total retail sales of consumer goods nationwide reached 36.6 trillion RMB, an increase of 10.2% over the same period last year. The retail sales of consumer goods for enterprises above designated size2 was 16.1 trillion RMB, rising by 8.1% year-on-year. Figure 5.1 shows the total retail sales of consumer goods and growth rate for 2012–2017. In 2017, the retail sales of consumer goods in rural areas of China reached 5.20 trillion RMB, up by 11.8% year-on-year. This growth rate is 1.8 percentage points higher than the growth of 10% for cities and towns; it had exceeded the latter rate for six consecutive years. Online retail sales of physical goods reached 5.48 trillion RMB, an increase of 28% year-on-year, accounting for 15% share of the total retail sales of consumer goods, with the share rising over the years. Food and beverage sales of below-quota enterprises3 and individual households reached 2.99 trillion RMB, rising by 11.8% over the previous year; the retail sales of enterprises below the quota and individual households reached 17.58 trillion RMB, rising by 12% year-on-year. Hence, the mass consumption has continued its steady growth in recent years.

5.2.2 Expanding Market Size of Means of Production In 2012–2017, China’s market size of means of production continued to expand, and the total sales of means of production showed an overall increase, with an average

2 Above-quota

enterprises refer to wholesalers with revenue of 20 millionRMB or more, retailers with revenue of 5 million RMB or more, accommodation and catering enterprises with revenue of 2 million RMB or more. 3 Below-quota enterprises refer to wholesalers with revenue of 5–20 millionRMB, retailers with revenue of 2–5 millionRMB, accommodation and catering enterprises with revenue of less than 2 millionRMB.

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Fig. 5.1 Total retail sales of consumer goods and growth rate in china for 2012–2017. Source Compiled from the China Statistical Yearbook (2013–2017) and related data in the 2017 China Statistical Bulletin of National Economic and Social Development, published by the National Bureau of Statistics of China

Fig. 5.2 Total sales of means of production and growth rate for 2012–2017. Source Compiled from the Operation Report of Commercial Logistics in China (2015, 2016), published by the Ministry of Commerce of P.R.C.

annual growth rate of 6.08%, as shown in Fig. 5.2. In 2017, China’s means of production market maintained a good development, with the total sales reaching 67.3 trillion RMB and the comparable price increased by 5.3% year-on-year, a figure down from previous year by 2 percentage points.

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Fig. 5.3 Total import and export value and growth rate in China for 2012–2017. Source Compiled from the China Statistical Yearbook (2017) and related data in the 2017 China Statistical Bulletin of National Economic and Social Development, published by the National Bureau of Statistics of China

5.2.3 Rally in the Total Import and Export Value During 2012–2016, China’s total foreign trade value showed an increase for the first three years, followed by a decline for the next two years. In 2017, the total trade value rebounded to six-year high of 27.8 trillion RMB, an increase of 14.2% over 2016. Overall, the total trade value over the six-year period has an average annual growth rate of 1.64%, as shown in Fig. 5.3. In 2017, China’s quarterly import and export value amounted to 6.17 trillion RMB, 6.91 trillion RMB, 7.17 trillion RMB and 7.54 trillion RMB, respectively, with a quarterly growth of 21.3%, 17.2%, 11.9% and 8.6%, respectively. The total trade value for 2017 included 15.3 trillion RMB in export, up by 10.8%, and 12.5 trillion RMB in import, up by 18.7%; the trade surplus was 2.9 trillion RMB, which is down by 14.2% from the previous year. In 2017, China’s import and export value of general trade4 increased by 16.8% to 15.66 trillion RMB, accounting for 56.4% of China’s total import and export value, up by 1.3% over 2016. This indicates a slight improvement in the structure of trade models.

4 General trade refers to the unilateral import or export of goods generally by enterprises having the

import-export operations right in China.

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5.2.4 Constantly Issued Policies and Measures of Commerce Logistics In recent years, the State Council of the P.R.C. and its Ministries and Commissions have issued a number of policies, plans and opinions to strengthen the guidance to commercial logistics, as shown in Table 5.1. Viewing from the policy contents, China clearly proposes to build a commerce logistic network that features urban and rural coordination, regional coordination, and effective connection at home and abroad, as well as to improve the construction of commerce logistics infrastructure. At the same time, China also explicitly intends to improve the professional service capability of its commerce logistics enterprises and enhance the standardization, informatization, intensification and internationalization of its commerce logistics.

5.2.5 Continually Enhanced Specifications and Standards for Commerce Logistics-Related Services In recent years, the Ministry of Commerce, the Standardization Administration of P.R.C. and the local governments have attached great importance to commerce logistics standardization by constantly improving the technical standards and service specifications for commerce logistics infrastructure, carrier units, transportation and warehousing management, informatization, and service quality. At the same time, they have advocated the commerce logistics to develop towards standardization and integration. In May 2014, the Standardization Administration and the Ministry of Commerce jointly issued the Opinions on Accelerating Commerce Logistics Standardization. The Opinions stressed the necessity to strengthen the revision of the foundational, general and key standards and focus on promoting the pilot projects for pallet standardization. In November 2014, the Ministry of Commerce and the Standardization Administration jointly issued the Special Action Plan for Commerce Logistics Standardization. The Plan clearly proposed, commencing with the standardization of pallets, to spearhead the application, expansion and cyclic sharing of standard pallets in fast moving consumer goods, agricultural and subsidiary products, and pharmaceutical circulation. In January 2015, the China Commerce Logistics Standardization Action Alliance, consisting of national trade circulation enterprises, warehousing logistics enterprises, logistics technology and equipment enterprises and relevant testing and certification institutions, was established in Shanghai. In December 2016, commercial authorities of Beijing, Tianjin, and Hebei region cooperated in establishing the Beijing-TianjinHebei Logistics Standardization Alliance to jointly promote the standardization of commerce logistics including the cyclic sharing of standardized pallets.

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Table 5.1 Policies related to commerce logistics development in China No.

Issued in

Issued by

Name of policy documents

Contents about commerce logistics

1

2012–08

State Council

Opinions on Deepening the Reform of the Circulation Systems and Accelerating the Development of the Circulation Industry

To build a number of commercial centers, professional markets and national and regional distribution centers with robust radiating capability

2

2012–09

State Council

12th Five-Year Plan for Domestic Trade Development

To support the upgrade and transformation of a number of traditional logistics enterprises; improve the specialization, socialization and informatization of commerce logistics; reasonably plan and build commerce logistics clusters

3

2014–06

State Council

Medium- and Long-term Development Plan of Logistics Industry (2014–2020)

To encourage commerce logistics enterprises to elevate the level of scaled operation and coordinated distribution; optimize the allocation of logistics resources in manufacturing and commercial clusters

4

2014–09

Ministry of Commerce

Opinions on Promoting the Development of Commerce Logistics

To support commerce logistics enterprises to develop high-end intelligent services such as vendor managed inventory and punctual delivery; guide a number of commerce logistics parks to transform into functionally green logistics fields (continued)

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Table 5.1 (continued) No.

Issued in

Issued by

Name of policy documents

Contents about commerce logistics

5

2015–08

State Council

Opinions on Promoting the Modernization of Domestic Trade Circulation and Building a Law-abiding Business Environment

To increase support for overseas investment in circulation enterprises, coordinate the construction of commerce logistics-type overseas economic and trade cooperation zones; lift foreign investment access restrictions in areas such as commerce logistics, and encourage foreign investment in modern logistics services such as joint distribution, chain distribution and distribution of fresh agricultural products

6

2017–01

Ministry of Commerce, National Development and Reform Commission, Ministry of Natural Resources, Ministry of Transport, State Postal Bureau

13th Five-Year Plan for the Development of National Commerce Logistics (2016–2022)

To build a multi-level commerce logistics network; strengthen the construction of infrastructure, standardization and informationization of commerce logistics; promote the intensive, internationalized and professional development of commerce logistics; promote the green transformation of commerce logistics and build the commerce logistics credit system

In December 2016, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) and the Standardization Administration jointly issued the Code for the Application of RFID Labels for Commercial Pallets. The Code provides the general requirements for RFID labels of commercial pallets when applied as the information carrier, and other regulatory requirements for functional and technical indicators, codes, environmental adaptability, safety and management, operational procedures, extended applications and exception handling.

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In July 2017, as entrusted by the China Association of Warehousing and Distribution, Shanxi Common Homeland Co., Ltd. built and operated the China Commerce Logistics Standardization Cloud Platform. The Platform integrates resources on logistics standardization, informationization, equipment and facilities, and provides logistics platforms and users with information services, platform hosting services, Software-as-a-Services, and logistics e-commerce services. Moreover, it promotes logistics interconnectivity and resource sharing for commerce logistics. In August 2017, the Ministry of Commerce issued the Construction and Operation Service Specification for Commerce Logistics Parks, an industry standard prepared by the China Association of Warehousing and Distribution, to take effect on June 1, 2018. The Specification spelled out the planning requirements, basic functional configuration, operations management requirements, and evaluation criteria system of commerce logistics parks, and set up the requirements for the construction of green commerce logistics parks. In August 2017, the Ministry of Commerce issued the industry standard, the Credit Evaluation Index for Commerce Logistics Enterprises. The standard proposed a special credit evaluation index for commerce logistics enterprises from the perspective of manpower supportability, resource supportability, funding supportability, technical supportability, capabilities on financial management, contract management, environmental management, risk management, and social responsibility. In addition, local governments in Tianjin, Jilin and other cities have also issued a number of commerce logistics specifications and standards to promote the development of commerce logistics standards. For example, in December 2016, the Tianjin Market and Quality Supervision Administration issued a number of commerce logistics-related specifications and standards, as shown in Table 5.2.

5.3 Current Development of Commerce Logistics in China With the recent growth of the commerce logistics market and the improvement of the policy environment, China’s commerce logistics is showing a favorable stand with constantly expanded scale, continually improved infrastructure, stable but declining rates, rapidly improved services, frequent service models innovations, and accelerated construction of standard systems.

5.3.1 Continually Expanded Scale of Commerce Logistics In recent years, due to the increase in consumers’ demands, means of production, and import and export volumes, China’s professional commerce logistics for ecommerce, cold chain, automobile, pertaining to people’s livelihood is developing well.

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Table 5.2 Standards related to commerce logistics in Tianjin (2016) No.

Policy documents

Commerce logistics-related contents

1

Guidelines for Commerce Logistics Standardization Part 1: Basic Requirements

It defines the terms and definitions, basic principles, management requirements, main tasks and main contents of commerce logistics standardization

2

Guidelines for Commerce Logistics Standardization Part 2: Standard System

It defines the terms and definitions, overall structure, overall requirements and components of the standard system of commerce logistics standardization

3

Guidelines for Commerce Logistics Standardization Part 3: Standard Implementation and Evaluation

It provides the requirements for standard implementation, standard implementation evaluation and standard system evaluation, and standardization improvement in commerce logistics standardization

4

Requirements for Commerce Logistics Information Construction

It defines the terms and its definitions, basic principles, general overview, technical requirements, functional requirements, operational management, and safety requirements

5

Commerce Logistics Service—Specification for Less-than-Truck-Load (LTL) Transportation

It defines the terms and its definitions, basic requirements, service requirements and service quality improvements

6

Commerce Logistics Management—Specification for Green Warehousing

It defines the terms and definitions, basic requirements, practitioners, green warehousing facilities, green warehousing equipment, green warehousing operations, information management and index for performance evaluation

7

Commerce Logistics Management—Specification for Green Distribution

It defines the terms and definitions, basic requirements, personnel requirements, and green requirements for distribution equipment, distribution planning, operations management, information management, and performance evaluation

8

Commerce Logistics—Transportation Management Requirements

It defines the basic principles, major stakeholders, transport machines, planning, loading, transportation process, transit, unloading, handover, return, risk control and emergency management, complaint handling requirements

9

Commerce Logistics Management—Specification for Warehousing

It defines the terms and definitions, basic requirements, personnel requirements, warehousing demands and layout, warehousing operations, in-warehouse operations, order processing, ex-warehouse operations, information systems, risk control, and service quality evaluation (continued)

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Table 5.2 (continued) No.

Policy documents

Commerce logistics-related contents

10

Commerce Logistics—Distribution Management Requirements

It defines the terms and definitions, basic requirements, personnel, distribution vehicles, distribution planning, distribution, pick-up, delivery, receipt, information, risk control and emergency management, and complaint handling requirements

11

Commerce Logistics—Specification for Service Quality

It defines the terms and definitions, basic principles, personnel requirements, plan design services, information services, customer services, operations services, basic service quality evaluation index, evaluation method, risk control and emergency management, and continuous improvement

E-commerce logistics continues to grow rapidly. In 2017, China’s e-commerce trade reached 29.16 trillion RMB, an increase of 11.7% year-on-year; this includes 21.83 trillion RMB in service e-commerce trade, up by 24.0%, 10.2 percentage points higher than that in 2016, 5.48 trillion RMB in online retail of physical goods, up by 28.0%, and accounting for 15.0% of the total retail of consumer goods (Chang 2018). In 2017, the national express delivery services totaled 40.06 billion parcels, up by 28%, and achieved a total revenue of 495.71 billion RMB, up by 24.7% from the previous year. The scale and demand of cold chain logistics market have grown rapidly. According to the estimates of the China Federation of Logistics and Purchasing—Cold Chain Logistics Committee, in 2016, China’s cold chain logistics market reached 220 billion RMB, up by 22.3%. In 2017, China’s cold chain logistics market size was expected to reach 470 billion RMB. Automobile logistics market has maintained rapid growth and ranked No.1 in the world for eight consecutive years. In 2017, there were 29.02 million cars produced, up by 3.2%, and 28.88 million cars sold, up by 3%. These figures included 24.81 million passenger cars produced, up by 1.6%, and 24.72 million passenger cars sold, up by 1.4%; 4.21 million commercial cars produced, up by 13.8%, and 4.16 million commercial cars sold, up by 14%; 790 thousand new energy cars produced, up by 53.8%, and 780 thousand new energy cars sold, up by 53.3%. In addition, China’s commerce logistics for chain retail, cross-border e-commerce and catering have also achieved rapid development. For example, in 2017, China’s total retail imports and exports through the Customs’ cross-border e-commerce management platforms reached 90.24 billion RMB, an increase of 80.6% year-on-year; the total includes 33.65 billion RMB in total exports, up by 41.3%, 56.59 billion RMB in total imports, up by 116.4%. Also, in 2017, China’s total imports and exports to/from countries along the Belt and Road was 7.37 trillion RMB, an increase of 17.8%, including 4.30 trillion RMB in total exports, up by 12.1%, and 3.07 trillion RMB in total imports, up by 26.8%.

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5.3.2 Continually Improved Commerce Logistics Infrastructure In recent years, with the steady growth of investments in commerce logistics infrastructure, China’s commerce logistics infrastructure has been continually improved, and its supporting capability constantly enhanced. First, the layout of commerce logistics nodes is constantly optimized. China has listed 39 cities including Beijing and Tianjin as national commerce logistics cities and 64 cities including Baoding and Qinhuangdao as regional commerce logistics cities, to improve the urban and rural commerce distribution service network. Chongqing has established a sensibly laid out urban and rural commerce logistics facilities system, based on the “3 + 12 + N”5 logistics park system. It has set up 28 logistics distribution centers, 65 public distribution centers, 10 thousand public pick-up/drop-off points in urban and rural areas, and 250 public loading/unloading points in commercial clusters. Second, construction of key commerce logistics parks is sped up. For example, Hefei Commerce Logistics Park, one of the first 29 demonstration logistics parks in China, has six professional logistics clusters including green foods, daily-necessity commodities, finishing materials, construction machineries, industrial raw materials, and express logistics. Presently, the Park has drawn more than 360 enterprises to settle in; it also attracted 40 projects, each of size over 100 million RMB, with total investment of over 20 billion RMB. Haian Commerce logistics Park is the most important warehousing and logistics distribution cluster for bulk materials, such as non-ferrous metal, cotton and grain, in the north of the Yangtze River in Jiangsu Province. The Park has achieved a seamless connection of highway, railway and waterway transportation by integrating the park’s railway and the national arterial railways. Third, the commerce logistics terminal distribution network has constantly been improved. In 2017, Chongqing newly rebuilt its warehousing, dispatching, and distribution facilities and equipment with a total area of more than 500,000 square meters. Furthermore, Chongqing built 4,833 urban terminal distribution points, and built 15 distribution centers and 6,071 distribution points in the county-level rural logistics distribution network. Also, Taiyuan has built more than 1,000 new social distribution outlets, one new public warehousing center, two county-level commercial centers, and 297 chain convenience stores, to provide full delivery coverage of six city districts and their nearby suburbs within a radius of 500 m. Fourth, commerce logistics information platforms are being rapidly constructed. In November 2017, Shandong public information service platform for cold chain logistics of agricultural products was accredited. This platform provides online, transparent, and visible functions for the cold chain resources of agricultural products, and helps small and medium-sized enterprises to improve information management + 12 + N” refers to three hub logistics parks (Chongqing Western Modern Logistics Park, Chongqing Aviation Logistics Park and Orchard Port Logistics Park), 12 nodal logistics parks, and N distribution logistics parks.

5 “3

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at no cost. In August 2014, Logistics Tangshan, the first urban joint distribution public information service platform in China, was launched as a pilot joint distribution project by the Ministry of Commerce. In addition, specialty commerce logistics infrastructure for cold chain and medicine are also significantly improved. In 2017, the total capacity for cold storage in China is expected to reach 47.75 million tons, an increase of 13.7% year-on-year, with the total cold storage area up to 119.37 million cubic meters.

5.3.3 Ratio of Expense for Commerce Logistics Stable but Showing Declining Trend In recent years, the ratios of logistics expense for China’s wholesalers and retailers have been lower than those of industrial enterprises, and shown a downward trend. In 2016, the combined ratio of logistics expense (the proportion of logistics expenses in sales) of China’s industry, wholesale and retail enterprises was 8.1%, down by 0.1 percentage points compared with that of 2015. The ratio of logistics expense for industrial enterprises was 8.6%, down by 0.1 percentage points, and that for wholesalers and retailers was 7.4%, down by 0.2 percentage points, as shown in Fig. 5.4. In 2015, the ratio of logistics expense for China’s wholesale industry was lower than that of retail industry. Compared with the previous year, the ratio of logistics expense for wholesale was flat while that of retail was declining. In 2015, the ratio of logistics expense was 7.5% for wholesale, flat as the previous year, and 7.8% for retail, down by 0.3 percentage points compared with last year.

Fig. 5.4 Ratio of logistics expense for industrial, wholesale and retail enterprises in China for 2013–2016. Source Compiled From the 2016 China Commerce Logistics Development Report and the 2017 National Statistical Survey Report on Logistics of Key Enterprises

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5.3.4 Rapidly Improved Commerce Logistics Services With the continual improvement of China’s urban and rural commerce logistics network as well as the wide application of new-generation information technologies, including cloud computing, big data and the Internet of Things, the level of China’s commerce logistics services has been rapidly elevated. First, the commerce logistics network is rapidly expanding to small and mediumsized cities, drilling down to rural towns and villages, and spreading to residential communities, resulting in continual enhancement of the urban and rural commerce logistics service capability. For example, Qinhuangdao has built an operational model of “operations center + warehousing logistics + village-level service station.” This model focuses on promoting integrated operations of online trading services, warehousing logistics, and terminal distribution to improve urban and rural commerce logistics services. Also, Shanxi Province has attracted large domestic commerce groups to build modern large commodity circulation and distribution centers, steadfastly promote the “express delivery reaching the countryside” program, and speed up the construction of urban and rural-integrated commerce circulation network. Second, leveraging on special facilities and equipment and new-generation information technologies such as cloud computing, big data and the Internet of Things, commerce logistics services are becoming more intelligent and professional. In October 2017, JD Shanghai’s “Asia No. 1” Logistics Base built the world’s first fullprocess unmanned warehouse with advanced technologies including the Internet of Things, cloud computing, big data, artificial intelligence, robotics and RFID. The unmanned operations heightened the level of intelligence and specialization of the commerce logistic warehouse. Third, commerce logistics services are getting more efficient and convenient; personalized services such as “Timely Delivery,” “Time-specific Delivery,” and onestop services such as “Door to Door” are becoming more popular. Self-built logistics such as JD.com and Suning.com can provide “Same Day Delivery” and “Next Day Delivery” in hundreds of cities. If an order is placed before 11:00 pm, then delivery will be made on the following morning; if an order is placed in the morning, then delivery will be made in the afternoon or evening on the same day. Amazon has launched the “Midnight Cut-Off”6 service in nine major cities and introduced multiwindow specified-time delivery services in 22 major cities to provide consumers with diversified and personalized delivery services.

6 If

the consumer places an order and completes payment before midnight, delivery will be made before 18:00 the next day.

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5.3.5 Commerce Logistics Distribution Models Continually Innovated With the development of commerce logistics services towards preciseness, personalization and specialization, as well as the strong dynamics and diversity of the “last mile” commerce logistics distribution and delivery demands, commerce logistics distribution models also demonstrate a diversified development trend. First, the integrated warehousing and distribution model is typified by enterprises such as JD and Cainiao. This model integrates receiving, warehousing, picking, packaging, sorting, distribution and other functions to be completed by one company, and provides all the related services throughout the supply chain. It unifies order preprocessing, plans implementation, in-warehouse operations, shipping distribution, rejection and return, and the upstream and downstream account clearing by combining warehousing and distribution. This model can efficiently fulfill customers’ operational requirements and achieve the one-stop modern logistics services. For example, Cainiao warehousing and distribution integration project jointly created by China Post EMS and Cainiao is a large major project that integrates warehousing, distribution, information technology services, line-haul and other value-added services. Second, the constantly innovated joint distribution model is one which combines multiple customers to receive distribution services provided by some third-party logistics companies, so as to achieve scale-based logistics distribution operations and improve the utilization efficiency of logistics resources. Joint distribution now comes in various innovation models such as “unified warehousing and distribution,” “direct distribution upon cyclic pick-up,” “joint distribution upon cyclic pick-up,” “goodscollection + warehouse-collection + distribution,” “joint distribution upon phased JIT collection,” “community collection + region-based cyclic joint distribution,” “joint distribution upon multi-factory collection,” and “joint distribution upon smart collection” (Wang 2017). Third, end distribution innovation models such as “Offline Pick-up of Online Orders,” “Offline Delivery of Online Orders,” “Self-Service Pick-up” and “Absentee Reception” are promoted. For example, Zhejiang Yugong Eco-agricultural Co., Ltd. unifies distribution by grouping orders on e-commerce platforms by region and adopts the “Offline Pick-up of Online Orders” model to achieve online and offline integration and resolve the low efficiency of terminal distribution. Its pick-up points had increased from 12 in 2015 to 23 in 2017, covering Huzhou city and Nanxun region, with 70 thousand parcels distributed every day. It is estimated that by 2018, it will expand to more than 300 pick-up points and gross 200 million RMB in revenue.

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5.4 Problems and Trends of Commerce Logistics in China Though China’s commerce logistics has made significant progress in recent years, there still exist problems such as under-developed commerce logistics network, weak enterprise competitiveness, low market concentration, and insufficient standardization and informationization. In the future, with its constantly improved development environment, commerce logistics will be headed towards rapid development, and its standardization systems will soon be established. At the same time, the credit system will be further built, and green commerce logistics will receive greater emphasis.

5.4.1 Problems in China’s Commerce Logistics 5.4.1.1

Under-Developed Commerce Logistics Network

Presently in China, a commerce logistics network that features urban and rural coordination, regional coordination and effective connection at home and abroad has not been fully established. Specifically, first of all, there is a need to build up certain national commerce logistics node cities with international competitiveness and regional driving force, and regional commerce logistics node cities with radiating capability. Second, an urban commerce logistics network system including logistics distribution centers, professional distribution centers and a terminal distribution network is still to be established. In addition, a rural commerce logistics network system consisting of township-level comprehensive logistics distribution centers and a terminal distribution network is still to be developed. Third, since the connection and supporting level of China’s urban and rural commerce logistics infrastructure is low, urban and rural-integrated commerce logistics infrastructure still needs to be strengthened.

5.4.1.2

Weak Competitiveness of Commerce Logistics Enterprises and Low Market Concentration

Presently, China’s commerce logistics enterprises are still numerous, small, scattered, and weak. This is especially the case for small and medium-sized cities, where commerce logistics enterprises are small in size and scattered in operations, mostly providing mere traditional transportation, warehousing, and distribution services. They are unable to satisfy customers’ one-stop, integrated, full-process service demands, and having only limited market competitiveness. In addition, China’s commerce logistics enterprises have low market concentration; most of them are lower than their foreign counterparts in developed countries

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in terms of size, income and market share. There is therefore an urgent need to build up a number of modern leading commerce logistics enterprises with advanced technologies, outstanding main business and strong core competitiveness to bring forth a robust industry development.

5.4.1.3

Insufficient Standardization and Informatization

Although China’s commerce logistics standardization and information construction have achieved considerable development in recent years, they are still hampered by the following problems. First, different commerce logistics standards and nonstandardized service standards make it difficult to share logistics resources and improve distribution efficiency in commerce logistics distribution. Second, as the full-process standard commerce logistics system has not yet been established, there are no universally-adopted standards for production, packaging, loading and unloading and transportation. Hence, there is a great need to set up a standard system for commerce logistics featuring complementarily, organic integration and mutual supporting. Third, as there are few specialized, distinctive public information platforms for commerce logistics, it is difficult to effectively integrate commerce logistics network resources and coordinate the commerce logistics operations process.

5.4.1.4

Limited Specialization and Socialization

Currently, China’s commerce logistics is still facing the problem of limited specialization and socialization. In terms of lack of specialization, due to the low entry threshold for China’s commerce logistics enterprises, most of them focus on only singular services such as transportation, warehousing, or some other services; they are generally weak on integration and limited in technical services. So far professional logistics systems for e-commerce, express delivery, cold chain, medicine, catering, automobile have not yet been established. In terms of the shortfall on socialization, as most of China’s commerce logistics enterprises, regardless of size, carry out all functions in-house, they are burdened with a low utilization rate of facilities and equipment, high distribution costs, and low distribution efficiency. The proportion of third-party logistics services employed in the commerce logistics market in China is much lower than that in western countries. In addition, presently China has few large professional third-party commerce logistics enterprises; most of them are small in size and internationally unknown.

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5.4.2 Future Trends in China’s Commerce Logistics 5.4.2.1

New Technologies Will Boost the Development of Intelligent Commerce Logistics

With the further maturity of advanced technologies such as automatic identification, electronic data exchange, cargo tracking, intelligent transportation and the Internet of Things, intelligent commerce logistics will be well-developed. Furthermore, commerce logistics will further evolve towards informatization, intelligence and preciseness. In recent years, enterprises including JD, Cainiao and SF Express have applied advanced technologies such as the Internet of Things, cloud computing, big data, artificial intelligence, robotics, and RFID in commerce logistics, in order to boost the development of commerce logistics towards intelligence. For example, JD Unmanned Warehouse integrates leading technologies such as visual acceptance, automatic palletizing, automatic sorting, and intelligent algorithmic recommendation for consumables. The JD Unmanned Warehouse can achieve full-system intelligence and full-process unmanning operations including warehousing, storage, packaging, and sorting. As another example, Amazon applies the UAV technology to fulfill customer orders. Customers’ orders are placed online, picked and assembled in the logistics center into parcels and carried on the conveyor line to the exiting station. The UAVs automatically pick up the ordered parcels at the exiting station and deliver them to the customers. These operations help promote the logistics distribution intelligence.

5.4.2.2

Greening of Commerce Logistics Will Be Developed with Greater Emphasis

Confronted with environmental problems and perpetually tightened resource and environmental constraints, vigorous development of green commercial logistics has gradually become a momentous trend in China. During the 13th Five-Year Plan period, the Government clearly mandated to encourage enterprises to vigorously promote the applications of green warehousing facilities and technologies and urge large commercial enterprises to implement green supply chain management. Meanwhile, China is focusing on improving the energy-saving technology of cold storage, adopting clean energy such as solar energy in warehousing facilities, and widely using electric forklifts, intelligent shuttles and intensive racking systems. China is also concertedly promoting the use of new energy delivery vehicles to achieve sustainable development of green warehousing and distribution. In addition, China will give the greening of commerce logistics greater emphasis by promoting green logistics packaging, recyclable packaging, slimmed packaging and degradable packaging throughout the entire process of commodity warehousing, transportation, sorting, processing, and delivery.

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Standard System of Commerce Logistics Will Be Established

During the 13th Five-Year Plan period, the Ministry of Commerce proposed to strengthen the development of key technical standards for logistics. It called for hastening the construction of the cyclic sharing system for standard pallets, adopting standard pallets and their cyclic sharing, and vigorously increasing the penetration of standard pallets. Meanwhile, the Ministry of Commerce focuses on improving the basic and service types of commerce logistics standards, and accelerates the formation of commerce logistics standards covering warehousing, transportation, loading, unloading, packaging, sorting, and delivery. In addition, with the adoption of modern circulation methods such as e-commerce, chain operations, and joint distribution, commerce logistics equipment standardization, service standardization and information standardization will be further improved.

5.4.2.4

Credit System of Commerce Logistics Will Be Further Promoted

During the 13th Five-Year Plan period, the Government clearly stipulated to establish a scientific and judicious commerce logistics credit evaluation system, study and formulate standardized and unified credit evaluation methods, and establish a long-term mechanism for credit evaluation. At the same time, the Government will direct the logistics parks, logistics information platforms, e-commerce logistics companies to establish credit evaluation mechanisms for their resident merchants and upstream and downstream enterprises, and advocate corporate integrity management. By making the most of the role of industry organizations, the Government will also provide the policies, laws, consulting, market information and other supporting services to commerce logistics enterprises and practitioners, in order to raise their level of awareness of enterprise integrity and risk prevention.

5.5 Summary This chapter discusses the four aspects of current commerce logistics development in China, namely, the overview of commerce logistics, the development environment of commerce logistics, the current development status, and the existing problems and development trends of commerce logistics. In terms of the development environment in recent years, the retailing of consumer goods in China has grown rapidly, the market size of means of production has expanded incessantly, and the import and export trade has also shown a rally. Meanwhile, the Chinese Government has instituted various macro policies and standards on commerce logistics, in a move to keep improving the development environment for commerce logistics.

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In terms of the current development status, China keeps on expanding the scale of commerce logistics and constantly improving the relevant infrastructures. The fares of commerce logistics also show a generally steady but slightly declining trend. Meanwhile, China’s commerce logistics services keep improving and the service models keep innovating. The construction of a standard system for commerce logistics has been accelerated. In terms of the existing problems and the development trends, China’s commerce logistics still manifests signs of weak competitiveness, low level of market concentration, and limited standardization and informationization. Commerce logistics is expected to grow rapidly with the continual improvement of the development environment; the standardization system will be accelerated; the credit system will be further promoted, and the green commerce logistics will be developed with greater emphasis.

References Chang Jiarui (2018). National Online Retail Sales Increased by 32.2% in 2017 [N]. China Securities Journal, 2018-01-19. Wang Jixiang (2017). China’s Shared Logistics Innovation Models and Development Trend [J]. Logistics & Material Handling, 22(2): 80–84. Wen Weijuan, Yue Yue (2014). China’s Urban Distribution Situation Analysis and Development Strategy [J]. China Business and Market, (9): 46–51. Zhang Qian, Wu Hanbo (2011). Urban Logistics [M]. Peking University Press.

Chapter 6

Development of Agricultural Products Logistics in China Zhijuan Chen

Agricultural products logistics refers to the transfer of agricultural goods and related information from the producer to the consumer in order to meet consumer demands. As an important branch of modern logistics, agricultural products logistics is an essential foundation and assurance for China’s urbanization construction, agricultural modernization and supply-side structural reform. In recent years, demands for China’s agricultural products logistics have grown continually, while the industry’s development environment has improved concurrently, and agricultural products logistics has accelerated its development in the construction of service system and innovation of service mode. This chapter contains four sections. Section 6.1 provides an overview of agricultural products logistics, including the main features of agricultural products logistics and its logistics modes. Section 6.2 describes the development environment of agricultural products logistics, including the market demand environment and the policy and measures environment. Section 6.3 discusses the current status of agricultural products logistics in China, including its market size, its logistics network, the grain logistics system, the e-commerce logistics and the cold chain logistics. Section 6.4 explores the problems and development trend of China’s agricultural products logistics.

Z. Chen (B) Binhai College, Nankai University, Tianjin, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_6

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6.1 Overview of Agricultural Products Logistics 6.1.1 Characteristics of Agricultural Products Logistics 6.1.1.1

Diverse Types of Agricultural Products Logistics

There are great varieties of agricultural products in China. Due to their distinct biochemical characteristics, various agricultural products have different requirements for logistics operations and environment. Therefore, agricultural products logistics requires reasonable selection of warehousing technology, transportation modes, as well as professional and auxiliary facilities and equipment, based on the characteristics of different agricultural products.

6.1.1.2

Agricultural Products Logistics Is Difficult to Operate

The production of China’s agricultural products exhibits a conspicuous seasonal and regional characteristic, while consumer demands for agricultural products show a year-round and dispersed characteristic; thus the distribution of agricultural products requires geographically extensive transportation and considerable inventory. Most agricultural products have short shelf life, are perishable and vulnerable to damage; these features make agricultural products logistics more complex in packaging, warehousing, and transportation. For example, fresh agricultural products have stricter requirements on logistics operations time, number of handling and loadingunloading operations, and distribution radius. Oftentimes, transportation and warehousing measures such as low temperature and modulated atmosphere are required during the logistics processes.

6.1.1.3

Agricultural Products Logistics Can Increase the Product Value Through Processing

Different from manufactured products, the added value of agricultural products occur after the production is over. During the flow from the production area to the final consumption area, most agricultural products require initial processing or deep processing in order to facilitate distribution, extend the period of freshness, reduce the losses, and ultimately meet consumers’ demands, so as to realize the full value of the agricultural products. These processing operations include, for example, classification, packaging, labeling of vegetables and fruits, and properly packaging and preserving the aquatic products.

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Agricultural Products Logistics Is Decentralized

Compared to the centralized characteristics of other types of logistics, agricultural products logistics participants are dispersed in production, distribution and consumption. On one hand, China’s family-based agricultural production system leads to small-scaled production entities, wide span of distribution, and low degree of organization. On the other hand, distribution entities of agricultural products exhibit diversification, small scale, and large number of operators. Finally, the widely spread consumers lead to scattered demands for agricultural products logistics and extensive geographical scope of logistics services.

6.1.1.5

Agricultural Products Logistics Matters to the National Economy and People’s Livelihood

Due to the inelasticity of demand and the fixed production season and cycle of agricultural products, long-term and stable supply of agricultural products is vital to a country’s social and political stability and national security. Therefore, agricultural products become an important strategic commodity, and governments of most countries have appropriately intervened and adjusted the production and distribution of agricultural products. For example, the US government has been directly subsidizing the agriculture industry; the Chinese Government has issued Document No. 1 for 15 consecutive years to lay out plans for agricultural and rural development, and promoted the agricultural products logistics projects.

6.1.2 Logistics Mode for Agricultural Products The logistics mode for agricultural products refers to the basic strategy and method adopted for agricultural products logistics. Specifically, the agricultural products logistics mode is a composite form of various elements that constitute agricultural products logistics activities and a standard format of its activities. It is a logistics organizational form consisting of the required logistics operations elements, the logistics demanders, providers, agents, and information support services, for the purpose of meeting the logistics service demands of agricultural products. So far, China’s agricultural products logistics mode mainly consists of the following three types.

6.1.2.1

Self-operated Logistics Mode for Agricultural Products

The self-operated logistics mode for agricultural products refers to the mode whereby agricultural products producers, processing enterprises or distribution enterprises organize the logistics activities independently to provide services for

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the production, sales and distribution of their own agricultural products. Under this mode, organizers of agricultural products logistics may purchase warehousing or transportation services from third-party logistics enterprises, but these services are just provisional and purely market-based; that is, the relationship between logistics services and the enterprise value chain is loose. Self-operated mode exists in three common forms—processing enterprise-oriented mode, distribution enterprise-oriented mode, and wholesale market-oriented mode. The processing enterprise-oriented logistics mode is a mode whereby agricultural product processing enterprises, as the core, sign cooperation agreements with farmers directly or through cooperatives/production bases. The processing enterprises then organize logistics operations to deliver agricultural products through wholesalers, retailers or direct sales outlets to consumers, such as the Fujian Sunner Group operates. The distribution enterprise-oriented logistics mode is a mode whereby large distribution enterprises link agricultural product producers, processing enterprises and final consumers to form the industry chain by constructing the logistics platforms, information platforms, sales platforms and customer databases for the trading of agricultural products. In general, distribution enterprises under such mode have strict requirements on agricultural products in terms of product quality, packaging, and standardization. A good example is Yonghui Superstores. The wholesale-market-oriented logistics mode is a mode which builds a bridge between production and consumption mainly by cultivating and developing various wholesale markets, specialized wholesale markets for agricultural products. This mode can be further divided into three types: the production-origin wholesale market-oriented logistics mode, the sales-locale wholesale market-oriented logistics mode, and the gathering/dispersion-site wholesale market-oriented logistics mode. At present, the gathering/dispersion-site wholesale-market-oriented logistics mode is the most widely adopted mode in China.

6.1.2.2

Third-Party Logistics Mode for Agricultural Products

The third-party logistics mode for agricultural products refers to the mode whereby agricultural products logistics activities are organized and operated by third parties other than either suppliers or demanders of agricultural products. Under this mode, enterprises that engaged in third-party logistics services are not involved in the purchasing/selling of agricultural products. They only provide logistics agency services for agricultural products production and processing enterprises, various wholesalers, retailers and intermediary organizations, on the basis of alliances and contracts. Under this mode, the third-party logistics enterprises are in charge of the organizational management, the transport arrangement, and the distribution activities for agricultural products. Compared with the self-operated logistics mode, logistics services under the thirdparty logistics mode are more specialized and informative. Meanwhile, with this mode and by using specialized equipment and technologies, it is possible to develop

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more professional, standardized operational procedures and logistics processes to effectively reduce the product attrition rate. And it is also possible to realize the allaround interests of supply chain by forming contractual relationship and clarifying the respective responsibilities and rights. For example, the Yangcheng crab supply chain led by the SF Express can achieve integrated logistics operations at the lowest total cost; it is built on the logistics advantage of SF Express which integrates, coordinates and controls the logistics activities of the entire supply chain.

6.1.2.3

Agricultural Products Logistics Park

The agricultural products logistics park is an agricultural products logistics organization area that can be used to achieve the scaled and multifunctional operations of agricultural products logistics. It is composed of a number of relatively comparable agricultural products logistics organizations and logistics facilities, and various agricultural products logistics and processing enterprises having different service functions. The agricultural products logistics park mode refers to a mode whereby agricultural products are delivered from the supplier to the demander by relying on the logistics infrastructure of the logistics park. Compared with the wholesalemarket-oriented logistics mode, the logistics park mode can provide services such as customs clearance, integrated business services, and transaction display, in addition to the warehousing, transportation, loading and unloading, processing, distribution, and information processing. At present, China’s larger, more advanced agricultural products logistics parks include Shenzhen Higreen International Agricultural Products Park, Shandong Shouguang Agricultural Products Logistics Park, Shanxi Taihangshan Agricultural Products Logistics Park, and Changsha Agricultural Products Logistics Park.

6.2 Development Environment of China’s Agricultural Products Logistics The market environment and the policy environment constitute an important foundation for the development of agricultural products logistics. In recent years, with the promotion of China’s urbanization, agricultural modernization, and agricultural supply-side structural reform, the market environment for China’s agricultural products logistics has been continually enhanced. At the same time, the Government has issued several relevant policies to improve the policy environment for agricultural products logistics.

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6.2.1 Huge Market Demands for Agricultural Products Logistics China is a large country producing huge quantity of agricultural outputs year-long. In 2017, the total output of China’s agricultural products reached 2.118 billion tons (Hong Tao 2018), in which the grain output was 0.618 billion tons (National Bureau of Statistics 2018); grain output has exceeded 600 million tons per year over the last five consecutive years, as shown in Table 6.1. Output of major agricultural products including cotton, oil, meat, egg, aquatic products, vegetables and fruit takes the lead among all countries in the world. With the development of China’s urbanization, the enhancement of residents’ consumption and the gradual improvement of the market economy, the shares of these agricultural products for self-sufficiency at the production origins have declined year by year recently. Most of the agricultural products are finally brought to the market as commodities, and the transformation rate of commercialization is on the rise year by year. The high rate of commercialization of agricultural products generated huge demands for agricultural products logistics.

6.2.2 Accelerated Construction of Modern Urbanization In recent years, with the acceleration of industrialization, China’s urbanization has been experiencing rapid development. Up to 2017, the population residing in cities and towns in China had increased to 813 million, representing an urbanization rate of 58.52%, as shown in Fig. 6.1. The advance in urbanization cannot be attained without the support of smooth and efficient agricultural products logistics systems. Undoubtedly, the continuing upswing of urbanization in China places higher require-

Table 6.1 China’s main agricultural products output for 2013–2017 (million ton)

Index

2013

2014

2015

2016

2017

Grain

601.94

607.03

621.44

616.25

617.91

Oil

35.17

35.07

35.37

36.30

37.32

Tea

1.92

2.10

2.25

2.40

2.55

85.35

87.07

86.25

85.38

84.31

Egg

28.76

28.94

29.99

30.95

30.70

Milk

35.31

37.25

37.55

36.02

35.45

Aquatic products

61.72

64.62

67.00

69.01

69.38

Meat

Source Compiled from the China Statistical Yearbook (2014–2017) and related data in the 2017 China Statistical Bulletin of National Economic and Social Development, published by the National Bureau of Statistics of China

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Growth rate (%)

Urbanization rate (%)

6 Development of Agricultural Products Logistics in China

Fig. 6.1 China’s urbanization rate and growth rate for 2011–2017. Source Compiled from the China Statistical Yearbook (2012–2017) and related data in the 2017 China Statistical Bulletin of National Economic and Social Development, published by the National Bureau of Statistics of China

ments for the development of its agricultural products logistics in regard to logistics scale, logistics speed, and logistics efficiency.

6.2.3 Accelerated Promotion of Agricultural Modernization Agricultural modernization is the foundation and support for national modernization and the fundamental direction of agricultural development. Thanks to the greater importance attached to agricultural modernization, in recent years, the Chinese Party Central Committee and the State Council have given more attention to the agricultural modernization and continually strengthened the policies of benefiting the farmers, hence notable achievement has been made in the construction of agricultural modernization. The rapid and healthy development of agricultural products logistics is one of the most important assurances for agricultural modernization. With the advancement of agricultural modernization, agricultural production has shifted away from traditional, primitive operations, and moved forward to modern, intensive operations. This shift mandates the agricultural products logistics to accelerate its transformation and upgrading in terms of hardware facilities, organizational methods, distribution methods, and trading means, so as to adapt to the new requirements subsequent to the agricultural modernization.

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6.2.4 Persistent Upgrading of Consumer Demands With the elevation of the residents’ income level, the change in age structure of the consumer groups and the rapid development of emerging technologies such as the Internet, consumption demands of Chinese residents are evolving towards a more high-end, diversified, personalized and informatized directions. Besides, consumers’ demands for domestic and foreign high-quality agricultural products are continually rising; their requirements on quality fresh agricultural products are becoming more stringent. In this context, it is crucial to improve the effective allocation of agricultural resources, enhance the performance of agricultural products logistics, and reduce the loss during the distribution of agricultural products. Therefore, the Government has taken the lead in carrying out the over-arching design and system planning for the construction of agricultural products logistics distribution system, and builds a modern logistics system with the help of advanced network technology and information technology.

6.2.5 Rapid Development of Emerging Distribution Modes for Agricultural Products There have been diversified trading methods for agricultural products in recent years. As various trading methods explore their own trading patterns, they have also promoted the diversification of distribution modes for agricultural products. With the change of consumption experience, new distribution modes such as grower-supermarket direct linking and E-retailing have developed rapidly. At present, the turnover in grower-supermarket direct linking accounts for 15% of the total circulation of agricultural products, with over 1,000 chain enterprises linked with about 16 thousand farmer cooperatives. In 2017, the sales of China’s agricultural products through E-retailing reached 250 billion RMB (Hong Tao 2018). Presently in China, there are various E-retailing modes for agricultural products such as O2O (online to offline), B2C (business to consumer), C2B (consumer to business), B2B2C (business to business to consumer), C2C (consumer to consumer), C2F (consumer to farmer), B2M (business to market), M2C (manufacturer to consumer), BMC (business + medium + consumer) and CSA (community sponsored agriculture). The scale of e-commerce for agricultural products has expanded rapidly in China. According to statistics, national fresh-food e-commerce transactions grew rapidly from 12.67 billion RMB in 2013 to 139.13 billion RMB in 2017, with an average annual growth of 82.0% during the past 4 years, as shown in Fig. 6.2. Online transactions are carried out in the wholesale market for agricultural products. For example, Shenzhen Agricultural Products Co., Ltd., based on supply chain management, manages 50 comprehensive wholesale markets and online trading markets in 35 large and medium-sized cities across China, forming the largest domestic distribution ecosystem for agricultural products. Another site, www.sxw365.cn, is a

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Growth rate (%)

Market scale of China’s fresh products e-commerce (billion RMB)

6 Development of Agricultural Products Logistics in China

Fig. 6.2 Market scale and growth rate of China’s fresh products e-commerce for 2013–2017. Source Compiled from the 2018 E-commerce Development Report on China’s Agricultural Products, published by E-commerce Research Center

vertical e-commerce platform for fresh food materials founded on physical wholesale markets. Offline retail sales of agricultural products are showing an intelligent trend. Different intelligent fresh-food stores are opened, such as Fresh Hema and JD 7FRESH, which aim to create online and offline-integrated new retail complexes that feature “fresh food supermarket + catering + e-commerce + logistics.” At the same time, traditional farmer’s markets are reformed with the help of science and technology, and have become more intelligent. Examples include the China Vegetable Union Yulong Intelligent Market Experience Store, the Hefei Yaohai District Victory Intelligent Farmers’ Market, and the Hangzhou Dinghai Farmers’ Market. These intelligent markets integrate intelligent devices such as intelligent electronic scale, intelligent display and touch all-in-one apparatus, to achieve functions including free full WiFi coverage, mobile payment, food tracking, intelligent reviews, and big data analysis.

6.2.6 Constant Issuance of Industry-Related Policies and Plans Recently, the State Council and various Ministries and Commissions have issued a number of policies, development plans and guiding opinions on strengthening the construction of agricultural products logistics facilities, establishing and improving modern distribution systems for agricultural products, and promoting the construc-

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tion of key backbone network for agricultural products; these actions, as shown in Table 6.2, serve to facilitate the healthy, orderly development of agricultural products logistics.

6.3 Development Status of China’s Agricultural Products Logistics With the development of the social economy and the improvement of residents’ living standards, agricultural products logistics has maintained an upward momentum. Owing to the continual increase of agricultural products logistics and improved construction of logistics systems, a multi-node, network-like, fully-encompassing distribution network for agricultural products is basically established in China. Meanwhile, new distribution modes for agricultural products are developing rapidly; the trend of e-commerce distribution of agricultural products is becoming more and more apparent, and cold chain logistics is developing vigorously.

6.3.1 The Scale of Agricultural Products Logistics Continues to Expand In 2013–2017, the total value of agricultural products logistics in China showed a steadily increasing trend with an average annual growth of 4.5%,1 but with a slight decline in growth rates over the years, as shown in Fig. 6.3. In recent years, with the increased volume of imported agricultural products (as shown in Table 6.3), the scale of import logistics for agricultural products has also grown in like proportion.

6.3.2 Agricultural Products Logistics Network Is Constantly Improving Recently, due to China’s concerted efforts in constructing the agricultural products logistics systems, constant optimization of its highway network structure, improvement on the green channels for transporting agricultural products, and the establishment of agricultural products logistics nodal systems, it has basically established a multi-node, network-like, fully-encompassing agricultural products logistics system. First, with its constantly expanded scale and density, China’s highway network structure has been further optimized. In recent years, the highway infrastructure on 1 The calculation formula is: verage annual growth rate

=

 4

total value o f agricultural pr oducts logistics in 2017 total value o f agricultural pr oducts logistics in 2013

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Table 6.2 Relevant policies and plans on China’s agricultural products logistics No.

Time of issuance

Issued by

Doc. name

Description

1

2014-03

Ministry of commerce, national development and reform commission, and eleven other departments

Guiding Opinions of 13 ministries including the ministry of commerce on further strengthening the construction of agricultural products market system

Promote the upgrading of agricultural products logistics centers; accelerate the cultivation of comprehensive processing and distribution enterprises for agricultural products and third-party cold chain logistics enterprises; foster the construction of warehousing facilities for agricultural products; support the standardization of agricultural product warehousing, transshipment facilities and means of transportation

2

2014-10

State council

Notice of the state council on issuing the medium and long-term plan for logistics development (2014–2020)

Carry out the agricultural products logistics project

3

2014-12

National development and reform commission, ministry of finance, and eight other departments

Guiding opinions on further promoting the healthy development of cold chain transportation logistics enterprises

Strengthen the construction of infrastructure for cold chain logistics and improve the standardization systems for cold chain transportation logistics (continued)

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Table 6.2 (continued) No.

Time of issuance

Issued by

Doc. name

Description

4

2015-02

State council

Several opinions on strengthening the reform and innovation and accelerating the agricultural modernization construction

Strengthen the construction of agricultural product warehousing and logistics facilities; accelerate the construction of a cross-regional cold chain logistics system; support the e-commerce, logistics, commerce, finance enterprises and other enterprises to participate in the construction of agriculture-related e-commerce platforms

5

2015-02

Ministry of transport, ministry of agriculture, and two other departments

Several opinions on cooperatively promoting the healthy development of rural logistics and accelerating the modernization of service agriculture

Accelerate the improvement of rural logistics infrastructure; promote advanced rural logistics operations models; promote the application of advanced, pertinent rural logistics equipment; upgrade the information level of rural logistics; cultivate rural logistics operators

6

2015-08

Development and reform commission

Notice on accelerating the implementation of major modern logistics projects

Lead enterprises to carry out the construction of agricultural products logistics projects: focus on the construction of pre-cooling, cold storage and cold chain transportation facilities for bulk fresh agricultural products (continued)

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131

Table 6.2 (continued) No.

Time of issuance

Issued by

Doc. name

Description

7

2015-08

Ministry of commerce and nine other departments

Development plan for the national agricultural products market system

Strengthen the construction of distribution infrastructure for agricultural products, especially for agricultural products cold chain logistics. Cultivate agricultural products logistics enterprises and develop third-party logistics for agricultural products. Strengthen the standardization construction of various systems such as warehousing logistics and refrigerated transportation systems for agricultural products

8

2016-02

Development and reform commission and nine other departments

Several opinions on strengthening the construction of short-term logistics to promote effective investment and household consumption

Propose six key tasks including strengthening the construction of agricultural products logistics facilities

9

2016-04

Ministry of commerce and eleven other departments

Guiding opinions on strengthening the construction of market systems for public welfare-based agricultural products

Improve public processing and distribution centers and develop cold chain logistics

(continued)

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Table 6.2 (continued) No.

Time of issuance

Issued by

Doc. name

Description

10

2016-09

Ministry of commerce, china development bank

Notice on jointly promoting the construction of the national backbone distribution network for agricultural products

Define the overall concept, key supporting directions, organizational implementation and working mechanism for promoting the construction of the national backbone distribution network for agricultural products

11

2016-10

Ministry of transport

Notice on further strengthening the construction of rural logistics network nodal system

Propose the task objectives and five task priorities in the construction of rural logistics network nodal systems

12

2016-10

State council

Notice on Issuing the National Agricultural Modernization Plan (2016–2020)

Construct the market distribution system for agricultural products, and build transportation corridors, cold chain logistics distribution centers and distribution stations where agricultural products are produced. Promote commerce logistics, postal services, and other service networks to serve agriculture (continued)

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Table 6.2 (continued) No.

Time of issuance

Issued by

Doc. name

Description

13

2017-03

Development and reform commission and state administration of grain

Notice of the state administration of grain of the national development and reform commission on issuing the 13th five-year development plan for grain logistics

Define the guiding idea, basic principles, development objectives and main tasks in the 13th Five-Year Development Plan for Grain Logistics and propose safeguard measures to promote its implementation

14

2017-04

General office of the state council

Opinions on accelerating the development of cold chain logistics to ensure food safety and promote consumption upgrading

Propose eight measures including improving the cold chain logistics infrastructure network, encouraging cold chain logistics innovation, improving the information level of cold chain logistics, and accelerating the innovation and application of cold chain logistics technology equipment

15

2017-04

Ministry of commerce, agricultural development Bank of China

Notice on jointly promoting the construction of the agricultural products and rural market systems

Fully promote the construction of agricultural products and rural market systems; accelerate the construction of a national backbone distribution network for agricultural products; develop new forms for agricultural products and rural distribution (continued)

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Table 6.2 (continued) Issued by

Doc. name

Description

General office of the state council

Opinions on further promoting logistics to reduce costs and increase efficiency and promote the development of the substantive economy

Implement the green channel policy for transporting fresh agricultural products

17

2017-09

General office of the CPC central committee and general office of the state council

Opinions on innovating on systems and mechanisms to promote green agriculture development

Establish low-carbon, low-energyconsumption, recycling, and efficient processing distribution systems

18

2018-03

General office of ministry of commerce and general office of CFSMC

Notice on deepening the strategic cooperation and promoting the rural distribution modernization

Propose four key tasks including promoting distribution modernization for agricultural products and strengthening the construction of urban and rural logistics systems

Growth rate (%)

Time of issuance 2017-08

Total value China’s agricultural products logistics (billion RMB)

No. 16

Fig. 6.3 Total value and growth rate of China’s agricultural products logistics for 2013–2017. Source Compiled from the National Logistics Report (2013–2017), published by the National Development and Reform Commission, the National Bureau of Statistics of China and the China Federation of Logistics and Purchasing

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Table 6.3 China’s imported quantity of agricultural products for 2013–2017 (thousand ton) Index

2013

2014

2015

2016

2017

Grain and grain flour

14,580

19,510

32,700

21,990

25,590

Rice

2,270

2,580

3,380

3,560

Soy

63,380

71,400

81,690

83,910

Meat

3,050

2,790

2,810

4,600

– 95,530 –

Highway density (km/100 sq km)

Highway mileage (million kilometers)

Source Data of imported meat compiled from the China Institute of Business Industry, other data compiled from the China Statistical Yearbook (2014–2017) and related data in the 2017 China Statistical Bulletin of National Economic and Social Development, published by the National Bureau of Statistics of China

Fig. 6.4 China’s highway mileage and highway density for 2013–2017. Source Compiled from the China Statistical Yearbook (2014–2017) published by the National Bureau of Statistics of China and the Statistical Bulletin of Transportation Industry for 2017 published by the Ministry of Transport of China

which China’s agricultural products logistics is relayed has been gradually improved. Up to the end of 2017, the total mileage of highways in China reached 4.77 million kilometers, and the density of the highway network reached 49.72 km/100 km2 . China’s highway mileage and highway density for 2013–2017 are shown in Fig. 6.4. Second, the green channel for the transportation of fresh agricultural products has been continually improved. The “Green Channel” policy for fresh agricultural products in China was put into operation in 1995. So far, the green channel has been extended to all toll roads in China (including tolled independent bridges and tunnels). Third, the construction of wholesale markets for agricultural products has been further strengthened. Wholesale markets for agricultural products still play a major role in the distribution of agricultural products, accounting for about 70% of the total circulation. Up to the end of 2017, there were 4,469 fully-functional large wholesale markets for agricultural products in China.

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Fourth, the structure of freezing facilities and equipment for agricultural products has been continually upgraded. Up to April 2017, China’s total refrigerated storage capacity was 36,096 kilotons; there were 74,587 refrigerated trucks, including 31,643 self-owned refrigerated trucks and 42,994 integrated industrial refrigerated trucks. Compared with the conditions of 2016, the total refrigeration storage capacity increased by 18.9%; the total number of refrigerated trucks decreased by 2.5%, of which the number of self-owned refrigerated trucks decreased by 16.3%, and the number of social refrigerated trucks increased by 11.6% (China Cold Chain Logistics Alliance 2017).

6.3.3 Construction of Grain Logistics System Is Steadily Promoted In recent years, due to increased investment in the construction of the grain logistics system, funded by various levels of governmental departments in finance, development and reform, banking, and grain administration, and grain enterprises, China’s grain logistics industry has developed steadily. Grain logistics distributors begin to take shape. The Chinese Government allots considerable investment funding from the national budget to carry out major grain distribution projects and support the construction of grain logistics distribution facilities. Up to now, China has basically formed the logistics nodes and grain logistics parks that have notable proliferating capability and exemplary functions, to cover major grain production and consumption areas. And the distribution functions of the network nodes have also been enhanced. The grain warehousing system has been continually upgraded, with significantly improved warehousing modernization. China has continually strengthened the construction of grain warehousing infrastructure. Up to the end of 2017, the good warehousing capacity2 reached 600 billion kilograms (State Administration of Grain 2018). The status of grain warehousing facilities and technologies has reached the world’s advanced level. More than 900 of Sinograin’s direct-owned warehouses and sub-warehouses have fully achieved intelligent management (Liu Hui 2018). Efficient equipment and technologies for grain logistics have been promoted and applied. Grain logistics technologies such as containerized unitization begin to be adopted, multi-point plough belt conveyor and other grain-saving equipment are gradually promulgated and highway-railway-waterway multi-mode transportation is improved (State Administration of Grain 2017). Modern logistics projects for grain will receive more financial support. In November 2017, the National Development and Reform Commission and the State Administration of Grain jointly issued the Special Management Measures for the Control 2 The

good warehousing capacity refers to the bulk warehousing capacity for grain stored directly in bulk without paving, encasing and other measures, and the warehousing capacity for grain stored in packages.

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of Food Security and the Budget Allotment for Emergency Facilities, which focused on supporting modern logistics projects for grain, and appropriately supported the warehouses for grain product and projects for emergency distribution centers.

6.3.4 E-Commerce Logistics Services for Fresh Agricultural Products Continues to Innovate New e-commerce logistics modes for agricultural products kept on emerging. First, e-commerce logistics modes for agricultural products are actively explored. For example, CAINIAO Logistics has formed a new two-stage distribution logistics mode3 by integrating various logistics resources such as cold chain highway freight firms, cold chain transit centers, and ground delivery companies. Second, with the adoption of the preparatory warehouse mode in logistics distribution, the logistics cost structure has changed from the traditional one mainly for packaging and express delivery expenses into the new one consisting mainly of fixed costs such as warehousing and refrigeration. For example, Fresh agricultural products provided by Beijing Missfresh Ecommerce Co., Ltd. for Shenzhen are placed in the preparatory warehouse, where 99% of customer orders can be fulfilled in two hours. Third, crowd-sourcing is used for the delivery of fresh agricultural products. For example, in 2016, “JD to Home” (daojia.jd.com) merged with “Dada Crowd-sourcing Logistics,” and formed a new company to provide delivery services of fresh agricultural products for “JD to Home.” The concept of logistics service is constantly innovated and upgraded. First, the opening of innovative thinking or integrated use of logistics resources has elevated the efficiency of resource utilization and realized value co-creation. For example, in 2016, Jingdong officially opened its cold chain logistics services for fresh agricultural products to provide Jingdong and other fresh e-commerce enterprises with full-process cold chain logistics services, including transportation, warehousing and sorting. Second, online and offline integration and supply chain sharing are promoted. For example, Dmall and Wumart have reached a strategic partnership, so as to afford customers a seamless connection between online and offline experience, by transforming Wumart’s offline warehouses, standardizing its design of fresh agricultural products, and optimizing its logistics service processes.

3 Different from traditional cold chain logistics models such as self-building, self-building and coop-

eration, CAINIAO Logistics achieves the two-stage (cold chain + ground delivery) cold chain home delivery by integrating social cold chain logistics resources and operating its own cold storages.

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6.3.5 Cold Chain Logistics for Fresh Agricultural Products Is Developing Vigorously In recent years, Chinese residents’ disposable income has increased, and their consumption habit has gradually escalated. Consumers are no longer satisfied with simple necessities, but are placing higher requirements on the quality of life. As a result, the desire for consuming high-quality agricultural products leads to the incessant expansion of demands for fresh agricultural products, which in turn drives the construction of cold chain for agricultural products and the rapid development of cold chain logistics for agricultural products. According to the “2018 E-commerce Development Report on Chinese Agricultural Products,” in 2017, the total amount of cold chain logistics for Chinese agricultural products reached 4,000 billion RMB, increased by 17.6% compared to the previous year, and accounting for 1.58% of the total value of national logistics in the same year. The total revenue of cold chain logistics reached 240 billion RMB, up by 10%. The capacity of refrigerated warehouses reached 119.37 million cubic meters, up by 13.7%. Cold chain logistics projects are being carried out at accelerated pace. In recent years, a number of cold chain logistics projects for agricultural products were built and completed in various parts of China, including Zhongkai Intelligent Cold Chain Logistics Park, Sino-Russian International Cold Chain Logistics Project, Lanzhou Plateau Xialai Cold Chain Logistics Project, Kunshan Cross-Strait Cold Chain Logistics Project, and Henan Wanbang Hebi Cold Chain Logistics Project for Agricultural Products. Third-party cold chain logistics for agricultural products is developing rapidly. Third-party cold chain logistics enterprises including JD Logistics, Cainiao Logistics, SF Cold Chain Express, and Xianyi Supply Chain Co., Ltd. are rising rapidly. At the same time, many agricultural enterprises, logistics enterprises, retail enterprises, and e-commerce enterprises are beginning to enter the field of cold chain logistics. At present, companies such as STO, YTO, SF, and JD have accessed the cold chain logistics arena by relying on their client’s big data.

6.4 Problems and Development Trend of China’s Agricultural Products Logistics Although China’s agricultural products logistics has maintained a steady development, there still exist problems of primitive organizational structure, low technological level, insufficient informatization, and inadequate development of cold chain logistics. In the future, with the continuing improvement of relevant technologies and management, China’s agricultural products logistics will pick up its pace in mode innovation, intelligence, greening and cold chain system construction.

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6.4.1 Problems of China’s Agricultural Products Logistics 6.4.1.1

Small Scale of Agricultural Products Logistics Operators

At present, China’s agricultural products distribution is still dominated by wholesale markets. There are various agricultural products logistics operators, including well-funded wholesalers at the production origins, wholesalers at the sales sites, agricultural cooperatives, distribution processing enterprises, large chain retailers, as well as weak, private farmers, small transporters and individual vendors. The latter operators account for a larger percentage; they are of small scale, low level, having poor coordination, disparate logistics operational activities, and inefficient organizational management.

6.4.1.2

Cold Chain Logistics for Agricultural Products Needs Improvement

The characteristics of agricultural products place high requirements on warehousing facilities, transport vehicles, and preservation technology. However, as China’s agricultural products logistics is chiefly regular temperature logistics or natural logistics, there is no wholly, independent cold chain logistics system. Hence, there is a conspicuous lacking in cold chain logistics management system built on advanced information technology. In addition, the transport means in China cannot meet the requisite for agricultural products logistics due to the backward techniques in post-production grading, pre-cooling, preservation, packaging, and re-processing, the shortage in refrigerated facilities and equipment, and the large percentage of general-purpose warehouses.

6.4.1.3

Low Information Level of Agricultural Products Logistics

At present, China has not established a computer network-based logistics information sharing platform. There is a shortage of large databases, and a low percentage of websites with agricultural information. The existing websites of agricultural products mainly focus on agricultural news, agricultural policies and commodity prices, but carry insufficient information on the supply and demand of agricultural products. Many wholesale markets and logistics companies lack modern information technology and effective management methods. There is no platform for basic information sharing, so that the level of information services is low. With low standardization of information on agricultural products, there is still a lack of mature information standard system for agricultural products; POS, EDI, barcode and other technologies are not widespread in agricultural products logistics. The backward condition exists due to the imperfection of the information team for

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agricultural products, the low educational level of the operators, the vague awareness in information collection, the inadequate ability in information acquisition and analysis, and the scanty level of information applications.

6.4.2 Development Trend of China’s Agricultural Products Logistics 6.4.2.1

Agricultural Products Logistics Develops Towards Intelligent Operations

“Technology-driven” is the fundamental feature in the development of modern logistics. In the future, with the rapid development of China’s high-tech, the integration of modern technologies and agricultural products logistics will be heightened. The construction of agricultural products logistics information platforms will be accelerated. Cored on information technology, a modern logistics technology pattern that integrates preservation, transportation, distribution, loading/unloading, automated warehousing, packaging and other professional technologies will gradually emerge. Along with the further promotion of Iot-based agricultural products logistics information network system, supportive functions including production monitoring, transportation monitoring, warehousing monitoring, quality inspection and process control management will be organically combined. Transformation and upgrading of the traditional agricultural products logistics operations mode will accelerate, various new business modes will continue to spring up, and the online and offline-integrated business mode will develop rapidly.

6.4.2.2

The Greening Level of Agricultural Products Logistics Will Continue to Improve

Along with the residents’ rising living standards, the impact of China’s agricultural products logistics on the environment will receive more attention. The Government will formulate policies and regulations to improve the organization of agricultural production and operation, perfect the logistics technology, distribution systems and facilities, and reduce the losses of agricultural products in logistics. At the same time, the emphasis will also be placed on reducing environmental pollution resulting from automobile exhaust emissions, and noise generated while carrying out logistics activities.

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6.4.2.3

141

Cold Chain Logistics Systems for Agricultural Products Will Be Further Constructed

At present, cold chain logistics is still a shortfall that needs to be ameliorated in China’s agricultural products logistics. In the future, with the rapid expansion of the fresh-food e-commerce market, there is an urgent need to solve the problems in quality and loss of fresh products, to face the issue of constructing environmentallyfriendly and efficient cold chain logistics system. China’s cold chain logistics system construction needs to be reformed in the following aspects: construction of cold storages and cold chain logistics centers, standardized transformation of facilities such as delivery channels and shelves, application and proliferation of environmentallysound refrigeration facilities and equipment and technologies, whole-process supervision management of cold chain logistics, standardization of fresh food and packaging, and adoption of diversified delivery methods.

6.5 Summary This chapter gives an overview of agricultural products logistics in China, discusses the development environment, the current development status, and explores the existing problems and development trend. With the advances in China’s urbanization construction, agricultural modernization and agricultural supply-side structural reform, the market environment of China’s agricultural products logistics has been continually enhanced. Meanwhile, the Government pays considerable attention to the development of agricultural products logistics, and has issued a number of relevant policies to improve the policy environment for agricultural products logistics. As for the development status, with the continual growth in agricultural products logistics and the improved construction of logistics systems, a multi-node, network-like, fully-encompassing distribution network for agricultural products has been basically established. Meanwhile, new distribution modes for agricultural products are evolving rapidly, e-commerce-oriented distribution of agricultural products is becoming more and more apparent, and cold chain logistics is developing vigorously. Problems still exist in China’s agricultural products logistics such as primitive organizational structure, low technological level, insufficient informatization and inadequate development of cold chain logistics. In the future, with the continual advancement in relevant technologies and management, China’s agricultural products logistics will accelerate its development in mode innovation, intelligence, greening and cold chain system construction.

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References Chen Mengyao et al. Research and Analysis Report on China’s Consumption Upgrade [R]. http:// www.sohu.com/a/206939740_652385, 2017-11-27. China Cold Chain Logistics Alliance. National Distribution Map of Cold Chain Logistics (2017). https://www.sohu.com/a/138026140_653523.2017-05-03 Hong Tao. 2018 E-Commerce Development Report on Chinese Agricultural Products [R]. Ebrun, 2018-03-20, 2018-03-20 Liu Hui. Transparency and Effective Administration of Food Security [EB/OL]. http://www.gov. cn/xinwen/2018-01/02/content_5252338.htm, 2018-01-02 National Bureau of Statistics. 2017 China Statistical Bulletin of National Economic and Social Development State Administration of Grain. 13th Five-Year Development Plan for Grain Logistics [EB/OL]. http://www.ndrc.gov.cn/gzdt/201703/t20170310_840818.html, 2017-03-03 State Administration of Grain. The 2018 National Conference on Grain Circulation is Held in Beijing [EB/OL]. http://www.gov.cn/xinwen/2018-01/23/content_5259757.htm, 2018-01-23 State Council. National Planning for New Urbanization (2014–2020) Zhongkai Wisdom Website. Company Profile of Zhongkai Wisdom Cold Chain Logistics Park [EB/OL]. https://chinafoodvalley.com/gsgk.jhtml

Chapter 7

Service Models and Innovation of China’s Highway Freight Platforms Zhilun Jiao and Yujing Huang

Highway transportation is the main form of China’s freight logistics. In 2013–2015, China’s highway freight volume remained at around 75% of the total freight volume (www.chyxx.com 2016). With the rapid development of Internet and other information technologies, the highway logistics industry has introduced Internet-based platforms and systems in many areas such as business management and service innovation. “Internet + Highway Freight” has gone through a developmental gamut of emerging with a quick rise, growing by a rapid expansion, resulting to the exiting of a large number of enterprises, and finally the returning of the market to a steady state. The highway freight platform herein refers to the online/offline commercial trading media or auxiliary service system built with the Internet and the IoT to serve the upstream and downstream multilateral markets in the highway freight industry chain. It includes both the online trading platform and the offline physical logistics service or management service platform supported by the Internet. This chapter consists of four sections. Section 7.1 discusses the form, classification, operational entities and trading chain of China’s highway freight. Section 7.2 specifically summarizes the seven major types of Internet platforms and their service models for China’s highway freight. Section 7.3 analyzes the impact of the development in highway freight platform on China’s highway logistics industry. Section 7.4 presents the development trend of China’s highway freight platform and highway freight industry.

Z. Jiao (B) Logistics Research Center, Nankai University, Tianjin, China e-mail: [email protected] Y. Huang College of Economic and Social Development, Nankai University, Tianjin, China © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_7

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7.1 Overview of Highway Freight Compared with railway, aviation and waterway transportation, highway freight has its advantages in broad acceptance of its general service, and the convenience in transshipment and door-to-door service; its disadvantages are in limited transport volume and distance, unstable transportation time, and high energy consumption. China’s highway freight covers multiple service types and multiple sectors, and has great potential applications in concert with the Internet and information technologies in various fields. Many cutting-edge information technologies are also the first to be applied in highway logistics.

7.1.1 Forms and Classifications of China’s Highway Freight According to different criteria, highway freight services may be divided into multiple types, and the different types often correspond to different service products and sub-sectors of industries. Observing from the transportation distance, highway freight mainly includes long-distance trunk transportation, short-distance city-wide transportation and urban distribution. Viewing from the transportation time, highway freight may be divided into regular transportation and time-based transportation, which differ in that the latter clearly defines the completion time of transportation service and the liability for failure to complete the transportation service on time. Seeing from the vehicle load, it may be divided into mini-vehicle transportation, light vehicle transportation, medium truck transportation, and heavy truck transportation. According to the Provisions on the Administration of Over-loaded Transport Vehicles on the Road issued by the Ministry of Transport of the P.R.C. in 2016, the maximum weight limit of a six-axle full-trailer train is 46 tons. Depending on the length of the compartment, common vans for China’s highway freight consist of four types: 4.2, 7.6, 9.6 and 17.5 m. Based on the batch size of orders and delivery method, highway transportation may be divided into “Full Truck Load” (FTL) transportation, “Less-than Truck Load” (LTL) transportation and parcel transportation.1 With the improvement of specialization in the industry, transportation enterprises that engage in LTL transportation services further divide LTL transportation into large freight LTL and small freight LTL.2

1 FTL

transportation generally refers to the transportation of cargo on one B/L whose weight or volume is enough to fill one truck. In contrast, if the weight or volume of cargo on one B/L is not enough to fill one truck, then cargos of multiple customers on more than one B/L will be required. Such model is LTL transportation. In actual industry operations, FTL transportation will generally be used by the consignor for more than 3 tons or 300 units on one B/L. 2 Different companies divide big freight LTL and small freight LTL in different ways. Generally, small freight LTL is used for cargos from 30 kg to 1 ton, while big freight LTL for cargos from 1 ton to 3 tons. For cargos under 30 kg, parcel transportation applies.

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According to different end-users served, highway freight may be divided into merchant-oriented services (B-end customer,3 store delivery services) and household or individual-oriented services (C-end customer, home delivery services). Trunk transportation generally serves or delivers to factory warehouses and merchants. Urban distribution includes store distribution and home delivery. With the increase in household income and the acceleration of consumption upgrading, coupled with the development of China’s Internet and e-commerce, user-end consumption increasingly highlights its small-volume, multi-batch and personalized features. Therefore, for merchant-oriented highway freight, the proportion of LTL has grown rapidly. Household or individual-oriented services having gradually become independent of highway freight and emerge into a subdivided industry focusing on home delivery services that grow extremely rapidly, including express delivery and instant delivery.

7.1.2 Operational Entities in China’s Highway Freight Market Market participants in China’s highway freight industry include vehicle operators, route operators, intermediary service providers, integrated service providers, hub operators, and supporting service providers. Vehicle operators include small operators who own and operate several vehicles or even one vehicle (generally referred to as “truck owners” in the industry) and fleet companies that operate a large number of vehicles. Route operators include designated route operators and network operators in the field of trunk freight. A designated route operator is one who operates one or more point-to-point route(s) between cities in a fixed manner, such as Beijing to Shanghai designated route. These operators of designated routes generally have their own vehicles and drivers, but may also hire external vehicles to provide additional service during peak seasons having extra volume of cargos. Compared with designated route operators, network operators generally have multiple self-operated designated routes or alliance routes to form a highway transportation service network with region-toregion or nationwide coverage. In urban delivery, operators of vehicle routes are generally consolidated into regional urban delivery service providers to undertake city-wide store delivery and home delivery. Intermediary service providers include various brokers, agents and intermediaries; they generally provide freight sources, vehicle sources and transaction matching services only, and do not actually provide carrier service. In late 2016, the Ministry of Finance and the State Administration of Taxation issued the Notice on Fully Advancing the Pilot Test on Changing from Business Tax to VAT (Cai Shui [2016] No. 36), which for the first time defined the market role of Non-Transporter Operating Common Carrier (NTOCC) in the tax law. Similar to the Non-Vessel Operating 3 In

this Chapter, the word “Business-end” is abbreviated as “B-end”. “individual customers” is abbreviated as “C-end”.

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Common Carrie (NVOCC) in international shipping, although this market entity is one type of shipping agent, the carrier’s legal liability has been further clarified in the transportation service process. Integrated service providers are service providers with multiple capabilities such as vehicle services, route operations and information agency services. In highway freight, integrated service providers generally have close cooperation with certain large and medium-sized manufacturing enterprises or commercial enterprises to undertake the whole-process transportation services of these client enterprises. After undertaking the overall transportation services from large client enterprises, these integrated service providers often subcontract part or all of the businesses to vehicle, route or intermediary service providers. Hub operators are service providers who operate freight terminals, logistics parks and distribution warehouses. Generally, they include three types: real estate hub operators, property hub operators, and integrated hub operators. Real estate hub operators only own park estate, and gain profits through rental; property hub operators provide property and logistics services in freight logistics parks, including water, electricity, fueling, parking, loading and unloading, accommodation, catering and other services; integrated hubs operators are more deeply involved in the business activities of the enterprises residing in their parks, and achieve overall incubation services through equity cooperation, finance, information systems, and cargo source development. Supporting service providers include information system service providers, vehicle/driver service providers, financial payment service providers, and incubation service providers. They provide diversified services, such as car repair, car washing, parking, fueling for vehicles, and catering and accommodation for drivers.

7.1.3 Trading Chain of China’s Highway Freight Services The trading chain of China’s highway freight industry is as shown in Fig. 7.1. The usual trading pattern is as follows. First, the consignor finds an intermediary vehicle or route service provider (generally serving small cargo owners) or an integrated service provider with adequate carrying capability (generally serving large cargo owners), and then the “agent” finds the actual vehicle or route carriers. In the actual carrying process, if driver, vehicle, finance, management information system and other ancillary services are required, such services may be obtained from supporting service providers after being initiated independently by the consignor, the integrated service provider, the station service provider, the actual carrier, or even the receiver. Embedded in the process, the Internet platform, the information system platform and the logistics park platform all play a role in supporting the transactions and the management functions.

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Consignor

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Mainly intermediary service providers, route operators and integrated service providers

Mainly hub service providers, line operators and supporting operators

Mainly vehicle operators, line operators and integrated service providers

Various highway freight participants in urban delivery

Information matching, cargo canvassing, shipping services

Loading & unloading, parking, catering and other supporting services

Trunk transportation, loading & unloading, transshipment services

City-wide store delivery, home delivery

Internet platform

Physical park platform

Customer

Information system platform

Fig. 7.1 Schematic diagram of the trading chain of China’s highway freight

7.2 Platform Type and Service Model Like other logistics services, highway freight is also a kind of derived demand, where the evolution of the downstream business system will directly affect the reform of service models of highway freight logistics. With the latest development of information technology, especially the accelerated penetration of Internet technology in the economic, social and commercial fields, the traditional residential consumption model, commercial circulation model, and logistics service model have changed; China’s highway freight logistics service model is also constantly innovating.

7.2.1 Vehicle-to-Cargo Matching Platform for Trunk Transportation Vehicle-to-cargo matching platform for trunk transportation is a service business which links the transport capacity and the transaction demand of freight source with intermediary services cored on NTOCCs in trunk transportation. Such platforms attempt to connect and serve consignors having freight demands and carriers by borrowing from the platform service model of “Taobao” to connect “sellers” and “buyers,” for the purpose of transaction matching and additional services, whereby creating customer value and achieving platform profitability. Presently, vehicle-to-cargo matching platform enterprises with intermediary services as the main business include “ymm56.com”,4 “huochebang.cn” and “LOJI.” Take huochebang.cn as an example, its platform has developed a transaction service 4 Many

highway freight enterprises and Internet platforms mentioned in this chapter have neither carried out international business nor formally registered their enterprise names in English. The translation principle adopted herein is as follows: (1) if an enterprise publishes its official English enterprise name on its website, such name shall prevail; (2) otherwise, the website name of the enterprise or platform will be taken as its English name, such as ymm56.com; (3) if an enterprise

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interface on both the mobile end and the computer end, on which both enterprises with freight demands and highway transportation enterprises may inquire information on freight demands, routes and vehicles in real time. The faster transactions via the platform in matching the needs of vehicle suppliers and consignors can shorten the waiting time and effectively reduce the rate of empty back-haul of vehicles. After a transaction is settled, the consignor may also track the vehicle, and learn about the status of the cargo. In addition, the platform often additionally provides auto aftermarket services including highway pass, vehicle insurance, refueling verification, and freight finance. Between 2013 and 2014, a large number of vehicle-to-cargo matching platforms emerged in China’s highway freight market, which provided intermediary services and additional services. Most of the early platforms, aimed at eliminating traditional intermediaries, tried to replace the role of intermediary service providers in the existing highway industry. However, as it was difficult to establish trust between consignors and small LTL operators, traditional intermediaries actually provided multiple functions including credit guarantee and information dispersion. Due to their small size and low market trust in the early development period, vehicle-to-cargo matching platforms lacking the offline resource base can hardly replace the traditional middlemen. After several years’ of development, when a large number of vehicleto-cargo matching platforms exited the market or transformed to other services, the industry has gradually returned to rationality. In November 2017, ymm56.com and huochebang.cn, two industry-leading Internet freight platforms (both having a market value of over 1 billion USD) merged into manbang, signifying that a dominate enterprise of Internet highway vehicle-to-cargo matching platform is beginning to take shape. In addition to operating in a de-intermediation approach, some highway freight platforms build services by relying on traditional intermediaries. For example, fuyoukache.com, positioned as a trunk FTL-based Internet trading platform that empowers highway freight brokers, achieves rapid expansion by integrating offline traditional brokers and intermediary service providers. From its launching in March 2015 to 2017, the platform’s annual trading volume had exceeded 4 billion RMB. As the platform obtained C-round financing of 0.25 billion RMB from Legend Capital, Eastern Bell Venture Capital, ProLogis, AVIC TRUST, and ZhenFund (fuyoukache.com 2018) in March 2017, the company has since shown a stable and rapid development.

7.2.2 Trunk Transportation Fleet Management Platform Trunk transportation fleet management provides vehicle services as core business. With fleet resource management as the entry point, the platforms seek to make profit from serving the carriers, or provide consignors transport capacity solutions by gathtakes the Chinese client App as its main platform, without English website name or clearly indicated English name, the Chinese “phonetic symbols” will be used.

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ering scattered vehicles of small transportation enterprises to form a transport capacity pool. Such platforms mainly include log56.com, hdc.e6gpshk.com, and Zhihong. For example, gcb56.com’s platform achieves the intensive management of allied vehicles from the society by making the most of the immediacy in the transmission of the Internet information through GPS and other devices installed on such vehicles. It matches the optimal transport resources by considering comprehensive factors including distance and costs in response to the consignor’s fragmented freight demands. Commercial customers of such platforms include China’s large-scale enterprises and manufacturing enterprises such as Lee Kum Kee, the Ting Hsin Group and the Liby Group. As another example, Zhihong integrates its own transport capacity and allied vehicles from the society with the “large-fleet” management model to form special FTL lines, express trunk lines and warehousing distribution services to cover many cities nationwide; its customers include SFexpress, deppon.com, yto express and JD.com. Due to the large number of individual enterprises in China’s highway freight, fleet management platforms generally integrate the social transport capacity to form allied market integration platforms. There are various models for the platforms to integrate the social transport capacity, including accumulating transport capacity by relying on traditional special line services, obtaining new transport capacity through subsidies and stable freight sources, and locking up capacity through finance lease and other financial models. For example, Lion Bridge Logistics, wholly-owned by Lion Bridge Capital, formed an alliance with drivers in the form of finance lease based its own financial resources, gradually forming a “super fleet” model of transport capacity integration; it provides services to various consignors through integrated contract logistics, intercity lines, and intra-city delivery services.

7.2.3 Trunk Special Route Alliance Platform The “trunk special route alliance” platform is mainly founded on the cooperation among transportation lines. The numerous small-scale private companies operating one or several lines constitute China’s mainstream form of traditional trunk freight companies. In 2013, China had 7.45 million highway freight transportation operators, 14.19 million highway-operated trucks and an average of only 1.90 trucks per operator (China Federation of Logistics and Purchasing 2017). Due to the low entry barriers, many enterprises in the special line market are self-employed, operating one or two lines with only one vehicle, so product homogeneity and price competition are its conspicuous characteristics. With the changes in the demand structure and technical conditions of China’s logistics industry, improving service capabilities and competitiveness by integrating small and medium-sized special lines through the Internet or physical platforms has become an objective requirement for the industry’s development.

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These platform service models of shared service lines and shared revenue are formed mainly through the cooperation and alliance among various special line enterprises. In around 2014, such alliance platforms developed rapidly, helping small and medium-sized freight enterprises form a wide-ranging logistics transportation network quickly. However, as problems of line resources, revenue allotment were not clearly resolved, many alliances had finally exited the market. Typical platform enterprises that rely mainly on line cooperation include yimidida.com and Wangzhongwuliu. Take yimidida.com as an example. It has established the cross-provincial trunk lines based on the bottom-up cooperation of regional special line alliance, while their respective intra- provincial special lines are still operated by the original allied special line enterprises. Meanwhile all alliance parties jointly hold shares of the alliance platform and share the benefits of cooperation. Originally formed by six regional LTL logistics companies, yimidida.com has now expanded its service regions to 33 provinces across China; in 2016 and 2017, it obtained over 100 million RMB of venture capital in four rounds (yimidida.com 2018).

7.2.4 Trunk “Network Alliance” Platform Vast geographical space and imbalanced demands have led China’s freight transportation to form a multi-stage dispatching logistics network. For areas closer to urban regions with dense freight transportation demands, the need of logistics transportation for directional dispatching and customized services is more significant. The whole-process, whole-network transportation services need to be divided into the operational mechanisms for trunk lines, dispatching centers, and terminal receiving and dispatching nodes. Among them, the “hub + trunk” is a relatively more standardized operation of China’s highway freight, and the terminal receiving and dispatching network consists of small vehicle operators and intermediary service providers. The trunk “network alliance” platform refers to a platform-based operation of whole network services in which the main business of “hub + trunk” self-operated operations is strengthened, and the scattered receiving and dispatching resources are integrated. The typical enterprises of such platforms include Kxtx.com, Ane56.com, shangqiao56.com and ycgwl.com. Ane56.com has built a physical special line logistics network platform with “regional dispatching centers, direct operation of trunk and branch shuttle buses by the headquarter” plus “terminal network franchising;” the headquarter manages the franchised outlets in a unified manner, shares freight expenses with the outlets and operates its own self-operated terminal receiving outlets. The Company now has 210 dispatching centers, over 4,000 truck lines and over 17,000 outlets in China (Ane56.com 2018); it is a leader among China’s trunk LTL transportation enterprises. Unlike Ane56.com, Kxtx.com has adopted the online and offline-integrated platform franchise model. It does not directly participate in the management and operations of its franchisees, and only provides order resources and management standards. In the earlier stage, Kxtx.com used to build its platform with open franchising for dis-

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patching centers, trunk lines and terminal stores; it later expanded the self-operations in dispatching centers and trunk lines. But it has always opened franchise to terminal nodes, and rarely participated in the operations of the terminals. These platform enterprises gather terminal service resources mainly through the franchise of special lines and outlet enterprises. They jointly build a large-scale highway transportation network from key regions to the whole country through largescale, standardized trunk lines and dispatching centers. They undertake business, accumulate credit and enhance the market bargaining power with “co-branding.”

7.2.5 Trunk “Park Service” Platform Highway freight logistics park, as a gathering area for highway trunk logistics receiving, dispatching and sending, can provide transportation services such as loading, unloading, dispatching and warehousing as well as auxiliary services such as drivers, vehicles, and financing to various highway transportation enterprises. China’s traditional highway freight parks are generally landowner-type enterprises; as such, they receive income from providing basic services and collecting rent and property fees. During highway freight market integration and Internet platform development, traditional parks have also begun to apply platform thinking, leverage the advantages of hubs, and open up the trunk highway logistics services between parks; they also expand local urban delivery services to form an integrated logistics service platform. Most of the “park service” platforms with hub services are transformed from enterprises with traditional park operations resources, such as Transfar, Linan, and szihlld.com logistics companies. There are also platforms such as 56pingtai that transform and develop park services by relying on traditional freight service resources. Such platforms also differ in operating models. For example, Transfar Logistics, based on its early-day physical highway port platform model, has formed the franchise platform system for trunk logistics and store receiving points by developing Internet platforms such as Lujing and Yihuodi. 56pingtai, based on its traditional trunk line resources, has extended towards hub services by leasing and providing custody services. It also opens up the franchise platform and integrates the terminal lines, vehicles and intermediary transportation services.

7.2.6 City-Wide Terminal “Urban Delivery” Platform While highway trunk freight platforms emerge rapidly, urban delivery platforms that focus on peri-urban and urban delivery services are also springing up. Urban delivery platforms can be divided into store delivery platforms and home delivery platforms depending on the different operations and service models. Compared with trunk freight, store delivery features smaller range of services, more intensive network, lower service standardization, and requires similar credit

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support for initial transactions. Owing to these factors, traditional store delivery logistics is mostly founded on medium and long-term contractual services for fixed customers. Store delivery platform enterprises which sprung up since 2014 include yunniao.cn, BestLogistics, lanxiniu.com, and Spider. At the outset, the core business of these platforms was mostly “vehicle-to-cargo matching” type, accompanied by some scattered, one-time store delivery services; later on, they have transformed into or expanded to medium and long-term contractual logistics services. For example, yunniao.cn, starting from “vehicle-to-cargo matching,” has gradually formed its customized services for various types of clients, and eventually solidified the services into various standardized service processes. In 2017, yunniao.cn’s service network covered 19 first-tier cities; its platform transport capacity pool has more than 800 thousand drivers. In February 2017, the company obtained D round financing of 100 million USD, an investment led by Warburg Pincus and joined by Matrix Partners China, Matrix Partners China, and GSR Capital (yunniao.cn 2018). In addition, based on the idea of “commerce + logistics,” store delivery has also combined with e-commerce and new retailing to form a new logistics service system. For example, Alibaba’s online retail supply chain has expanded into “lst.1688.com,” a B2B ordering platform for community supermarkets and convenience stores. It promotes the traditional convenience stores to join Tmall to form a closed business flow, thereby expanding the store delivery logistics services through logistics platforms such as “cainiao.” JD is also developing a predominately self-operated urban store delivery service platform through the “JD Convenience Store” franchise system by capitalizing on its increased business flow. Similar types of “B2B wholesale + delivery” enterprise platforms also include “Huimin.cn,” “best store + ,” “yunmayi.com,” and “Eternal.” Compared to store delivery, home delivery platforms are mainly facing household and personal services, with features such as order fragmentation and route customization. Home delivery platforms may also be subdivided into different types of services, such as parcel delivery, instant take-out delivery, and large-sized FTL moving services. With the help of Internet technologies, these sub-divided areas have early on formed relatively mature and market-concentrated logistics platform enterprises, such as ZTO and Yunda in express delivery, fengniao.ele.me and imdada.cn in instant delivery, and huolala.cn and supaide.com in large-sized FTL service. In terms of city-wide delivery platforms, many highway service platforms crossserve different business and logistics sub-markets, and platforms in different fields may also have business intersections. For example, “yunniao.cn” undertakes urban delivery services for trunk transportation enterprises, cyclic replenishment services for chain enterprises, delivery services from regional express warehouses to outlets for express delivery companies, and even “integrated warehousing-delivery” comprehensive logistics services.

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7.2.7 Other Supporting Freight Service Platforms There are many types of supporting highway freight services, of which the following are closely related to the Internet platforms. (1) Information service platforms. Typical enterprises include “e6gps.com” and “oTMS.” Through their own information systems and logistics customization solutions, these enterprises integrate resources on consignors, middlemen, actual carriers and receivers into their systems to form a set of customer demandoriented, closed-loop, transparent logistics service process information. On such platform, all parties form a community of instant communication, thus can reduce the cost of information search, assessment and intermediate service for the consignors. Such platforms improve the transportation efficiency by providing full-service information services rather than relying on certain specific logistics services and freight resources. For example, e6gps.com provides e6gps cloud services to Wal-Mart and P&G, so as to enable them to fully monitor their cargos and make timely logistics decisions dynamically. (2) COD and other financial service platforms. These platforms serve highway freight enterprises and provide clients with financial services such as COD, financing, and insurance. Such platform enterprises include “E-COD” and “vbill.cn.” E-COD helps enterprises with COD demands more easily connect to payment systems and transportation management information systems of different companies, thus facilitating their COD management. (3) Big data freight management service platforms. For example, G7.com acquires the information on operations of vehicles and drivers in real time based on sensors installed on customers’ vehicles, so as to achieve route identification, real-time fault alarm, and accident responsibility ascertainment. Through the onthe-spot real-time risk warning system, the platform provides safety warning services related to driver fatigue for the client’s fleet, based on the comprehensive assessment of big data, so as to greatly reduce highway accidents resulting from fatigue driving. In addition, there are others platforms offering auto aftermarket services (such as maintenance, refueling, parking, car wash, vehicle inspection, and paying traffic fines), and driver services (such as accommodation, catering, recreation, and driver assistance). These services are typically tacked on to some main business functions of such platforms, so that such platforms or their third-party enterprises would provide corresponding services. Some other related services are also available on such platforms, such as IT information system services, news media services, and professional social networking services.

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7.3 Impact of Highway Freight Platforms on China’s Logistics Industry Highway freight platform is the main application form of Internet technology in highway transportation, which constitutes a major carrier and pivot of the Internet on the transformation of China’s highway transportation industry. Transportation is an important basic function of the logistics industry. Although highway freight platform is just one of the many types of logistics platforms, it has had a major impact on the development of China’s logistics industry.

7.3.1 Accelerate the Market Integration The organizational pattern of China’s highway freight market remains “small, scattered and poor,” with low overall market concentration, and limited service network and service capability. Seen from the perspective of sub-sectors, FTL transportation, LTL transportation, and express delivery have successively shown an increasing level of concentration. Among them, the FTL transportation market is less organized, in which individual enterprises constitute 90% of the transport capacity (China Federation of Logistics and Purchasing 2017), and each one of them typically has less than five employees. As to the LTL transportation market, in 2013, the top 10 of China’s highway LTL logistics enterprises covered less than 5% of the market share. In contrast, the top 10 LTL transportation enterprises of the US account for 68.29% of the US market share (Logclub 2016). In the express delivery market, as express delivery enterprises, including SF Express, YTO, STO, ZTO, and Yunda, were listed in the second half of 2016–2017, the market concentration of the entire industry has been raised significantly. With the help of Internet technology, the development of China’s highway freight platforms has accelerated the integration of the highway logistics industry. First, highway freight platforms have innovated on market integration models. Large number of small, scattered individual transportation enterprises can become platform participants or franchisees and gain the same action and collaborative service capabilities by relying on the platform, and thus enhance their capability in providing external services and reducing cooperative transaction costs. By taking in individual enterprises, some platforms actually incorporate them into their small service teams under unified brands, similar to project teams under their wings. This forms a new model of market integration. Second, highway freight platforms have accelerated the market integration process. The development of platforms has enhanced the overall bargaining power of individual transport enterprises. During the development and growth of a platform, the platform will uniformly expand the client base, improve the quality of freight sources, and to some extent establish standards for enterprises joining the platform, integrate emerging technologies, and complete the R&D of equipment, information

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systems and business models required for the intensive industry development. These actions have thereby accelerated the industry development, then by further absorbing more franchisees, sped up the pace of industry integration and intensification. Overall, the highway freight logistics market is gradually increasing its concentration. As to the LTL market, deppon.com achieved an annual revenue of 17 billion RMB in 2016, showing a year-on-year increase of 31.6%, solidifying its leading position in the industry; it was listed in January 2017. Large LTL transportation enterprises including Jiaji and Shenghui have remained stable in market size. In November 2017, ymm56.com and huochebang.cn merged into manbang, a large leader of the vehicle-to-cargo matching platforms. Some individual, small freight enterprises have accelerated the process of market integration and elimination. As to the express delivery market, it had initially formed an oligopoly pattern in 2017. On the one hand, large express delivery enterprises began to accelerate market mergers and acquisitions. For example, YTO Express controlled On Time in May 2017; STO Express purchased shares of Fast Express in August 2017. On the other hand, small and medium-sized express enterprises also accelerated integration; for example, Quanfeng Express was acquired by zqlwl.com.

7.3.2 Promote Specialization, Whole-Process Coverage and Business Model Innovation The development of highway freight platform has improved the market segmentation and specialization level of highway logistics. First, traditional highway services, especially freight services for scattered customers, are provided on a case-by-case basis in terms of price, receiving outlets, and transportation time; opaque pricing, non-standardized operations and unstable service quality are very common. Internet platforms have promoted the productization of logistics services and raised the level of specialization in service standards by means of bidding or published prices. Second, under the influence of the productization of highway freight platforms and logistics services, many service areas are subdivided. For example, the LTL transportation field has been subdivided into express delivery, general delivery, large-sized freight, and small-sized freight. Third, as specialized, customized contract freight and third-party freight developing rapidly, highway transportation services for cold chain and hazardous goods also continue to upgrade. The development of highway freight platforms has enhanced the full-processbased service capacity of the highway logistics industry. Their business models are conducive to extending the service chain and adding other related services. While relying on their own resources to build core business service platforms, highway freight platform enterprises will usually rely on cooperation with other enterprises to increase the relevant upstream and downstream services, thereby forming fullprocess highway freight services. For example, many trunk highway platforms pro-

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vide temporary warehousing, city-wide logistics, and even sales agency services on their platforms. The development of highway freight platforms has also improved the innovation level of business models of highway logistics enterprises. The highway freight platform itself is a business model innovation. It is an enterprise’s innovation to improve the transaction efficiency, reduce transaction costs and gather trading resources with the help of the Internet in information transmission, real-time feedback, transaction consummation, full-process tracking, online payment, and auxiliary management. In addition, driven by the development of new technologies including the Internet, big data, and AI, highway freight enterprises which are familiar with customer demands and market operations begin to develop new equipment in various sub-sectors and explore new services, such as drop and pull, drop box in highway transportation and drones in express delivery.

7.3.3 Enhance the Informatization and Competitiveness Highway freight platforms have accelerated the applications of emerging technologies such as big data and AI in the industry. Many platforms are built directly on the Internet-based and mobile Internet-based cloud platforms, allowing customers to utilize the platforms via cell phones and other mobile Internet devices. Because the platform has strong ability to retain and accumulate data, some big data-based intelligent algorithms and applications can be implemented, thereby improving the intelligence level of platform service products. China’s highway logistics has become a test ground for many cutting-edge information and AI applications, and formed an auspicious interaction mechanism for R&D and transformation with technology development, and enhanced the overall development and competitiveness of the industry. Driven by the Internet revolution, China has become the largest market for global logistics in certain subsectors, resulting in some world-class logistics enterprises. For example, in e-commerce express delivery, cainiao logistics has relied on the “commerce flow + hub” model to form a full-service express logistics platform to attract a number of large express logistics enterprises. Also, in April 2017, JD.com announced the establishment of its subsidiary Jingdong Logistics and ensured its independent operation. This organizational structure enabled Jingdong Logistics to provide open services to the society with its own brand as a logistics enterprise with integrated service capabilities such as trunk lines, hubs, urban distribution, and express delivery.

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7.4 The Development Trend of Highway Freight Platforms As one of the specific application forms of Internet technology in the highway industry, various support conditions such as industry policies, technical conditions, and social resource elements necessary for the development of highway freight platforms will be gradually improved. As highway freight platforms develops pragmatically and rationally, the return to customer value will be further manifest.

7.4.1 Platform Services Will Be Gradually Standardized, Productized, Express-Oriented and Full Process-Based In the era of accelerated application of information technology including the Internet, the pressure brought on by changes in customer’s demand will be quickly transmitted to the highway logistics industry. The development of highway freight platforms will also adapt to the changes in customer’s demand and accelerate the standardization, productization, express-orientation and full-process-basis of highway freight services. Several factors contribute to the trend of standardization and productization. First, the unitization and modularization of highway logistics equipment and operational batches, such as the gradual promotion of unitized pallet applications, as well as the positioning of products suitable for transportation and batch-modular operated drop and pull or drop box transportations start to develop rapidly. Second, the productization that distinguishes different sub-markets and specialized operations models, such as Same-Day Delivery and Next-Day Delivery in city-wide distribution and express delivery, “Zhitongche,” “Set Time Delivery” and “Scheduled Truck” that distinguish routes and product weights in LTL transportation. Third, the whole process of highway logistics, supported by technologies including the Internet and the IoT, has gradually become the industry standards, and its applications in position monitoring, route monitoring, temperature monitoring, and cabin-accessing monitoring continue to expand. The trend for express-oriented logistics has several aspects. In trunk transportation and city-wide delivery, scheduling on the basis of time-based freight transportation, similar to”scheduled cyclical services” of “five-set scheduled train” in railway and liner transportation markets, is promoted.5 In FTL transportation, linked, transparent, and time-based intermodal services are gradually being smoothed out. In LTL transportation, cyclical, stable and time-based operations are gradually achieved. For city-wide and inter-province delivery services, “Half Day Delivery” and “One Day Delivery” are respectively becoming prevalent. 5 “Five-set”

refers to set station (set stations of loading), set route (set operational routes), set train number (set departure cycles), set time (set departure and arrival times) and set price (set transport prices within a certain time period).

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Seen from the full-process-based trend, with the gradual improvement of the market mechanism for highway freight services and the enhancement of the enterprise’s operational efficiency, the market will become increasingly competitive; profit margin for single, homogenized transportation services will gradually decline, the willingness of highway freight platforms to expand into upstream and downstream services and full-process services will increase. For example, some trunk LTL transportation enterprises expand into city distribution, some city-wide store distribution services expand into home delivery services, and some line or park platforms expand into auto aftermarkets and driver services.

7.4.2 The Policy Environment Will Continue to Improve With the more penetrated application of the Internet and information technology in the highway industry, China’s highway industry has gained widespread attention in the society. The State and local governments continue to instate regulatory industrial development policies, straighten out the industry’s operating mechanism, and promote industry transformation and upgrading. The governments are expected to further improve the industry’s policy environment in the future. First, the governments will gradually improve, perfect the industry standards, promote the formation of standard systems, and develop mandatory, operational standards. Presently, the State has issued mandatory standards including the Limits on Dimensions, Axle Load and Masses for Motor Vehicles, Trailers and Combination Vehicles (GB1589-2016), so as to lay a foundation for further managing the problems related to overloading. Second, the governments will straighten out the tax and ticketing mechanism to lessen the burden on enterprises. During the full implementation of changing from Business Tax to VAT, the highway freight industry’s tax burden is lowered slightly, yet problems such as insufficient input tax credits still exist. In the future, with further expansion of China’s NTOCC pilot work, problems pertaining to VAT credits are expected to be resolved under the new framework. Third, the governments are to further regulate the development of the industry, along issues such as overload management, and phased implementation and expanded scope of environmental emission standards. Also the implementation of “NTOCC” policy will further standardize the development of freight forwarding and highway freight platforms. In the future, regulated industry development will foster the healthy development of the industry.

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7.4.3 Accelerated Technology Applications and Business Model Innovations In the development of Internet technology and highway freight platforms, cuttingedge technology applications and business model innovations are of vital importance. In the future, the transformation of new technology applications and the innovation of business models in highway freight and of highway freight platforms will pick up the pace. First, big data and AI technologies may accelerate the applications in highway freight and bring about many business model innovations. Some industry leaders are now exploring specific applications of new equipment such as UAVs and driverless vehicles based on big data and AI. In June 2017, Jingdong Logistics built the world’s first unmanned aerial vehicle dispatching center in Suqian; in August, Jingdong Logistics received a written approval from the government for UAV operations covering Shaanxi Province. In the long run, unmanned distribution may become a revolutionary force in the development of the rural logistics industry. Second, the development of new retailing model may alter the industry’s structure of some retail logistics. Since Alibaba proposed the concept of “new retailing,” major retail enterprises have begun to utilize online and offline channels to combine retail shopping with catering, social networking, entertainment and other diverse experiences; they achieve business model innovation in retailing with the support of advanced technologies, big data and intelligent unmanned equipment. In logistics, new retailing is developing a terminal delivery model of “stores as distributed warehouses.” One good example of this is “freshhema.com,” which makes “immediate delivery” of fresh products, in half an hour, to customers within 3 square kilometers. In the future, the logistics industry will continue to come up with new business models in accordance with new business models in commercial circulation.

7.5 Summary This chapter mainly discusses the service models and their innovations in China’s highway freight field. It is well-recognized that China’s highway freight industry has a long trading chain, with numerous service participants and many types of subdivided services. This chapter details the seven platform types in China’s highway freight sector, including five platforms in trunk transportation: vehicle-to-cargo matching platform, fleet management platform, special line alliance platform, network alliance platform, and park service platform, as well as city-wide urban delivery platform and other supporting freight service platforms. With certain subdivided highway freight service as the entry point, these seven platforms achieve an improvement in their service value and efficiency by relying on the Internet technology applications. The impact of the development of highway freight platforms on the industry includes (1) accelerating the market integration; (2) promoting the specialization,

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full-process orientation of services and business model innovation; and (3) improving the information technology and the competitiveness of the industry. In the future, China’s highway freight platforms will manifest the following trends: (1) movement towards service standardization, productization, express-delivery orientation, and full-process-basis; (2) gradual improvement of the policy environment, and (3) accelerated technology application and business model innovation.

References China Federation of Logistics & Purchasing. Report on China’s Highway Freight Development (2016-2017) [R]. China Fortune Press, 2017-11-01 China Federation of Logistics & Purchasing. Report on China’s Highway Freight Development (2016–2017) [R]. China Fortune Press, 2017-11-01 Logclub. http://www.360doc.com/content/16/0225/13/8224881_537269814.shtml, 2016-02-06 www.chyxx.com. http://www.chyxx.com/industry/201608/435652.html, 2016-08-04 fuyoukache.com. https://www.fuyoukache.com/us.html?target=us_company.html, 2018-01-25 Ane56.com. http://www.ane56.com/ane/aboutus.jsp, 2018-01-25 yimidida.com. http://www.yimidida.com/common/introduce.jsp?pmenu=gyymdd&menu=qygk, 2018-01-25 Yunniao. [EB/OL]. https://www.yunniao.cn/about, 2018-01-25

Chapter 8

Development and Innovation of the Belt and Road Cross-Border Logistics Service System Jinglei Yang

As an infrastructure of international economy and trade, cross-border logistics, which includes cross-border transportation, cross-border infrastructure, Customs clearance processes and policies, is becoming more and more prominent in view of the new chances and challenges confronting the new era. Therefore, cross-border logistics has a direct impact on international economy and trade cooperation. This Chapter mainly discusses the development and innovation of cross-border logistics service system achieved by the countries along the Belt and Road. It is divided into four parts. Section 8.1 introduces the development background of the Belt and Road (B&R) cross-border logistics service system. Section 8.2 presents the innovations of cross-border logistics service system between China and countries along the B&R in 2017. Section 8.3 describes the problems that exist in the B&R cross-border logistics service system. Section 8.4 discusses the future development of the cross-border logistics service system between China and countries along the B&R.

J. Yang (B) Business School, Nankai University, Tianjin, China e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2019 X. Li et al. (eds.), Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-13-7816-4_8

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8.1 The Background of the B&R Cross-Border Logistics Service System Development 8.1.1 The B&R Initiative Is Being Gradually Implemented 8.1.1.1

Bilateral and Multilateral Cooperation Between China and Countries Along the B&R Being Continually Deepened

On the basis of the development initiatives among the six economic corridors,1 increasing number of cooperation agreements between China and other countries along these corridors were signed on multiple aspects including E-commerce, tariff, Free Trade Area (FTA) and trade in service. These cooperation agreements bring forward a series of new requirements on the B&R cross-border logistics and laid a solid foundation for the development and innovation of the cross-border logistics service system. Influential bilateral and multilateral trade agreements between China and the countries along the B&R in 2017 are shown in Table 8.1.

8.1.1.2

China-Based Associations Begin to Function

With the enhanced integration of the countries/regions along the B&R, intergovernmental and non-governmental organizations have provided a strategic support for the cross-border logistics service system by implementing bilateral and multilateral cooperation between different countries. In terms of inter-governmental organization, more than 40 representatives from over 20 countries/regions along the B&R initiated the “Belt and Road International Transportation Alliance” at the World Transport Convention (WTC) in June 2017. The Alliance will help to achieve transportation integration and sustainable development in the countries along the B&R. As for non-governmental organization, 66 business associations, both domestic and overseas, including Guangzhou Commercial Association, China General Chamber of Commerce (CGCC), and Guangzhou General Chamber of Commerce (GGCC) initiated the “One Belt One Road Alliance of International Chambers of Commerce” in October 2015, in order to provide an information and cooperation platform for business contacts through the cooperation of companies and research institutions2 along the B&R. In October 2016, the “Belt and Road Construction Promotion Committee” was established, with the China Association of Social Economic & Cultural Exchange 1 The

six economic corridors refer to the China-Mongolia Russian Economic Corridor, the New Eurasian Continental Bridge Economic Corridor, the China-Central Asia-West Asia Economic Corridor, the China-Indochina Economic Corridor, the China-Pakistan Economic Corridor, and the Bangladesh-China-India-Myanmar Economic Corridor. 2 Asia Pacific Daily. Guangzhou entrepreneurs jointly promote the construction of the Belt and Road) [EB/OL]. http://www.sohu.com/a/127157356_125484, 2017-02-24.

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Table 8.1 Influential agreements signed in 2017 Signed documents

Countries

Contents

China, Mongolia, Russia

The Outline specifies carrying out cooperation projects on increasing trilateral trade volumes, enhancing product competitiveness, intensifying transit transport facilitation, and developing infrastructure. It clarifies the purpose of strengthening cooperation among the three countries and further explores the direction of cooperation

Railway departments of China, Belarus, Germany, Kazakhstan, Mongolia, Poland, Russia

The Agreement aims to increase the market share of railway freight between Asia and Europe, steer the economic development and economic and trade cooperation along the B&R, work together to make the China Railway Express into an international logistics brand, and provide the mechanism ensuring the deepened development of China Railway Express

China, Russia

It aims to conduct a feasibility study of the Eurasian Economic Partnership Agreement for the connection and cooperation between the B&R Initiative and the Eurasian Economic Union

China, New Zealand

It touches upon the issues such as technical barriers to trade, clearance and trade facilitation, rules of origin, trade in service, investment, competition policy, E-commerce, agricultural cooperation, environment, and government procurement

China, Iran

It establishes a high-level meeting mechanism to share experience on the reform and development of post and express delivery; it encourages the postal enterprises of the two countries to conduct cooperation on E-commerce, logistics services and postal financial services (continued)

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Table 8.1 (continued) Signed documents

Countries

Contents

China, Cambodia

It aims to strengthen the exchange and cooperation in E-commerce on policy communication, enterprise cooperation, capacity building, personnel training and joint research