Logistics industry moving forward
By Dai Yan (China Daily)
Updated: 2005-05-19 08:40

SHANGHAI: China's logistics industry is saying goodbye to its past rough development as local companies gear up and overseas companies bring their expertise to the Chinese market.

That was the message being put forward yesterday as International Logistics Week kicked off in Shanghai.

Increasing competition and the growing demand for more sophisticated logistics services to fit the country's deeper involvement in the global supply chain have forced the industry to review its past development and aim for a well planned future.

Ou Xinqian, vice-minister of the National Development and Reform Commission, said the logistics industry in China will now enter a period of rational rapid development, moving on from an initial stage.

"The demand for logistics services will continue to grow quickly over the next year, while the total expense on logistics should remain stable as the added value of the industry rises," Ou said at the opening ceremony of the logistics event.

According to Ou, China's total expense on logistics totalled 2.9 trillion yuan (US$350 billion) last year, increasing at an annual rate of 16.6 per cent. The industry's added value in the year was 846 billion yuan (US$102 billion), rising 8.4 per cent year-on-year.

Some key problems need to be addressed such as the poor quality of service, low efficiency and a lack of integrated government administration, said Ou.

But the government has recently stepped up efforts to improve the sector, she added.

The State Council approved the Opinions Concerning the Promotion of China's Modern Logistics Industry in August last year.

Earlier this year 13 central government departments, led by the National Development and Reform Commission, established an inter-ministerial mechanism on the working of national modern logistics, the first meeting was held this month.

Companies will make sensible choices once they have more knowledge of the logistics industry, said Qian Yongchang, chairman of the China Communications and Transportation Association.

The costs of logistics services in China are comparatively higher than in other countries: The cost of cargo transportation is three times higher than that of developed countries, and expenditure on goods flow accounts for 30 per cent of the aggregate cost of goods, 10 per cent higher than that of developed countries. China's expenditure on logistics is 21 per cent of the GDP as against just over 10 per cent in developed countries.

In conjunction with Logistics Week, the Shanghai International Transport and Logistics Exhibition also opened yesterday. The exhibition launch was attended by well recognized international companies, such as Baltrans, Kerry Logistics, APL Logistics and Port of Antwerp as well as leading Chinese companies Sinotrans, China Shipping Logistics and COSCO Logistics.

During the three day show , it is expected that more than 8,000 professionals will pass through the 11,500 square metre exhibition in search of fresh ideas and innovative solutions to their logistics problems.

Liu Guojin, Antwerp Port Authority's Adviser in the Far East, said the port, the second largest in Europe, is hoping to use the exhibition to show off its advanced cargo handling ability to the world market.

"Freight agencies, shipping companies and Chinese exporters may choose to go through the Antwerp Port and we can expand the expertise of the Port's logistics service to China," he said.

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