Disrupted logistics eyes normalcy

The logistics disruption in some regions of China is expected to improve later this month, as the central and local governments are stepping up efforts to ensure the smooth operation of freight logistics for industries and households, a renowned industry expert said.

He Dengcai, vice-president of the Beijing-based China Federation of Logistics and Purchasing, said amid growing local COVID-19 cases, freight transportation and logistics in some areas of China have been disrupted, affecting the production and supply of industrial products and daily necessity materials.

But as governments are making all-out efforts to ensure smooth operation of logistics, "The situation is likely to start improving around April 20," He said.

According to He, industrial product logistics accounts for 90 percent of China's total logistics, and smooth operation of logistics is of high importance to maintain industrial production.

"Transportation is a key link in logistics, and logistics is a key part of the supply chain. Obstructed traffic and poor logistics will gradually affect the stability of the industrial chain and supply chain, and affect the smooth operation of the national economy," He said. "The logistics system should be treated as important as infrastructures such as urban power supply and water supply."

The Ministry of Transport on Tuesday prohibited the blocking of road transportation or sending back vehicles or personnel, irrespective of their circumstances, and ordered more efficient COVID-19 screening along transportation routes.

These measures followed a State Council notice on Monday that urged all possible efforts to ensure the smooth transportation of medical and epidemic-prevention supplies, daily necessities, postal and express deliveries, as well as production materials, to minimize the impact on economic and social activities.

The State Council also called for free nucleic acid testing services to be offered to truck drivers and ship crew members, and for traffic permits recognized across the country to be issued to vehicles carrying important supplies.

Local authorities are on the move. Shanghai added COVID-19 testing sites along expressways and set up testing sites exclusively for truck drivers in the city, while the Shanghai Port issued permits for container trucks accepted by adjacent provincial regions in the Yangtze River Delta.

Jiangsu province has reopened 52 expressway intersections, or 40 percent of all closed intersections, as of Wednesday, and it said dynamic adjustments will be made in the future per epidemic prevention and control measures while asking for efforts to quickly activate a regionally coordinated work mechanism to ensure smooth traffic flow.

He, from the China Federation of Logistics and Purchasing, said road transportation is responsible for three quarters of China's cargo transportation work. The Yangtze River Delta region, with Shanghai as the center, is a main production and manufacturing base and relies on a large number of small and medium-sized enterprises to form a sound production and supply chain.

When road traffic is not smooth, especially when the inter-provincial logistics channel that radiates from Shanghai to the other Yangtze River Delta is blocked, it seriously affects the supply of production materials, He said, adding that currently, local production enterprises face the dilemma that "the raw materials cannot be transported in, while the finished products cannot come out".

A small manufacturing company said the original freight rate from Yancheng, Jiangsu province, to Weifang, Shandong province was less than 5,000 yuan ($785), but now the price has exceeded 10,000 yuan, and it is still not easy to call a truck to deliver goods.

According to He, the status of modern logistics as a basic, strategic and leading industry in the national economy is more prominent. The epidemic has exposed the problems of poor logistics and obstructed traffic.

China's logistics industry continued to recover in January and February when the total amount of logistics reached 51.8 trillion yuan, a year-on-year increase of 7.2 percent and significantly higher than the level in 2019, according to data from the China Federation of Logistics and Purchasing.

In March, China's logistics prosperity index was at 48.7 percent, down from 51.2 percent in February.