Major players in China’s logistics industry are eyeing expansion following a decision by the central government to fully integrate the sector with the internet, boosting efficiency and reducing waste considerably.
The decision was made at an executive meeting of the State Council, which was presided over by Premier Li Keqiang on July 20. “The logistics industry is crucial, but an evident shortcoming in China’s modern services,” said a statement released after the meeting.
According to the statement, an information-sharing system and national standards will be established to govern this field. The establishment of a public information platform for comprehensive transportation and logistics transactions will also be accelerated to build a smarter warehousing and distribution mechanism.
The meeting also decided that new models will be developed for efficient and convenient logistics, promoting integration of logistics with the manufacturing sector, trade and commerce, and the financial sector. The internet will help match vehicles with cargos and precisely link freight vehicles with distribution sites and customers. Meanwhile, preferential policies such as taxation reduction and streamlined administration processes will be granted to this field.
The State Council’s decision is timely and encouraging, especially when major domestic logistics companies are seeking initial public offerings and looking for new growth opportunities, said Yu Weijiao, chairman of YTO Express (Logistics) Co Ltd based in Shanghai.
China has grown from the world’s largest courier nation to a logistics power and the integration of logistics and the internet will surely incubate more industries and opportunities, Yu said.
The decision can be regarded a follow-up of the country’s Internet Plus strategy Premier Li put forward first in last March as a way of economic restructuring.
For a long time, the nation’s urban and rural areas have been deeply separated from each other, hindering exchanges of agricultural and manufactured goods between villages and cities. Freight transportation also has caused waste of human resources, and gasoline, but its combination with the internet should produce different results.
In late May, Premier Li visited an online platform of logistics company 56qq.com at a big data exhibition in Guiyang, capital of Guizhou province. Via the platform, 1.7 million drivers and 300,000 logistics companies can find their optimal partners to transport freight.
“The platform reduced 50 billion yuan ($ 7.6 billion) in costs for drivers and logistics companies last year, for trucks drove far fewer mileages without freight,” said Luo Peng, a 56qq.com manager. This profound change was reiterated by the Premier at several meetings afterward, indicating his determination to change the situation and cultivate faster logistics.
Foreign logistics enterprises are taking a broader view of Chinese markets. Tony Zhou, corporate communications manager of FedEx Express China, said China’s e-commerce market size is expected to grow by 20 percent year-on-year to reach $1 trillion by 2019. “The rapid expansion of e-commerce will also help boost the logistics industry as the two sectors are closely connected,” Zhou said.
For the logistics industry, the integration of the internet and logistics is a key step in transforming and moving China’s manufacturing sector up the value chain, said Richard Loi, president of UPS China.
By improving its logistics infrastructure through using the internet and new technologies, China can benefit from greater competitiveness in the logistics industry and increase the efficiency of global trade, said Loi.