China's logistics industry expanded around 10% year-on-year (yoy) and reach around 195 trillion Yuan in 2013. China's logistics market is fragmented with a large number of logistics enterprise. Expansion activities by foreign, local and continued government support has driven the growth of the Chinese logistics market.

1. China’s logistics market : Moving north
China’s logistics market is estimated to grow at around 10% year-on-year (yoy) and reach around
195 trillion Yuan in 2013, primarily driven by improved services, growing industrialization,
expanding domestic retail market and continued government support
16.7% Estimated CAGR of China’s total logistics value 2008–13E (Tn Yuan)
97
125
158
2008 2009 2010 2011 2012 2013E
Estimated share of transportation cost in the total logistics value (2013)
51.3%
52.6% 55.3% 53.5% 53.0% 52.1% 51.3%
34.7%
12.7%
32.9% 33.8% 35.0% 35.1% 36.2%
11.8% 12.7% 12.0% 12.8% 12.5%
2008 2009 2010 2011 2012 2013E
Transportation Cost Inventory Cost Management Cost
Good time for growth…
Recent expansion activities by foreign and local players, and continued government support toward
improvement of logistics services has further driven the growth of logistics industry in the country.
The manufacturing sector remains key to China’s economic development. The logistics
value of industrial products is estimated to account ~91.4% share of the total value in 2013.
China logistics prosperity index, LPI (April–December, 2013)*
Quarter 2013
LPI
April ‘13
54.8
July ’13
52.4
Oct ’13
53.6
Dec ‘13
52.4
Note: An LPI reading above 50 indicates overall expansion in the logistics sector; below 50 indicates overall contraction.
Source: China Federation of Logistics & Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
KEY CHALLENGES
!
A fragmented market
China’s logistics market is fragmented with a large number of logistics enterprises. Road transport enterprises account
for the largest share of the logistics market, in terms of the number of enterprises (790,000 during 2011–12).
A long way to go…
Although China’s economic growth has been driven by increasing demand for logistics services, the country’s logistics
capabilities still remain at an early stage of development when compared to other developed economies like the US and
the European Union.
Compiled by: Mayur Varandani
Infrastructure development projects are largely undertaken in
coastal areas. Inland areas still lag the appropriate infrastructure.
Warehouses in China are relatively sub-standard and do not
meet the international standards. Also, poor warehouse layout
design and insucient material handling equipment have aected
the eciency of operations.
High toll fees imposed by the government for recovering
construction costs of roads and bridges has further aected the
industry’s growth.
Although there is an increasing number of graduates in logistics
and transport, the supply of skilled labor still remains a key
challenge for the industry.
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177
195
90
Source: China Federation of Logistics Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
Source: China Federation of Logistics Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis
Source: China Federation of Logistics Purchasing (CFLP), The Fung Business Intelligence Centre, Aranca Analysis