Logistics Operations in China Continue to Recover and Supply Chain Cycle Improves
Sino-Singapore Jingwei – In the first half of 2023, the logistics operation in China continued to recover, and the supply chain cycle was further smoothed, according to an analysis released by the China Federation of Logistics and Purchasing.
During the first six months of the year, the total amount of social logistics in the country reached 160.6 trillion yuan, showing a 4.8% year-on-year increase at comparable prices. This represents a 0.3 percentage point increase from the period between January and May, and a 1.6 percentage point increase from the previous quarter in the second quarter. Overall, the logistics demand has been increasing, indicating an upward trend.
The China Federation of Logistics and Purchasing reported that the upstream and downstream of the supply chain have returned to normal operation, resulting in an overall stable and improving development state for logistics operations. Industrial and agricultural product logistics have maintained stable growth rates, providing substantial support for the recovery of total social logistics. Additionally, consumer logistics for people’s livelihood have experienced rapid growth, further strengthening the overall growth of total social logistics. Notably, logistics in areas such as people’s livelihood consumption, imports, and renewable resources have contributed significantly, with a total contribution rate of nearly 30%, driving the overall increase of total social logistics by 1.4 percentage points compared to the same period last year.
Despite the positive developments in the logistics sector, there are still challenges that need to be addressed. Insufficient demand remains a problem, requiring the consolidation of a multi-field support pattern. The recovery process of logistics demand is still fluctuating, with order demand decrease being a major concern for logistics enterprises. In the second quarter, logistics companies felt that market demand was insufficient, particularly in traditional industries such as road transportation and storage and loading and unloading.
Intense competition in the logistics market has resulted in further drops in service prices. In the first half of the year, the competition pattern intensified, leading to an oversupply situation in most transportation segments. This, in turn, led to lower prices compared to the same period last year. For instance, freight rates for coastal bulk cargo and container markets have fallen due to a lack of growth momentum in transportation demand. Similarly, road logistics freight rates decreased in June, and they are expected to continue running at a low level throughout the year.
The operating pressure on micro entities in the logistics industry has not shown a significant slowdown trend. Operating costs remain high, with the majority of surveyed companies expressing increased pressure compared to the first quarter. Road and water transportation-related enterprises reported relatively concentrated cost rises. Additionally, the logistics supply chain service system still requires improvement as most fields face the pressure of homogeneous competition, low prices, and rising costs.
Looking ahead, the China Federation of Logistics and Purchasing expects the positive trend of social logistics demand to become more apparent in the second half of the year. With the state’s focus on expanding domestic demand, boosting sectors such as automobiles, electronic products, and home furnishing, rectifying arbitrary charges, promoting the development of the private economy, building a modern industrial system, and strengthening people’s livelihood security, the logistics industry, with its immense potential, is expected to experience a long-term positive trend in social logistics demand.
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