China’s logistics industry to spring up

Shanghai April 20, 2011: This week, more than 350 delegates gathered to listen to the rapid development of China’s automobile industry needs what a sophisticated supply chain system, as well as China’s new five-year plan to make changes to how Shanghai is thereby improved logistics importance of the work to a new level.

The speakers and participants on behalf of all focus on improving the efficiency and professionalism of the level of the supply chain to better serve China, the world’s largest automobile sales and manufacturing markets. Rapid growth in some areas there will be a slowdown trend, in this case in favor of manufacturing companies and logistics providers more attention to sophisticated supply chain management. This means increased transparency, participation and use of composite transport third-party logistics. China’s central government under appeal to make adjustments in its first draft of the 12th Five Year Plan will enhance the logistics industry and transport operations composite priority task.

He Liming

China’s phenomenal growth over the past two years – in the meantime to achieve double the number reached more than 17 million each year – might end up being cool, or at least stabilize. Despite this rapid growth whether long-term sustainability is still unknown, but sales in the first quarter of 2011 improved by 12%. Over the past two years, depending on the growth of the vast majority of tax benefits and other incentives, and the vast majority of these policies the government has been recovered. He Liming, president of China Federation of Logistics and Purchasing mention some local governments, especially in Beijing, we have begun to set quotas for the car, and at the same time raise parking fees.

However, China’s per capita GDP has reached about $ 4,000, which is the car started the purchasing power of horizontal dots, so the car’s sales growth in the foreseeable future should still be able to achieve an average 10% level.

ROCKETS president also pointed out that the recent growth makes automotive logistics industry has been growing better relative to other peers. Geodis (Geodis), Asia Pacific director of automotive and industrial Qian Jin believes that China’s logistics industry is characterized by a highly fragmented by 700,000 small businesses involved in automotive logistics market has about 12 major corporations, and international logistics providers more investment.

Some OEMs still use their own logistics providers, such as SAIC and Guangzhou Automobile (there are two) and some other companies such as Chery began using third-party logistics providers, Chery uses Anji logistics services. Also in the local logistics providers to improve their range of services. “Logistics service companies are actively explore new business opportunities, particularly in the export sector,” ROCKETS said, but the number of terms still remains relatively low, the 2010 data is 560,000, still below the 2008 peak The 690,000 level.

A slowdown in China, or more stable growth will probably encourage manufacturers to focus more on efficiency. While logistics costs to GDP is reduced by 0.5 percent to reach 16.7 percent, but what the president pointed out, it is almost twice as much data remained the same in Europe or North America. At the same time, China’s trucking industry is still shouldering the burden of carrying Chinese national goods, especially for the automotive industry. According ROCKETS views, it features any natural trucking industry was overloaded and add cost and high risk for the supply chain.


The logistics industry in the new five-year plan


Chinese government – the country’s main promoter of industrial growth – positive eyes focus on improving connectivity and more advanced logistics IT systems, not just on a five-year infrastructure investment plan mentioned. Institute of Comprehensive Transportation National Development and Reform Commission deputy director Wang Ming pointed out that this new plan, the time span 2011-2015, the logistics of this vocabulary is mentioned more than 20 times.

Greater standardization is one of the issues the government is most concerned about, whether it is a truck, pallet or IT systems. Wangsuo Zhang also mentioned logistics providers must go further to provide “one-stop” services, namely road transport, railway transport, packaging, shipping and warehousing Jieke focus provided by a business, rather than as the responsibility of the different companies as at present.

He also stressed the importance of continued investment in the railway, from the high-speed rail to different goods for special truck, in addition to the road to encourage an alternative mode of transport.

The length of the truck is one of the most important topics of the meeting emerged with the regulations related. Chen Gang, general manager pointed out a long stream on July 1 this year, the longest truck length will be shortened to 16.5 m, and the length of the two-stage trailer will be shortened to 22 meters. According to Chen’s comments, if timely implementation of this regulation, the capacity will be reduced by 30%. “Industry will face stagnation, and freight will rise significantly,” he warned to.

However, Deputy Secretary-General Chen, general manager and 马增荣 China Federation of Logistics and Purchasing said they are now actively lobbying the government to change the plan. “We are confident that the necessary changes can be achieved, but even a small number of changes have to be agreed by a number of government departments,” Ma Secretary-General said.


Government and industry demands willingness distance between Beijing Jiaotong University, Professor Zhang Xiaodong was further stated that while he is now in charge of writing the latest five-year plan in the logistics section.

“We will continue to pressure the government to provide them stressed the importance of logistics,” Professor Zhang said. “In the policy we currently still in the fire level.”

Zhang pointed out that even with significant investment, transport and logistics is still the bottleneck of China’s development, and has been struggling to meet the transport needs.

And he stressed the importance of continued investment in infrastructure outside – in the high-speed railway to improve the capacity at the same time, China will build a network of large-scale logistics centers – he believes the only investment is not enough. Focus should be shifted to the issue of convergence between the various modes of transport.

“In the next five-year plan, an integrated transport network must be realized in China, including road, rail and sea,” he said. “Currently, these modes of transport and not well integrated, which makes complex solutions difficult to implement.”

Gala Dinner

For China to build world-class logistics system

Michael Filazzola:二级与三级供应商的透明度很低

OEMs participating outspoken considered more sophisticated and transparent supply chain is a priority. GM China Global Purchasing and Supply Chain Director Michael Filazzola describe how the company is focused on optimizing the transport distance, its internal processes to improve the stability, maximize the use of its resources and strengthen supplier relationships. In particular, he examines the earthquake in Japan and subsequent supply crisis was reflected in General Motors did not understand the complexity of the supply chain.

“We were completely focused on from a supplier’s supply chain, but now we understand that we need to look deeper, until two rose to three, and to help them improve their methods of logistics processes,” Filazzola say to.

He added that GM also hopes that more use of rail, and even tried to short sea shipping, this approach is still new to explore in China

Zhang Yuhua, from FAW-Volkswagen manufacturing management department, also described how China’s OEMs learn from their competitors around the world the best way of working. The joint venture currently used in-time production, synchronous groupage logistics system from the center until the factory. The company draws on the concept of logistics supermarket Volkswagen and Audi to meet supply needs. Like with GM, the company is also to reduce supply chain costs through the whole perspective.




“Now we can assume that this is the spring of China’s logistics industry,” she said.

Local and international logistics providers have expressed their wish to improve the quality of service in China’s ambitions. Deputy General Manager of Anji Automotive Logistics 莫金康 said that although his company annually transport and international companies, such as Germany’s BLG, the same or even a greater number of vehicles, but also in the management still has a long way to go.

“But we hope to best corporate learning, so we meet with these companies and learn,” he said. “We plan to set up a country-wide network and control center, and is committed to improving our standards.” 

International logistics providers, such as Ceva and Geodis, has outlined a large-scale investment in China. According to Ceva Asia Pacific automotive director Dave Dudek, the company’s goal is to double the size of the next three years to make, a large part of which will be contributed by the automotive logistics sector.



Unsustainable price war

However, the Chinese industry is facing critical challenges and quality issues. Professor Zhang competition in the logistics industry will become a “malicious” and that the price war will damage the entire industry, because it limits the possibility of business cooperation.

Geodis also believes money into the most fundamental principles of China’s auto logistics market “price, price and price.”

Qin Meng export logistics manager of Porsche China, said rising prices and ongoing capacity issues (especially variations truck regulations) has the potential to further escalation of the price war. She frankly stated that manufacturers will have to accept an elevated freight. “Although we do not want to admit it, but China will inevitably rise in freight,” she said. “But the positive side is that once prices stabilize, the industry will receive more investment.”

She described the challenges of the next three years as “harsh” but also stressed that the rise of hybrid transport will ease transport bottlenecks play a key role.

Suppliers are feeling price pressure. Jörg Biesemann Continental Automotive Logistics Asia Pacific director, said the supply chain risk and unpredictability means that manufacturers require suppliers to improve freight stock. “We were asked to keep four weeks of shipping stocks, and there are some plants requires protection two weeks lead time, which means that we need to maintain the six weeks of inventory,” he said. “This clamping us a lot of working capital, and means that we need to push down the same requirements in our own suppliers.”


Delphi Asia Pacific senior manager of logistics ZhangHui also stressed the importance of improving the quality and enhancing supply chain connectivity. She stressed that the logistics service providers must be able to warehousing, trucking, customs clearance and cross-modal transport contain. “There is no one company can achieve this goal,” she said, “but maybe in the future there will be.”

Exports have been in the plan

A venue the next day session focused on the outlet stream, hosted by the China Federation of Logistics and Purchasing, and there are a number of local OEMs and attended by officials from the Ministry of Commerce.

Data is amazing. China’s auto parts exports rebounded from 2009’s 22 billion to 31 billion last year, it has been restored to the level before the financial crisis in 2008. Vehicle exports are not so fast recovery, in 2010 the export volume has not reached 2007 levels. But last year, 560,000 of the total has been significantly improved compared to the 2009 amount of 370,000, and if the first two months of 2011 90,009 thousand as a reference, then, this year, will soon create a record high.

Wang Gang, Deputy Director of Electrical and Mechanical Services Department of Commerce Division of recognition and high-tech industry vehicle sales “is mainly low-end products sold in Asia, the Middle East and Africa and other less developed countries,” and when it comes to sales in South America have started a positive sign. “Our most important market in 2011 in Brazil, there is growing very rapidly,” he said, while Russia’s performance is also growing and the number reaches three times the previous year.

2010, China’s five main market, in descending order of displacement, Algeria, Syria, Vietnam, Russia and Chile, and the main models for light trucks and commercial vehicles. But early in 2011 the export of cars exceeding the above products.

“Emerging markets will all together, the growth of the space is still very large, equivalent to the opportunity in developed markets,” 孙远飞 China Figure Supply Chain Management Co., Ltd., said.

The challenges faced by exporters is obvious: an order-driven strategy rather than the overall market strategy; product quality is not high, and difficult to maintain product continuity after obtaining a license; caused due to the small amount of low-quality service.

Such a small amount is also hampered effective outlet stream, a small amount of goods to various destinations and only have a minimal supply chain transparency.

However, things will change. “We have excess capacity,” Director Wang said, adding that China can fill the cuts by the tsunami in Japan, and Japanese OEMs factories relocated two blank geographically more stable countries left.


FAW Tian Li said his company currently has its own brand export indicators, Jiang pointed out that more Brilliance Auto their previous order-driven market model has been replaced by strategic behavior, and in Egypt, Brazil and Vietnam has overseas bases ʱ??

In addition, according to information later as Zhao, after the Paris dealer SHC exclusive distributor agreement signed last year, the JAC in the first quarter by 10,000 vehicles shipped to South America Eukor. JAC five there are three routes leading to Brazil is a direct service.

When China’s major exports to the car while developing countries bear Tanami BYD commercial and logistics senior managers to disclose the company is targeting the European market to export its electric vehicle products, and plans to 50-60% of the output for this purpose. She said the electric car is the core product in these markets and BYD has been set up in the United States of a marketing company to sell its electric vehicles, while the US official that the company’s most important market.

Western logistics providers have realized that China’s auto exports in the field is to be the next South Korea, but Like its neighboring countries will be 70 percent of total exports to China still has a long way to go; only 3% of China’s output for Exit. 2010 import and export activities grew 36%, while automotive logistics is ranked in the first place, this is the view of Professor Zhang Xiaodong. Automotive export industry is expected to reach annual growth of 30-40%.


On a five-year plan from 2006 was implemented and led to significant infrastructure investment (accounting for 9% GDP last year), on this basis, the next five years will focus on improving service quality and develop new facilities suitable for export , with emphasis on joint ventures with outsourced logistics.

But it reminds guests to logistics providers should be proactive, rather than waiting for the amount of growth. “Logistics companies shall cooperate with the shares of export trends, and to help establish a market, rather than simply wait and react,” China Federation of Logistics and Purchasing Automotive Logistics Branch Secretary Shen Jinjun said.

Wallenius Wilhelmsen, BLG, CN, Union Pacific and other companies, Richmond Harbor, the United Kingdom and the Belgian port of Zeebrugge Bristol Harbor include 加利佛尼亚, have in meeting China’s OEMs to showcase their facilities and willingness suitable for China’s auto export services.

  • Automotive Logistics China International Automotive Logistics Conference is the world in a series of one-stop logistics conference, which brings together OEMs, level suppliers, logistics providers and government representatives to discuss, lectures and socializing. Every two-day meeting, and held receptions in the evenings before the first day of the meeting and an evening networking dinner. Next meeting in the series will focus on the factory logistics, namely Finished Vehicle Logistics North America , will be held in Newport Beach Californian May 17-19. Next meeting will be a complete Automotive Logistics Russia , will be held June 14-16 in Moscow.

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