Contemporary Logistics in China: Revitalization Amidst the COVID-19 Pandemic 9811958327, 9789811958328

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Current Chinese Economic Report Series

Jianhua Xiao · Xiaofan Wu · Bing Lian Liu · Ling Wang · Fan Qin

Contemporary Logistics in China Revitalization Amidst the COVID-19 Pandemic

Current Chinese Economic Report Series

The Current Chinese Economic Reports series provides insights into the economic development of one of the largest and fastest growing economies in the world; though widely discussed internationally, many facets of its current development remain unknown to the English speaking world. All reports contain new data, which was previously unknown or unavailable outside of China. The series covers regional development, industry reports, as well as special topics like environmental or demographical issues.

Jianhua Xiao · Xiaofan Wu · Bing Lian Liu · Ling Wang · Fan Qin

Contemporary Logistics in China Revitalization Amidst the COVID-19 Pandemic

Jianhua Xiao Logistics Research Center, College of Economic and Social Development Nankai University Tianjin, China

Xiaofan Wu Logistics Research Center, College of Economic and Social Development Nankai University Tianjin, China

Bing Lian Liu Logistics Research Center, College of Economic and Social Development Nankai University Tianjin, China

Ling Wang Logistics Research Center, College of Economic and Social Development Nankai University Tianjin, China

Fan Qin Department of Management Science and Engineering, Business School Nankai University Tianjin, China

ISSN 2194-7937 ISSN 2194-7945 (electronic) Current Chinese Economic Report Series ISBN 978-981-19-5832-8 ISBN 978-981-19-5833-5 (eBook) https://doi.org/10.1007/978-981-19-5833-5 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Contents

1

China’s Logistics Development Under the New Development Paradigm: A Strong Sense of Responsibility and a New Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ling Wang 1.1 The Background, Significance and Connotation of the New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.1 The Background of the Proposed New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.2 The Great Significance of Building a New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.3 Interpreting the New Development Paradigm . . . . . . . . . 1.2 China’s New Logistics Roles Under the New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 Logistics is an Important Support for the Formation of a Strong Domestic Market . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 Logistics is an Important Safeguard for the High-Level Opening up to the Outside World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.3 Logistics is an Important Link in the Modern Circulation System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.4 Logistics Will Become the Leading Field of Application for Scientific and Technological Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.5 Deepening Reform in Logistics Helps Promote High-Quality Economic Development . . . . . . . . . . . . . . . 1.3 The New Direction of China’s Logistics Under the New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1 Strengthening the Strategic Underpinning of Expanding Domestic Demand . . . . . . . . . . . . . . . . . . . . 1.3.2 Promote a Higher Level of External Openness in Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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1.3.3

Quicken the Pace of Modern Logistics Infrastructure Construction . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.4 Innovation Will Spearhead the High-Quality Development of Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.5 Further Reduce Logistics Costs and Improve Quality and Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.6 Enhance the Security Capacity of the Supply Chain and Industry Chain . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

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18 19 19 20 21 21

The Development of China’s Logistics Market . . . . . . . . . . . . . . . . . . . Xiaomei Jiang 2.1 The Environment for China’s Logistics Development . . . . . . . . . . 2.1.1 The Severe Impact of the COVID-19 Pandemic on the Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 China’s Economy was the First to Recover . . . . . . . . . . . 2.1.3 A High-Level Institutionalized Opening-Up is Steadily Being Advanced . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Overall Scale of China’s Logistics Market . . . . . . . . . . . . . . . . . . . 2.2.1 Total Value of Social Logistics . . . . . . . . . . . . . . . . . . . . . . 2.2.2 Total Expense of Social Logistics . . . . . . . . . . . . . . . . . . . 2.2.3 Freight Volume and Freight Turnover . . . . . . . . . . . . . . . . 2.2.4 Cargo Throughput and Container Throughput of Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.5 Cargo and Mail Throughput in Civil Airports . . . . . . . . . 2.2.6 Business Volume of Express Industry . . . . . . . . . . . . . . . . 2.3 Major Characteristics of China’s Logistics Market . . . . . . . . . . . . 2.3.1 The Logistics Market Withstood the Severe Test of the COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 The Logistics Industry Makes Every Effort to Fight the Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Accelerating Market Restructuring of the Logistics Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.4 Logistics Enterprises Increase Capital Market Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.5 Speeding Up the Digital Restructuring of Logistics . . . . 2.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Logistics Facilities and Technological Development . . . . . . . . . . . . . . . Fan Qin 3.1 Transportation Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Highway Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Railway Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Waterway Infrastructures . . . . . . . . . . . . . . . . . . . . . . . . . .

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24 24 26 29 31 31 31 32 32 36 37 39 39 41 43 46 50 51 52

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3.1.4 Civil Airports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.5 Comprehensive Transportation Channels . . . . . . . . . . . . . 3.2 Logistics Parks (Centers) and Warehousing Facilities . . . . . . . . . . 3.2.1 Development Status of Logistics Parks (Centers) . . . . . . 3.2.2 Warehousing Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Logistics Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Transportation Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 Warehousing Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Logistics Informationization and Standardization . . . . . . . . . . . . . 3.4.1 Development of Logistics Informationization . . . . . . . . . 3.4.2 Status of Logistics Standardization . . . . . . . . . . . . . . . . . . 3.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

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59 60 61 61 63 64 65 66 70 71 73 74 75

Regional Logistics Market in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Yong Liu 4.1 China’s Development Environment for Regional Logistics Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 4.1.1 Regional Economic Operations Gradually Returned to Normal, with the Western Region Leading in Economic Growth . . . . . . . . . . . . . . . . . . . . . . . 78 4.1.2 The Eastern Region Transforms and Upgrades to Promote High-Quality Economic Development . . . . . 79 4.1.3 The Central and Western Regions Actively Promote Industrial Transfers, with Certain Provinces and Cities Experiencing Faster Growth in Foreign Trade Exports . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 4.1.4 Economic Growth in the Northeastern Region is Still Slow, but Shows Positive Signs of Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 4.1.5 Intensively Implementing Major Regional Strategies and Boosting the Construction of Regional Logistics Network . . . . . . . . . . . . . . . . . . . . . . 82 4.2 The Current Status and Characteristics of China’s Regional Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.2.1 The Scale of China’s Market Demand for Regional Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.2.2 Development Status of China’s Regional Logistics Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 4.2.3 Main Characteristics of Regional Logistics in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 4.3 Logistics Development in Hotspot Areas of China . . . . . . . . . . . . 97 4.3.1 Logistics Development in Hainan Province . . . . . . . . . . . 97 4.3.2 Logistics Development on the Yangtze River Economic Belt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

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4.3.3

Logistics Development of the New Land-Sea Corridors in Western China . . . . . . . . . . . . . . . . . . . . . . . . 103 4.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 5

The Development of Transport and Logistics in China . . . . . . . . . . . . Jinglei Yang 5.1 Development of Road Freight in China . . . . . . . . . . . . . . . . . . . . . . 5.1.1 Slight Fluctuations in the Volume of Goods Transported by Road Freight and a Slight Increase in its Proportion in the Total Volume of Goods Transported as a Whole . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 The Continued Optimization of the Road Freight Market Environment and the Strengthening of Leading Companies in This Sector . . . . . . . . . . . . . . . . 5.1.3 Gradual Improvement in Infrastructures for Cold Chain Logistics and Rapid Development of Road Cold Chain Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.4 Active Promotion of the Management and Maintenance of Rural Road Networks and Accelerated Development of Rural Logistics System Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Development of Railway Logistics in China . . . . . . . . . . . . . . . . . . 5.2.1 Slowdown in Growth of the Volume of Goods Transported by Rail and Improvements in Cargo Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 Further Optimization of the Railway Network and Steady Progress Made in Overseas Railway Development Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.3 The Acceleration of Mixed-Ownership Reforms and the Participation of Social Capital in the Development of the Railway Industrial Chain . . . . 5.2.4 Increased Digitalization of Railway Freight Operation and Constant Innovations in Logistics Operation Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.5 Significant Increase in the Number of China–Europe Railway Express Trips and Continued Improvements Made to Infrastructure and Service . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Development of Shipping Logistics in China . . . . . . . . . . . . . . . . . 5.3.1 Continued Increase in Demand for Shipping Logistics with a Slowdown in Growth Rate . . . . . . . . . . .

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5.3.2

Social Logistic Costs Lowered Due to Tax Reductions and Exemptions; Strong COVID-19 Containment Provided a Guarantee for Foreign Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.3 Major Trends of Automation, Digitization, Green Development, and Greater Safety Accelerated High-Quality Growth in Shipping Logistics . . . . . . . . . . . 5.3.4 Increased Integration of Port Resources and Enhanced Regional Cooperation Among Ports . . . . 5.4 Development of Aviation Logistics in China . . . . . . . . . . . . . . . . . . 5.4.1 Cargo and Mail Throughputs of Airports Registered Negative Growth with Significant Decline for Domestic Airlines . . . . . . . . . . . . . . . . . . . . . . 5.4.2 Accelerated Infrastructure Development of Aviation Logistics and Continuous Improvement in Digitalization . . . . . . . . . . . . . . . . . . . . . . 5.4.3 Improvement of the Air Freight Market and the Development of a New Landscape for Economic Activities Around the Airport . . . . . . . . . . 5.4.4 Rapid Increase in Air Freight Capabilities and Accelerated Growth in the Charted Cargo Flights Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

The Development Status of China’s Manufacturing Logistics . . . . . . Zhijuan Chen 6.1 The Development Environment of China’s Manufacturing Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 The Scale of China’s Manufacturing Industry Continues to Grow as Its Growth Rate Declines . . . . . . . 6.1.2 The Stability and Security of the Industry and Supply Chains Have Become a Top Priority . . . . . . . 6.1.3 China Speeds Up the Reconstruction of Its Industry Chains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.4 New Infrastructure Construction Enters an Accelerated Phase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.5 The Policy Environment for Manufacturing Logistics Continues to Improve . . . . . . . . . . . . . . . . . . . . . 6.2 The Development Status of China’s Manufacturing Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 The Scale of Manufacturing Logistics Maintains a Trend of Continuous Growth . . . . . . . . . . . . . . . . . . . . . .

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6.2.2

The Field and Scope of the Express Delivery Industry Servicing the Manufacturing Industry Keeps Expanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.3 The Line/Auxiliary Logistics of Manufacturing Enterprises Quickens the Pace of Intellectualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.4 Intelligent Logistics Equipment is Widely Used . . . . . . . 6.2.5 The Accelerated Creation of an Industrial Logistics Ecosphere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Development Status of Two Typical Manufacturing Logistics Industries in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1 Development Status of the Automobile Logistics Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Development of Logistics in the Electronics Manufacturing Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Development of Commerce Logistics in China . . . . . . . . . . . . . . . . . . . Xiaofan Wu 7.1 Development Environment of Commerce Logistics in China . . . . 7.1.1 Total Retail Sales of Consumer Goods Declined Slightly After Rising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.2 The Market for Means of Production Continued to Expand, While Growth Rate Slowed Down . . . . . . . . . 7.1.3 Total Foreign Trade Showed Counter-Trend Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.4 Trade Circulation Channels Quickened Their Pace of Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.5 Policy Environment for the Development of Commerce Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Current Development of Commerce Logistics in China . . . . . . . . 7.2.1 The Market Size of Commerce Logistics Continues to Grow Rapidly . . . . . . . . . . . . . . . . . . . . . . . . 7.2.2 Steady Progress Made in the Construction of Commerce Logistics Infrastructure . . . . . . . . . . . . . . . . 7.2.3 The Rise in Online Consumption Drives the Vigorous Growth of the Express Delivery Industry and New Commerce Logistics . . . . . . . . . . . . . . 7.2.4 Commerce Logistics Performed Brightly in the Fight Against COVID-19 . . . . . . . . . . . . . . . . . . . . . 7.3 Development Situation of the Key Sectors of China’s Commerce Logistics Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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7.3.1

Improvements in Pharmaceutical Logistics Supervision and Informatization Help Maintain Intensive and Efficient Development . . . . . . . . . . . . . . . . . 7.3.2 E-commerce Logistics Focuses on Community Group Buying, as E-commerce Distribution Channels Continue to Expand . . . . . . . . . . . . . . . . . . . . . . 7.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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Development of Agricultural Products Logistics in China . . . . . . . . . Xiang Li 8.1 Development Environment of China’s Agricultural Products Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.1 Agricultural Production Volume and Import Volume Continue to Expand . . . . . . . . . . . . . . . . . . . . . . . . 8.1.2 Rural E-tailing and Agricultural Products E-commerce Continue to Develop Well . . . . . . . . . . . . . . 8.1.3 The Rural Regions Have Achieved Complete Victory in the Battle Against Poverty . . . . . . . . . . . . . . . . 8.1.4 Ensuring a Steady Supply of Agricultural Products has Withstood the COVID-19 Test . . . . . . . . . . . . . . . . . . 8.1.5 The Progressive Implementation of Support Policies for Agricultural Products Logistics . . . . . . . . . . . 8.2 Development Status of China’s Agricultural Products Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.1 The Scale of Agricultural Products Logistics Continues to Grow Steadily . . . . . . . . . . . . . . . . . . . . . . . . 8.2.2 Agricultural Products Logistics Ensures Essential Supply and Pandemic Control Under COVID-19 . . . . . . 8.2.3 Further Construction and Improvement of the Agricultural Products Logistics Network . . . . . . . 8.2.4 Model Innovation and Development in Agricultural Products E-commerce Logistics . . . . . . . 8.3 Development Status of Some Key Sectors of China’s Agricultural Products Logistics Industry . . . . . . . . . . . . . . . . . . . . . 8.3.1 Development Status of Grain Logistics . . . . . . . . . . . . . . . 8.3.2 Development Status of Fresh Agri-Products Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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177 178 179 181 182 183 183 189 190 192 194 196 196 199 204 205

Response and Development of China’s Logistics Under COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Zhilun Jiao 9.1 The COVID-19 Outbreak and Its Impact on China’s Macroeconomy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208

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9.1.1 9.1.2

The Outbreak and Spread of COVID-19 . . . . . . . . . . . . . . Overall Situation of COVID-19 Prevention and Control in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.3 Impact of COVID-19 on China’s Macroeconomy . . . . . . 9.2 Impact of COVID-19 on China’s Logistics Market . . . . . . . . . . . . 9.2.1 Frequent Disruptions to the Global Supply Chains, as the World Adjusts Toward Regionalization and Localization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.2 Restructuring in the Freight Industry’s Demand and Supply Markets, as Highway Freight Logistics Rapidly Develops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.3 As Consumer Logistics Grows in Scale, Ensuring Health and Safety Becomes a Regular Requirement . . . . 9.2.4 Disruptions and Recovery of Cold-Chain Logistics, with Stricter Control Over Operations . . . . . . 9.3 The Response and Reaction of China’s Logistics Industry Under COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.1 The Government Quickly Introduced Policies to Help the Logistics Industry Cope with COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 Logistics Companies Respond Actively to Short-Term Operational Difficulties Under COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.3 Large Enterprises are Actively Assuming Social Responsibility in the National COVID-19 Crisis . . . . . . . 9.3.4 Accelerating “Informatized” and “Fully Unmanned” New Technologies and New Facilities . . . . . 9.3.5 Logistics Enterprises Actively Innovate Their Operational Methods and Business Models . . . . . . . . . . . 9.4 Outlook on the Development of China’s Logistics in the Post-COVID-19 Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4.1 The Increasing Importance of Logistics in the National Economy and Social Operation . . . . . . . . 9.4.2 COVID-19 Has Accelerated the Global Supply Chain Reconfiguration, As Regional Logistics Markets Make Profound Adjustments . . . . . . . . . . . . . . . . 9.4.3 Logistics Enterprises Will Further Focus on and Enhance Their Resilience to Risks . . . . . . . . . . . . 9.4.4 Contactless Commerce is Becoming More Widespread, with Intelligent Facilities Increasingly Used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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10 Development and Prospects of International Logistics in China Under the New Development Paradigm . . . . . . . . . . . . . . . . . Jun Liu 10.1 The Development Environment of International Logistics in China Under the New Development Paradigm . . . . . . . . . . . . . . 10.1.1 The New International Economic Situation and New Requirements Necessitated by the New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1.2 Gradually Improving the Policy System to Accelerate the Development of International Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1.3 The Industry Accelerates Innovation to Provide New Impetus for the Development of International Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 The Development Status of International Logistics in China Under the New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . 10.2.1 “The Belt and Road Initiative” has Reshaped China’s International Logistics Development Pattern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.2 Free Trade Zone Logistics has Become an Important Component of China’s International Logistics System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.3 The Rapidly Expanding Service Capacity of China’s International Logistics . . . . . . . . . . . . . . . . . . . 10.2.4 Large Logistics Enterprises to Accelerate the Development of International Logistics . . . . . . . . . . . 10.3 The Development Trend of International Logistics in China Under the New Development Paradigm . . . . . . . . . . . . . . . . . . . . . . 10.3.1 International and Domestic Logistics Systems will Gradually Integrate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.2 The International Logistics Network Will Be Perfected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.3 Adjustments in the International Cargo Transportation Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.4 The Greening and Intelligentization of International Logistics will be Further Accelerated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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11 Rural Logistics Construction in China Under the Rural Revitalization Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261 Jianhua Xiao 11.1 The Importance of Rural Logistics Construction in Implementing the Rural Revitalization Strategy . . . . . . . . . . . . . 261

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11.1.1 The Background and Epoch-Making Significance of the Rural Revitalization Strategy . . . . . . . . . . . . . . . . . . 11.1.2 The Definitions and Characteristics of Rural Logistics in China and the Evolution of Its System . . . . . 11.1.3 The Importance of Rural Logistics Construction in Implementing the Rural Revitalization Strategy . . . . . 11.2 Analysis of the Progress and Driving Factors in China’s Rural Logistics Construction Under the Rural Revitalization Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.1 Progress Made in China’s Rural Logistics Construction Under the Rural Revitalization Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.2 Analysis of Factors Driving China’s Rural Logistics Construction Under the Rural Revitalization Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3 Main Problems and Development Trends in China’s Rural Logistics Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.1 The Main Problems Facing Rural Logistics Construction in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.2 Development Trend in China’s Rural Logistics Construction Under the Rural Revitalization Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Chapter 1

China’s Logistics Development Under the New Development Paradigm: A Strong Sense of Responsibility and a New Direction Ling Wang

The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China (CPC) clearly proposed to “accelerate the fostering of a new development paradigm where domestic and foreign markets can reinforce each other, with the domestic market acting as the mainstay.”1 As a fundamental, strategic, and pioneering industry of the national economy, logistics connects productivity, distribution, circulation, and consumption, and is an important support and guarantee for opening up supply chains, coordinating industry chains, creating value chains, and building a “dual circulation” development paradigm. This new development paradigm will guide China’s logistics industry toward high-quality development and help create a modern logistics system, thus inaugurating a new era when China can become a major logistics power. This chapter consists of three sections. Section 1.1 analyzes the background, significance, and connotation of the new development paradigm. Section 1.2 analyzes the roles of China’s logistics under the new development paradigm in five areas: supporting a strong domestic market, promoting a higher level of opening-up, facilitating a modern circulation system, taking the lead in innovative technology application, and deepening reform of the logistics field to promote high-quality growth. Section 1.3 envisages China’s logistics under the new development paradigm in six areas: expanding domestic demand as strategic underpinning, promoting higher-level opening up of logistics, setting up a modern logistics infrastructure system, fostering innovation that leads to high-quality logistics development, improving logistics costs and quality (lower costs, improved quality and efficiency), and strengthening the security capacity of the industry and supply chains.

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According to the criteria standards used to classify economic activities of production, distribution, exchange and consumption, the so-called “domestic circulation” means that the abovementioned stages are completed within the country, i.e. the connection and matching of production and consumption (supply and demand) are mainly completed within the country, thus forming a stable industrial and economic structure. In contrast, the so-called “international circulation” is an economic model where the nodes of the above-mentioned stages are partially located abroad.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_1

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1.1 The Background, Significance and Connotation of the New Development Paradigm A major strategic decision made by the Chinese government to adapt to the changes in China’s development stage, environment, and conditions is accelerating the construction of a new development paradigm where domestic and foreign markets can reinforce each other, with the domestic market acting as the mainstay. It will be an extremely important guiding principle for China’s development during and after the 14th Five-Year Plan period. A better understanding of the background and basic connotations of the new development paradigm will help spur China’s economic and social development, build a modern logistics system, and achieve high-quality logistics development.

1.1.1 The Background of the Proposed New Development Paradigm Our world is undergoing momentous changes unseen in over a century, and the COVID-19 pandemic is accelerating such changes. Protectionism and unilateralism are on the rise, the world economy is in the doldrums, and the global supply chain is facing shocks due to non-economic factors. The international economic, technological, cultural, security, and political landscapes are undergoing intensive restructuring, as the world enters a period of turbulence and change. Concurrently, China’s domestic development environment is also undergoing profound changes, and the Chinese people are increasingly demanding a better life. In face of such momentous changes, the fostering of a new development paradigm is in accordance with the changes in China’s development stage, environment, and conditions, and is a strategic decision made by China to reshape its international cooperation and develop a new competitive edge. On April 10, 2020, the 7th Meeting of the Central Financial and Economic Affairs Commission of the CPC Central Committee first mentioned the “new development paradigm”, pointing out that a smooth domestic circulation is “conducive in building a new development paradigm where domestic and foreign markets reinforce each other, with the domestic market acting as the mainstay”. The Standing Committee of the Political Bureau of the CPC Central Committee held a meeting on May 14, 2020, and proposed that “we should fully leverage the massive Chinese market and boost domestic demand to build a new development paradigm, with mutually reinforcing domestic and international dual circulation”. The Political Bureau of the CPC Central Committee conducted a further meeting on July 30, 2020, emphasizing the necessity to “accelerate the formation of a new development paradigm where domestic and foreign markets can reinforce each other, with the domestic market acting as the mainstay”. Since then, at the 15th Meeting of the Central Committee for Deepening Overall Reform, the 8th Meeting of the Central Financial and Economic Affairs

1.1 The Background, Significance and Connotation …

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Commission of the CPC Central Committee, and other important meetings, “accelerating the construction of a new development paradigm” has been an important priority. On October 29, 2020, the Fifth Plenary Session of the 19th CPC Central Committee adopted the “Proposals for Formulating the 14th Five-Year Plan (2021– 2025) for National Economic and Social Development and the Long-Range Objectives through the Year 2035”, clearly proposing to “accelerate the construction of a new development paradigm where domestic and foreign markets reinforce each other, with the domestic market acting as the mainstay”.

1.1.2 The Great Significance of Building a New Development Paradigm 1.1.2.1

Building a New Development Paradigm is an Urgent Need for China to Enter a New Development Stage

In the early stages of China’s “reform and opening up”, domestic capital and technology were severely lacking, but labor was abundant and cheap, and its economy was highly complementary to that of developed countries. In the context of economic globalization, China was introduced to advanced technology and management skills by opening up to the outside world and developing its processing trade, rapidly catching up economically and creating a “world factory” development model with markets and resources “on the outside”. However, with the profound changes in labor, land, market, and other resource endowments, and increasing constraints on the resource environment, the original growth model that relied mainly on factor inputs, external demand, investment, and scale expansion is unsustainable. Hence, China is in urgent need of restructuring. The report of the 19th CPC National Congress clearly pointed out that China’s economy has been transitioning from a phase of rapid growth to a stage of high-quality development. Based on this new development stage, the potential of domestic demand is constantly being released, and domestic circulation increasingly strengthened. Hence, ensuring smooth domestic circulation could realize China’s high-quality development in response to the urgent need for economic restructuring.

1.1.2.2

Building a New Development Paradigm is China’s Strategic Decision to Cope with Changes in the Internal and External Environments

On an international level, the instabilities and uncertainties of the world economy have increased significantly, and the international development environment has

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become increasingly complex. The next stage of technological revolution and industrial transformation is gathering pace, promoting the deep integration of manufacturing and service industries, and resulting in a precipitous change in the production paradigm. The engine for global economic growth is gradually taking shape. At the same time, there have been profound adjustments in the international power situation, i.e., there are more complex interactions among major powers, with new emerging markets and developing countries rising as a collective group, thus rendering the multipolarity of the global economic landscape more obvious. In addition, economic globalization has run up against headwinds, i.e., the momentum of traditional international economic circulation has weakened significantly, as the global industry chains and supply chains shift toward localization, regionalization, and decentralization. At the domestic level, China’s uneven and insufficient development remains a clear problem. First, it still needs to carry out arduous reform in many key areas and links. Second, its innovation capabilities have not yet adapted to the requirements of highquality development. Third, it does not have a solid enough agricultural foundation. Fourth, there is a large urban and rural development and income distribution gap. Fifth, there is still a long way to go in its ecological and environmental conservation. Sixth, it still cannot meet the livelihood needs of its people. In the face of changes in the internal and external development environments, China must scientifically coordinate between development and security, focusing on opening up large domestic circulation, and enhancing the mutually reinforcing domestic and international interplay within the dual circulation, in order to participate more actively in international cooperation and competition.

1.1.2.3

Building a New Development Paradigm is an Inherent Requirement to Adapt to China’s Changing Development Conditions

China’s economy is progressing steadily and looking favorable in the long run, while its development foundations have become more solid, so it is in an ideal position to realize large domestic circulation and promote domestic and international “dual circulation”. First, the country’s socialist system has an extraordinary ability to organize, mobilize, coordinate and implement. Second, China has rich material resources, with an enhanced and guaranteed supply capacity. It has become the world’s secondlargest economy, the largest manufacturing country, and second-largest consumer nation of goods. It has the largest inflow of foreign capital, the world’s largest and most complete industrial system, a strong production capacity, with fully functional support capability, and vast human resources. Third, it has a massive market and huge potential for domestic demand. China is the world’s most populous country, with the largest middle-income group that continues to grow. Moreover, its consumer market is ever-expanding, its consumption structure continuing to optimize and adjust, making consumption the key impetus for economic growth. In addition, the rapid development of new industrialization, informatization, urbanization, and agricultural modernization could potentially attract much investment. Hence, the advantages of

1.1 The Background, Significance and Connotation …

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China’s mega-market and its domestic demand in supporting and boosting economic growth are becoming prominent. Fourth, regional coordination and the resilience of regional development have been enhanced. The Belt and Road Initiative has become widespread, achieving concrete results. The four major regions of Eastern, Central, Western, and Northeastern China have maintained benign regional interaction: the coordinated development of the Beijing–Tianjin–Hebei region, the development of the Yangtze River Economic Belt, the construction of the Guangdong–Hong Kong– Macao Greater Bay Area, the integrated development of the Yangtze River Delta, the ecological conservation and high-quality development of the Yellow River Basin, and other major regional development strategies are steadily being advanced, expanding the strategic maneuver room for national development. At present, China has entered a new stage of development, as it consolidates its foundation and refines its conditions for large domestic circulation. Thus, it must actively adapt to changes in the development foundation and conditions, and accelerate the building of a new development paradigm.

1.1.3 Interpreting the New Development Paradigm 1.1.3.1

Expanding Domestic Demand is the Strategic Underpinning for Building a New Development Paradigm

The Fifth Plenary Session of the 19th CPC Central Committee clearly proposed to “create a strong domestic market and foster a new development paradigm; expand domestic demand as a strategic underpinning and accelerate the establishment of a complete domestic demand system”. Expanding domestic demand is a powerful safeguard for forestalling and resolving major risks, ensuring quick responses to major public security emergencies. It is also an effective way to maintain the healthy and sustainable growth of China’s economy in the complex and profound internal and external environments. It is, moreover, a necessity to meet the people’s growing needs for a better life. The new development paradigm should focus firmly on supply-side structural reform, while paying attention to demand-side management, and grasping the strategic underpinning of expanding domestic demand in both demand and supply. On the one hand, the strategy of expanding domestic demand should be organically integrated with deepening structural reform on the supply side. By relying on its mega-market advantage, China should be able to optimize the supply structure, improve supply quality, precisely grasp the rising, multi-level and diversified consumer demand, and generate new demand with innovation-driven development and high-quality products and services. On the other hand, it should effectively integrate consumption and investment. Consumption is an important engine in driving the economy. China should boost traditional consumption, cultivate new types of consumption, and increase public consumption as appropriate. Investment demand is an important component in building a complete domestic demand system. China

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should promote new infrastructure construction,2 major national and engineering projects, and strategic investment in new infrastructure and high-tech industries in order to expand its scope for investment.

1.1.3.2

A High Degree of External Openness is a Powerful Driving Force for Building the New Development Paradigm

The Fifth Plenary Session of the 19th CPC Central Committee proposed to “implement a high degree of external openness and inaugurate a new paradigm of win–win cooperation. By continuing to open up on a larger scale and at a deeper level, and relying on the advantages of its massive market, China can promote international cooperation and achieve mutually beneficial situations”. A high degree of opening up to the outside world is an objective requirement to ensure smooth and unimpeded domestic and international “dual circulation”, a key condition for China’s participation in international economic cooperation and competition. It is an inevitable trend as the country moves toward high-quality economic development and deeper integration with the global economy. China must continue to implement the new development paradigm by opening up more sectors of its economy in a more thorough approach. First, it must optimize the spatial layout of its external opening up, strengthening cooperation by expanding transportation routes to the outside world. It should construct the Belt and Road Initiative with other countries, and help implement major projects along and around the “six corridors, six connectivity routes, and multiple countries and ports”.3 At the same time, it should speed up the construction of pilot free trade zones and free trade ports, and use open platforms to effectively attract investment and create cross-border e-commerce industry chains. Second, it should make efforts to cover every major area of its economic system, significantly relaxing market access for foreign investment and encouraging more foreign investment. At the same time, it should shorten the negative list on foreign investment, continuing to open up traditional fields such as manufacturing and agriculture, and further opening up modern service industries to the outside world. Lastly, it should continue to promote institutional openness. China should better master international regulations and perfect its integrated domestic and foreign trade management system. At the same time, it should improve its governance 2

New infrastructure is an infrastructure system led by the new development concept, as driven by technological innovation, information-based networking, and oriented to the needs of high-quality development, providing digital restructuring, intelligent upgrading, convergence, and innovation services. New infrastructure mainly includes information infrastructure, convergence infrastructure, and innovation infrastructure. 3 “The six corridors” refer to the China–Mongolia–Russia, the New Eurasian Continental Bridge, and economic cooperation corridors of China–Central Asia–West Asia, China–Indochina Peninsula, China–Pakistan, and Bangladesh–China–India–Myanmar. “The six connectivity routes” refer to the interconnected network of railroads, highways, waterways, airways, pipelines, and information highways. “Multiple countries” refers to the few important countries selected as the focal point of cooperation. “Multiple ports” refers to the construction of maritime pivot ports.

1.1 The Background, Significance and Connotation …

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capability, participate in the formulation and refinement of international standards, and actively make its voice heard.

1.1.3.3

A Modern Circulation System is an Important Strategic Undertaking in Building the New Development Paradigm

Domestic circulation and international circulation under the new development paradigm are inseparable from an efficient modern circulation system. A modern circulation system is not only the basic framework of large domestic circulation, but also the requisite market interface for domestic and international dual circulation. The construction of a modern circulation system can link production and consumption over a wider area, better coordinate the resources of the domestic and international markets, and better achieve division of labor and cooperation, so as to better attain large circulation as well as “dual circulation”. In building the new development paradigm, China will construct a modern circulation system in four areas. First, it will enhance the circulation of its main entities; in other words, it will encourage and support high-quality enterprises to “go global” and “circulate” in the outside world, nurture modern circulation enterprises with international competitiveness, train high-quality international logistics personnel, and improve the efficiency of its circulation system. Second, it will plan and promote hardware and software construction in the modern circulation system. It will promote quality circulation infrastructure services, optimize its circulation infrastructure network, establish and improve its emergency logistics system, clear blockages and connect disconnected nodes to enhance circulation flow. At the same time, it will speed up the restructuring of information circulation and create a public platform for such circulation. Third, it will actively develop new technologies, new businesses, and new models of circulation. The circulation industry should invest in disruptive, cutting-edge technological research, and strive to achieve development breakthroughs in digital, network, and smart circulation. Fourth, it will strengthen its institutional mechanisms, constantly improving the social credit system, enhancing the range of supervision and responsibility traceability within the circulation industry, and quickly setting up a traceability system for important products.

1.1.3.4

Scientific and Technological Innovation is the Strategic Support Framework for Building the New Development Paradigm

The fundamental feature of building the new development paradigm lies in achieving high self-reliance and self-improvement, i.e., China must further emphasize independent innovation and comprehensively boost its scientific and technological innovation. Scientific and technological innovation will create favorable conditions for the country to build an institution for a more advanced open economy, gaining new advantages in international cooperation and competition, and consistently driving national development and social progress. At the same time, it is an important force

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for strengthening national security and development interests, and a strategic support framework for building the new development paradigm and modern economic system. China must rely on its independent innovation and technological self-reliance to construct the new development paradigm, and fully unleash the strategic support role of scientific and technological innovation, strengthening this innovation in the following aspects. First, it will accelerate the pooling of nationwide resources for breakthroughs in core technologies. In other words, it will nurture strategic scientific and technological research teams of international pedigree. At the same time, breakthroughs in key core technologies must be achieved as quickly as possible. China must resolve the stranglehold problems that restrict innovation, and enhance the scientific and technological innovation and emergency response capacity of its institutional mechanisms. Second, it must plan, strategize and invest in leading-edge fields. That is, it must increase effort and investment in basic research, to achieve more “0-to-1” breakthroughs, master key fields, key links, key product innovation, and develop autonomy. At the same time, it should promote academic/industry collaboration, improve the transference and application rate of scientific research, and reduce the external dependence of its industrial core technologies. Third, it should fully grasp the new normal of scientific and technological innovation. It should nurture teams of talented scientific, technological and innovation workers, and establish a comprehensive incentive system for core talents. Fourth, it must improve its scientific and technological innovation ecology. That is, it should unswervingly enforce and protect intellectual property rights. Lastly, China should optimize its scientific and technological resource allocation, distributing more of its resources to scientific and technological innovators.

1.1.3.5

Deepening Reform is the Key to Building the New Development Paradigm

The comprehensive deepening of reform will play a major role in building the new development paradigm. It is key to resolving the contradictions in China’s economic and social development, and the endogenous engine to restructuring economic development, as well as liberating and developing the country’s social productive forces, being the fundamental engine in national development. Under the new development paradigm, China will deepen reform in the following areas, to ensure a better alignment between an efficient market and a well-functioning government. First, it will spur the vitality of various market entities; that is, deepen the reform of state-owned enterprises, optimize the state-owned economy, boost the development of private enterprises, and eliminate discriminatory, hidden, or regional market barriers and unreasonable restrictions. Second, it will deepen marketoriented reform. It will fully leverage the decisive role of the market in allocating resources, remove institutional mechanisms that impede the market-oriented allocation of factors of production and the circulation of goods and services, and promote the construction of market factors such as land, labor, capital, technology, and data.

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It will remove blockages between sectors, industries, regions, and countries in the key links of production, distribution, circulation, and consumption, and speed up the formation of a large, unified, open, competitive, and orderly national market. Third, it will further reforms to streamline administration and delegate power, improve regulation, and upgrade services.4 That is, it will give better play to the role of government, and ensure equal rights, opportunities, and rules for all market players, thereby creating a world-class business environment that is market-oriented, lawbased, and internationalized, and which offers basic conditions and related services for all market players.

1.2 China’s New Logistics Roles Under the New Development Paradigm As a service industry, logistics connects three main bodies: producers, sellers, and consumers. It is not only an important guarantee for enterprise production and sales, but also a vital support for the production and life of the people. By supporting a strong domestic market, modern logistics promotes a high level of opening up as well as the construction of a modern circulation system. It pioneers applications in innovative technology and deepens the reform of the logistics field, leading to highquality economic development which has become a key path to the new development paradigm.

1.2.1 Logistics is an Important Support for the Formation of a Strong Domestic Market At present, China is in firm control of its strategic underpinning of expanding domestic demand, as it quickens the construction of a more fluid, larger-scale, and better-structured domestic demand system. By upgrading the manufacturing value chain, innovating the commercial industry chain, and extending the agricultural supply chain, the logistics industry will improve the quality and efficiency of industrial development, and expand market demand. The total value of social logistics reflects the total value of all goods flowing from the place of supply to the place of reception, which is an important indicator of the total scale of social logistics. During the 13th Five-Year Plan period, the total value of social logistics in China grew from RMB 229.7 trillion in 2016, to RMB 300.1 trillion in 2020. The average annual

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“Streamline administration and delegate power, improve regulations, and upgrade services” refers to the streamlining and delegation of governance and administration, the strengthening and improvement of regulations, and the optimization and upgrading of services.

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growth rate was 6.6%,5 effectively supporting the country’s high-quality economic development. It has become an important support in expanding domestic demand and promoting the formation of a strong domestic market. First, the developing logistics and manufacturing industries are deeply integrated, greatly enhancing the potential of domestic demand. A well-developed logistics industry ensures the smooth flow of the supply chain and the industry chain by seamlessly connecting raw materials, parts, intermediate goods, and final products between producers. At the same time, logistics strongly binds commodity production and final consumption together, playing a vital role in shaping large domestic production circulation in the manufacturing industry. Since its reform and opening up, China’s manufacturing sector has built a complete and independent industrial system, gradually creating the intricate division of labor in its upstream, downstream and regional divisions. Its manufacturing industry is now ranked first globally in terms of scale. Industrial products are the most important service objects of China’s social logistics, the total value of industrial product logistics accounting for more than 90% of its total social logistics. Accelerating the deep integration of the logistics industry with the manufacturing industry will not only crucially enhance the core competitiveness of the manufacturing industry, but also effectively help to develop the logistics industry. Second, logistics has given birth to new business models and new modes of commerce, nurturing new consumer markets. Commerce logistics is a link that has a relatively large impact on costs in the entire logistics process, with the highest concentration of new technologies and business model innovation, directly affecting the smooth circulation of production materials and living materials. Special facilities and equipment such as advanced warehousing sorting, material handling, packaging processing, transportation and distribution, and advanced technologies such as bar codes, smart labels, radio frequency identification (RFID), visualization, tracking and tracing system, global positioning system (GPS), geographic information system (GIS), as well as a new generation of information technologies such as cloud computing, big data, blockchain, Internet of things (IoT) and mobile internet, have led to the formation of personalized services in commerce logistics. These take the form of “punctual deliveries”, “deliveries by a certain time”, “door-to-door” and other one-stop services, as well as other new distribution models such as direct distribution by suppliers, self-operated distribution by chain enterprises, socialized distribution, and joint distribution. At the same time, the commerce logistics network has accelerated its extension to small and medium-sized cities, and rural towns, extending to residential communities, with service capacity constantly being enhanced. In addition to satisfying the traditional offline sales of goods, commerce logistics has also created opportunities for developing new retailing by integrating online and offline e-commerce. Thus, it has completely changed the development ecology of traditional

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As calculated from the data in the 2016–2020 “National Logistics Operation Bulletins” issued by the National Development and Reform Commission and the China Federation of Logistics and Purchasing.

1.2 China’s New Logistics Roles Under the New Development Paradigm

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commerce, creating a new industrial development and consumption scenario, while spurring the vigorous growth of a new industry and a new commercial model. Finally, the logistics industry has extended the agricultural supply chain and effectively integrated urban and rural areas. Developments of the logistics industry, especially cold chain logistics and e-commerce logistics, could completely break the bottlenecks of restricted agricultural products circulation, high product loss, and asymmetric production and marketing information. China could establish an unbroken cold chain logistics network, with wide coverage and strong service function by relying on new sales models such as e-commerce platforms, micro-businesses, and live broadcasts to sell fresh and unique agricultural products to the whole country, and even the whole world. It could expand its sales radius exponentially and provide strong support for large-scale agricultural production and operation, realizing economies of scale (Xu and Qian 2020). At the same time, an efficient agricultural products logistics system will create favorable conditions for the integrated development of rural industries, by continuously consolidating the agricultural processing chain, rapidly developing the agricultural service chain, and constantly improving the agricultural function chain.

1.2.2 Logistics is an Important Safeguard for the High-Level Opening up to the Outside World The Report of the 19th CPC National Congress emphasized the need to cover new ground in pursuit of openness on all fronts. This not only means expanding the scope of openness, broadening the areas and deepening the level, but also innovating ways of opening up, optimizing regional layout, and improving the quality of openness. Modern international economic competition to a large extent depends on the integration and innovation of the global industry chain and supply chain. Seen from the perspective of logistics infrastructure interconnection and international economic and trade cooperation, logistics can guarantee the stable operation of the industry chain and supply chain, and helps support China’s high-level opening up. First, logistics infrastructure is the cornerstone of interconnection between countries. The construction of high-quality, sustainable, risk-resistant, reasonably priced, inclusive, and accessible infrastructure is conducive to each country exerting its resource advantage to the full, and promotes the stable and smooth operation of the global industry chain, supply chain, and value chain. The degree of interconnection between logistics infrastructure and the efficiency and convenience of international and domestic logistics corridors determines the development of domestic and international markets, as well as the convergence level between their respective logistics systems. At present, a general connectivity framework consisting of six corridors, six connectivity routes, and multiple countries and ports is now in place. The China–Europe Railway Express has gradually formed a network centering

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1 China’s Logistics Development …

around five major transportation systems—the “Chongqing–Xinjiang–Europe Railway”, the “Chengdu–Europe Express Railway”, the “Zhengzhou–Europe Express”, the “Wuhan–Xinjiang–Europe Railway” and the “China–Europe Chang’an Freight Train”. The “Chengdu–Europe Express Railway” has shortened the transportation time from Sichuan to Europe from more than 40 days via ocean shipping in the past to just 11 days. After the completion of the Trans-Asian Railway, the transportation time from Yunnan and Guangxi to the countries in Indochina will drop from 24–26 h to 14–21 h (ydyl.china.com.cn 2018). The interconnected logistics infrastructure not only brings China closer to the countries in the Belt and Road Initiative, but also deepens economic and trade ties between these countries and China. Second, the international logistics network is a major transport artery that connects countries globally in economic and trade cooperation. The strengthening of international cooperation based on global connectivity networks, international logistics and transportation, and the global supply chain and value chain is of great significance for China, to fully utilize international resources and expand its global markets. At present, the international logistics network has quickened its expansion pace, integrating China deeply and effectively with the global supply chain, and enabling industry to advance to the middle and high-end of the global value chain. China has signed bilateral air transport agreements with 127 countries and regions, and bilateral inter-governmental air transport agreements with 96 countries in the Belt and Road Initiative, maintaining regular passenger and cargo traffic with 54 of them (www.gov.cn 2020). By 2020, China’s international air cargo traffic was flying to 75 countries worldwide. By the end of 2020, the China–Europe railway lines were operating more than 30,000 trains, realizing trade between 71 Chinese cities and 92 cities in 21 European countries, with more than 70 steadily increasing domestic routes in operation, and many connected cities (chnrailway.com 2021).

1.2.3 Logistics is an Important Link in the Modern Circulation System The modern circulation system is the basic support framework of large circulation and dual circulation, and so is of crucial importance in helping China to build a new development paradigm and modern governance system with modern governance capability. Logistics is an important aspect of circulation, and transportation is an important support for logistics. Transportation connects the two ends, production and consumption, and is the basic link and important support for the construction of a modern circulation system, ensuring smooth circulation of the national economy (people.cn 2020). First, unimpeded logistics channels are important carriers in realizing regional interconnection. A high-quality logistics infrastructure network can ensure the free flow of resource elements, promote the rational allocation of different industry chain links in cities along the route, foster the growth of a new channel economy model, and

1.2 China’s New Logistics Roles Under the New Development Paradigm

13

effectively promote the flow of elements across regions and industries. It can remove the spatial and temporal limitations of production and operational activities, and connect different regions closely together, creating better conditions for optimizing the spatial layout of the economy and promoting coordinated regional development (Xu and Qian 2020). At the end of the 13th Five-Year Plan period, China’s railroad operating mileage had reached 146,300 km, including approximately 38,000 km of high-speed rail, ranked first in the world. The total distance covered by China’s highways is 5,198,100 km, including 161,000 km of expressways, also ranked first in the world. The total distance covered by its inland waterways is 127,700 km, the mileage of graded waterways reaching 67,300 km. There are 2,138 berths in coastal ports for the 10,000-or-more ton class, and 241 civil airports (Ministry of Transport of the People’s Republic of China 2021). The number of logistics parks increased from 207 in 2006 to 1,638 in 2018. In addition, China has accelerated its construction of a modern “channel + hub + network” logistics operation system. In 2019–2020, the National Development and Reform Commission and the Ministry of Transport constructed 45 national logistics hubs, covering 27 provinces, autonomous regions and municipalities, providing strong support for China’s modern circulation system. Second, a specialized logistics system is an important link between supply chain and industry chain. The improvement of specialized logistics services and the establishment of a logistics service system create favorable conditions to continuously consolidate the processing chain, rapidly develop the service chain, refine the functional chain, and extend the industry chain. Specialized logistics efficiently organizes and manages procurement, production, transportation, processing, storage, delivery, and distribution activities from supply to consumption. In the process, it preserves production materials and products, and increases their value, thus becoming an important driving force in industrial modernization (Xu and Qian 2020). China’s agricultural products’ cold chain logistics, manufacturing logistics, commerce logistics, automobile logistics, and other specialized logistics systems are currently being developed, effectively linking the upstream and downstream sections of the supply chain, and playing an important role in bridging and supporting the industry chain. Furthermore, the rapid response of the emergency logistics system crucially safeguards the circulation of major public security materials. Such strategic materials play an important role in the national economy and defense, and are related to national public security. By constructing a strong domestic strategic material reserve base and an emergency logistics network, and by building a rapid response emergency logistics system, China can effectively guarantee the timely supply of essential goods, medical relief supplies, and epidemic prevention materials, so as to properly respond to natural disasters, public health issues, and other emergencies. During the COVID19 pandemic, the production, procurement, deployment, and supply of key materials such as medical masks, protective gear, goggles, medical alcohol, and disinfectant has been crucial. There is also an urgent need to maintain the daily supply of these materials for production and life in the pandemic-affected areas. China’s emergency logistics has played an important role as a “lifeline” in the war against the pandemic, maintaining the smooth and orderly operation of production and life as the “vanguard commander”. From January 27, 2020, to April 18, 2020, a total of 1,344,100 tons of

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1 China’s Logistics Development …

pandemic-prevention materials and daily necessities were transported to the Hubei area from the rest of China, together with another 2,124,800 tons of production materials such as coal and fuel. Freight ships from the rest of China entered and left port 50,200 times, making 849 trips ferrying key materials in Wuhan waters, including more than 1.713 million tons of coal, 411,000 tons of fuel, and 181,000 tons of grain (www.rmjtxw.comc 2020). China’s emergency logistics ensured that the demand for daily necessities and medical supplies in Hubei Province was met.

1.2.4 Logistics Will Become the Leading Field of Application for Scientific and Technological Innovation There is now a greater need than ever for scientific and technological solutions as China develops economically and socially while aiming to improve people’s livelihoods. There is a need to foster innovation as a primary driving force. Accelerating scientific and technological innovation is necessary to promote high-quality development, realize high-quality lifestyles, construct a new development paradigm, and successfully embark on the new journey of building a modern socialist country. The logistics industry is the testing ground for many cutting-edge technologies and intelligent equipment. 5G, robotics, blockchain, artificial intelligence (AI), and other popular technologies and equipment are of wide concern to society, and have broad applications in the logistics industry. The integration of advanced technologies with the logistics industry and development has given the traditional logistics industry a fresh stimulus, with integrating technologies in different fields producing a new industry ecology. The widespread application of modern technology and equipment connects the logistics links even more closely, which not only improves logistics efficiency and service diversity, but also gives rise to new technological applications and new business models. It has become the new driving force for logistics innovation and development (Xu and Qian 2020). In warehouse technology, AGV (automatic guided vehicle), unmanned forklifts, shelf shuttles, sorting robots, and other robotics drive the transformation of traditional warehousing to smart warehousing. In unmanned technology, unmanned aircraft, unmanned freighters, unmanned railroad wagons, and unmanned trucks have changed the traditional mode of trunk transportation. In terminal technology, unmanned aerial drones and intelligent courier cabinets are being used to solve the problem of “the last kilometer” distribution at the end of the chain. In blockchain application, due to long transaction links, complex operation processes, and most market segments being relatively fragmented and low in concentration, the logistics and supply chain field has become an important industrial area in the application of blockchain technology. In addition, during the 13th FiveYear Plan period, China’s deepwater channels and high-speed railroad construction technologies were among the best in the world. The fourth phase of the Shanghai

1.2 China’s New Logistics Roles Under the New Development Paradigm

15

Yangshan Port automated container terminal was completed and put into production. The BeiDou system has been intensively applied in the logistics industry. The world’s first high-speed freight trainset with a speed of 350 km per hour has been officially launched. These achievements are of great importance in supporting and spearheading China’s fast cargo equipment development, ensuring the smooth operation of the modern circulation system, and promoting the new development paradigm of domestic and international dual circulation.

1.2.5 Deepening Reform in Logistics Helps Promote High-Quality Economic Development The comprehensive deepening of reform plays a crucial role in building the new development paradigm. The logistics industry is an important foundation to support real economic development. Accelerating the development of logistics is key to furthering supply-side structural reform, increasing the supply of public goods and services, expanding effective investment, promoting consumption of urban and rural residents, and eliminating bottlenecks, weaknesses and shortcomings, thus improving the overall operational efficiency of the national economy. In recent years, the Chinese government has attached great importance to the development of the logistics industry, and has continued to reduce logistics costs and enhance efficiency, achieving positive results and creating favorable conditions to stimulate the market and help develop the real economy. First, the “streamline the government, delegate power, and improve government services” reform in the logistics field has stimulated the vitality of market players. The business environment is about productivity and competitiveness, which directly affects the rise and fall of market players, the gathering and dispersal of production factors, and the relative strength of development power. The 2019 Central Economic Work Conference proposed to enhance the vitality of micro-entities and to give full play to the subjective initiative of enterprises and entrepreneurs, which must depend on fair, open, and transparent market rules and a business environment based on the rule of law. Streamlining administration and delegating power in the logistics field, vigorously strengthening supervision during and after the event, and striving to improve the level of management services has created an efficient, convenient governance environment for entities. For example, by simplifying documentation, optimizing processes, reducing fees, and constructing an international trade “singlewindow system”6 with other reforms, the Customs department has facilitated customs clearance and created a fast and efficient customs clearance environment. 6

The “single-window system” refers to the system in which all parties involved in international trade and transport are required to submit standardized information and documents through a single platform, in order to meet the relevant laws, regulations and management requirements. In other words, all import and export procedures can be performed at one platform, resulting in smoother and more convenient cargo clearance process.

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1 China’s Logistics Development …

Second, logistics cost reduction and efficiency enhancements promote the healthy development of the real economy. Logistics cost is an important cost of the real economy and also a crucial factor affecting production and consumption. Social logistics cost is a comprehensive reflection of the quality of national economic development, and a key factor in determining the competitiveness of the real economy. Logistics cost reduction and efficiency enhancement are important in optimizing resource allocation, reducing the operating costs of the real economy, and improving the efficiency and effectiveness of economic development and international competitiveness. The Chinese government has introduced a series of policies to progressively reduce institutional transaction costs, taxes, and fees, striving to lower labor costs and rent as well as energy and land costs for enterprises, to reduce logistics costs, and promote efficiency. During the COVID-19 pandemic, the introduction of policies and measures such as clearing emergency transport lanes for trucks, toll-free toll roads, and phased social insurance reductions have created favorable conditions for the logistics industry to fight the pandemic and resume work and production (He 2020). From 2015 to 2020, the share of total social logistics expense in the GDP decreased from 16 to 14.7%. If the share of total social logistics expense in the GDP in 2015 is measured at 16%, the total social logistics spending in China was reduced by RMB 1,200 billion during the 13th Five-Year Plan period. The results of cost reduction and efficiency increase are prominent.

1.3 The New Direction of China’s Logistics Under the New Development Paradigm In the 14th Five-Year Plan period, China’s logistics development will still be at an important period of strategic opportunity for development. However, the unbalanced, insufficient, and unsustainable contradictions in its development still exist. Under the new development paradigm, China will apply its new development philosophy throughout the whole process and in all areas, focusing on high-quality development, giving priority to domestic circulation, and promoting the positive interplay between domestic circulation and international circulation. It will be committed to improving people’s livelihoods and well-being, expanding domestic demand, and promoting a higher-level opening up in logistics. It will build a modern logistics infrastructure system and stick to innovation-led, high-quality logistics development. It will continue to reduce costs, improve quality and enhance efficiency in logistics, and intensify security capacity for the industry chain and supply chain. In so doing, China seeks to promote quality changes, efficiency changes, and power changes in the logistics industry, striving to achieve higher-quality development that is more efficient, fair, sustainable, and secure.

1.3 The New Direction of China’s Logistics …

17

1.3.1 Strengthening the Strategic Underpinning of Expanding Domestic Demand In the 14th Five-Year Plan period, China’s logistics industry will accelerate its transition from basic, low-level development to high-quality development, moving proactively toward a strong domestic market and strengthening its strategic underpinning to expand domestic demand. First, the country’s logistics must connect production and consumption, and effectively grasp demand trends. The logistics industry must respond to developing trends in industrial layout, domestic consumption, and the integration and reconfiguration of logistics, and enhance its supply system’s adaptability to market demand. At the same time, it must understand the diversified economic and social demand trends for logistics, deepen its supply-side structural reform, accelerate its restructuring and upgrade, and quicken the pace of reform in logistics management. Second, it should enhance the value creation capacity of modern logistics. The logistics industry must quicken the pace of business entry, model innovation, and service expansion, with the new industry and new models leading and creating new logistical consumption patterns, while deeply and actively integrating with manufacturing, agriculture, trade, information, finance, transportation, and other industries, creating new opportunities to add value to the industry chain and supply chain. Third, China must ensure and safeguard its logistics for social livelihoods. It must improve service quality and ensure that the segmented fields of cold chain logistics, pharmaceutical logistics, e-commerce express, and instant delivery can effectively meet people’s growing need for a better life. At the same time, it must optimize the allocation of urban and rural logistics resources, improve the urban distribution system and three-tier rural logistics service system at village, township and county levels, and open up channels for selling agricultural products to cities and industrial products to the countryside, thus advancing the coordinated development of rural revitalization and new urbanization.

1.3.2 Promote a Higher Level of External Openness in Logistics At present and for a period of time in the future, China will promote a higher level of opening up in the logistics field. First, it will look for new opportunities to open up logistics to the outside world and build a global supply chain service network. This will involve synergizing international shipping and aviation with the China– Europe railway express and building a diversified international logistics cooperation platform, while jointly constructing a global trade and marketing network with overseas warehouses and logistics terminal networks, and building domestic and overseas logistics nodes and service networks. Second, it will build an international logistics system that connects domestic and foreign channels, thus opening up and strengthening international cooperation further. It will coordinate its air, rail, road,

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1 China’s Logistics Development …

sea, and waterway transport systems, and construct an integrated, synergized multimodal transport network linking air, water, land, and underground. By strengthening cooperation with countries along international logistics corridors, in areas such as customs information exchange, mutual supervisory acknowledgment, and inspection and quarantine, China seeks to converge logistics-related standards and build an open and shared international logistics supply system that is safe, reliable, and secure, covering the entire globe (gmw.cn 2021). Third, it will cultivate a group of internationally competitive modern logistics enterprises and well-known logistics service brands. Such benchmark enterprises should play a leading role in demonstration, while advantageous companies should join forces, integrating through mergers and acquisitions, alliance cooperation, in order to expand, optimize and integrate their resources. China must accumulate international logistics resources, improve its integrated service capacity, build logistics service brands, and develop new advantages while participating in international cooperation and competition.

1.3.3 Quicken the Pace of Modern Logistics Infrastructure Construction In the future, China will be guided by overall optimization and synergistic integration, coordinating the development of stock and incremental, traditional and new infrastructure development, and building a modern infrastructure system that is systematic, complete, efficient, practical, intelligent, green, safe, and reliable. On the one hand, the new infrastructure construction will be systematically planned. The logistics industry will be driven by scientific and technological innovation, integrating 5G, artificial intelligence, big data, blockchain, and other modern information technologies with logistics infrastructure, while promoting new intelligent logistics infrastructure, creating smart logistics parks, smart ports, smart ports of entry, digital warehouses, and other facilities networks. On the other hand, it will solve the outstanding contradictions and key constraints of traditional infrastructure. China will speed up the creation of the “channel + hub + network” logistics system, improve the multiple levels of international, domestic, regional, city community, urban circles, and rural logistics infrastructure, and gradually form a closely integrated domestic and international logistics network. In addition, it will leverage the new infrastructure to restructure and upgrade traditional infrastructure, address weaknesses in its air cargo and public logistics services, and fill the gaps in its infrastructure network.

1.3 The New Direction of China’s Logistics …

19

1.3.4 Innovation Will Spearhead the High-Quality Development of Logistics In the future, China will promote innovation-driven, high-quality development, strive for all-round, multi-level innovation in the field of logistics, promote reform in the development modes, and formulate new impetus and new advantages for growth. First, originality and innovation in logistics will be further encouraged and enhanced. The industry will increase investment in capital, data, technology, knowledge, and talent, working together to identify innovative solutions to eliminate weak and missing links in the supply chain, industry chain, and value chain. This will help achieve major breakthroughs in core logistics links. Second, it will further apply advanced technologies in the field of logistics, and promote the deep integration of common core technologies, cutting-edge technologies, disruptive innovative technologies, and advanced facilities and equipment within the industry. Third, the country will restructure itself and move toward a “digital, networked, and intelligent” system. It will promote “migration to cloud and the use of digital and smart tools”7 to guide enterprises toward digital transformation. It will develop intelligent logistics, enrich the application scenarios of smart logistics, and use “intelligence” to open up new avenues for logistics restructuring and upgrading. Fourth, in the area of “green” transformation, China will promote clean energy in logistics, build a reverse logistics system, speed up the “greening” of logistics infrastructure, operations, cargo transportation, and packaging, accelerate innovation in green logistics management, and move toward sustainable, low-pollution, low-emission, high-quality and high-efficiency logistics.

1.3.5 Further Reduce Logistics Costs and Improve Quality and Efficiency China in the future will focus on the overall goal of “reducing burdens and costs, improving quality and efficiency” in accordance with the basic principles of “consolidating the present, focusing on the long term, combining the near and far, and treating both symptoms and root causes”. It will try to move from “quantitative cost reduction”, oriented toward reducing absolute cost expenditure, to “efficiency cost reduction”, oriented toward improving the logistics operation system. First, it will intensify the key areas of reform and reduce the cost of the logistics system. This will include streamlining licensing and permit procedures, scientifically managing vehicle overloading, maintaining order in the road freight market, optimizing parking and traffic management of urban distribution vehicles, facilitating customs clearance, 7

“Migration to cloud” means exploring the implementation of inclusive cloud service support policies. “Using digital tools” means promoting the use of big data at a deeper level. “Using smart tools” means increasing support for the intelligent restructuring of enterprises, especially the deep integration of artificial intelligence with the real economy.

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and deepening the market reform of the railroad system. Second, it will strengthen its land and financial guarantees, and reduce the cost of logistics factors. It can achieve this by ensuring the demand for logistics land, improving the assessment of logistics land, broadening financing channels, and improving the risk compensation and sharing mechanism. Third, China will implement tax and fee reduction measures in logistics, such as introducing preferential tax and fee policies, reducing the cost of road access, reducing railroad and air freight charges, standardizing the charges at sea ports, and strengthening the supervision of logistics charges. Fourth, it will enhance the open sharing of information and reduce logistics information costs, including the open sharing of logistics information and reducing the cost of truck positioning information. Fifth, it will promote the efficient integration of logistics facilities, and reduce the cost of intermodal transport by breaking down barriers in multimodal transport and improving the logistics standards and regulations. Sixth, China will promote quality and efficiency in the industry, and reduce its overall cost by constructing logistics infrastructure networks, nurturing key logistics enterprises, further developing the modern supply chain, speeding up the pace of intelligent logistics development, and actively fostering green logistics.

1.3.6 Enhance the Security Capacity of the Supply Chain and Industry Chain In the future, the scientific coordination of development and security will be China’s two primary tasks. The concept of security development will inform in all aspects. The country must first enhance its response capacity for emergencies. This will mean constantly improving its emergency logistics facilities and constructing an emergency logistics system with sufficient reserves, quick response, and strong impact resistance. It must also organically integrate its emergency logistics facilities, emergency logistics information sharing and interoperability, and improve its capabilities to respond quickly and share resources. Second, China will support the construction of an independent, controllable, safe, and efficient industry chain and supply chain. The logistics industry will enhance its organizational scale, professional operation, and network service capabilities, improve the level of logistics resource integration and industry concentration, move toward specialization and the high end of the value chain, and deeply integrate the industry chain and supply chain. It must solve the problem of logistics deficiency and shortage, actively restructure the entire supply chain, improve the quality of the whole logistics service chain, speed up the construction of a global supply chain network of core components and important commodities, and integrate its supply chain service capabilities (He 2021). China must also actively develop new models and new modes of modern logistics, and extend the value chain of its logistics services.

References

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1.4 Summary This chapter explains the background, significance and connotation of the new development paradigm, and analyzed the mission and role of China’s logistics, as well as the future development direction under the new development paradigm. The new development paradigm is a major strategic decision made by the Chinese government in response to changes in the country’s development, environment, and conditions. Not only does China urgently need to enter a new development stage, but it has also made this strategic decision to cope with changes in the internal and external environments. It is an inherent requirement to adapt to the changes in developmental conditions. Expanding domestic demand is the strategic underpinning in the building of a new development paradigm; a high level of external openness is the powerful driving force for building this paradigm; and constructing a modern circulation system is a vital strategic task in achieving this same paradigm. Scientific and technological innovation is the strategic support for building the new development paradigm, while deepening reform is the key. By building a strong domestic market, promoting a modern circulation system, pioneering scientific and technological innovation and applications, and deepening reform to promote high-quality economic development, modern logistics has become the pathway to build this new development paradigm. In the 14th Five-Year Plan period, logistics development will still be at an important stage of strategic opportunity. Under the new development paradigm, China will apply the new development concept in all fields throughout the development, aiming to achieve high-quality development based on large circulation and domestic and international dual circulation. Improving people’s livelihoods and well-being will be the key and goal of these policies. China will focus on building a modern logistics system by strategically expanding domestic demand and further opening up to the outside world. At the same time, it will resolutely promote innovation to achieve high-quality logistics development. It will reduce costs, improve quality, enhance the security capacity of its supply chain and industry chain, so as to effect quality changes, efficiency changes, and power changes in logistics, and achieve higher-quality, more efficient, more equitable, more sustainable, and more secure development.

References chnrailway.com (2021) The expanding prospect of the China–Europe express lines. http://chnrai lway.com/html/20210421/1935724.shtml. Accessed 21 Apr 2021 gmw.cn (2021) Ministry of transportation: accelerating the building of a nation with strong transportation capability to safeguard the international logistics supply chain system. https://m.gmw. cn/2021-03/01/content_34652265.htm. Accessed 1 March 2021 He L (2020). Forging ahead with the new development paradigm of dual circulation: writing a new chapter in the 14th five-year plan of modern logistics. http://www.chinawuliu.com.cn/lhhzq/202 011/23/533750.shtml. Accessed 23 Nov 2020

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He L (2021) Constructing a modern logistics system and building a “Strong Logistics Nation”. http://www.chinawuliu.com.cn/lhhzq/202101/29/540622.shtml. Accessed 29 Jan 2021 Ministry of Transport of the People’s Republic of China (2021) The 2020 statistical bulletin of transport industry development. https://xxgk.mot.gov.cn/2020/jigou/zhghs/202105/t20210517_ 3593412.html. Accessed 19 May 2021 people.cn (2020) Building a new development paradigm: modern integrated transport moves toward greater efficiency. http://finance.people.com.cn/n1/2020/1020/c1004-31898065.html. Accessed 20 Oct 2020 www.gov.cn (2020) The state council information office conference: introducing the development achievements of the 13th five-year plan in transport logistics. http://www.gov.cn/xinwen/202010/22/content_5553479.htm. Accessed 22 Oct 2020 www.rmjtxw.comc (2020) How to eliminate the shortcomings in China’s emergency logistics under the pandemic? http://www.rmjtxw.com/news/sd/109907.html. Accessed 21 Apr 2020 Xu H, Qian W (2020) Building a modern logistics system. China Market Press, Beijing ydyl.china.com.cn (2018) Domestic regional response, development pattern changes and participation strategies under the “Belt and Road Initiative”. http://ydyl.china.com.cn/2018-01/25/con tent_50299197.htm. Accessed 25 Jan 2018

Chapter 2

The Development of China’s Logistics Market Xiaomei Jiang

In 2020, facing the severe combined impact of the sudden COVID-19 pandemic and a deep global economic recession, the Chinese government took a series of strong measures to contain the spread of the pandemic, while ensuring the orderly resumption of work and production, thus enabling China’s economy to be the first to recover globally. It was the only major economy in the world to register positive growth in 2020. The Chinese logistics market suffered a severe shock in the first quarter of 2020. After the second quarter, the logistics market rebounded rapidly due to effective domestic control of the pandemic and steady economic recovery, culminating in a modest growth increment for the year, as compared to 2019. Chinese logistics companies actively participated in the fight against the pandemic and played an important role in safeguarding people’s livelihoods and ensuring the smooth flow of international logistics. They also sped up resource integration, increased capital market financing, and actively promoted the digital transformation of the industry, further improving the overall development quality of the logistics industry. This chapter is divided into three sections. Section 2.1 introduces the domestic and international environments for the development of China’s logistics industry in 2020, including the impact of the COVID-19 pandemic on the global economy, trade, and supply chains, as well as the performance of the economy under the pandemic, and the progress made in opening up to the outside world. Section 2.2 describes the development status in overall scale of China’s logistics market in 2020. It offers data on the total value and total expense of social logistics, freight volume and freight turnover, cargo and container throughput of ports, cargo and mail throughput in civil airports, and business volume of the express industry. Section 2.3 summarizes the major characteristics of China’s 2020 logistics market in five aspects: performance under the pandemic, actions logistics enterprises took to combat the pandemic, market restructuring of the logistics industry, capital market financing of logistics enterprises, and the digital transformation of the logistics sector.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_2

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2.1 The Environment for China’s Logistics Development 2.1.1 The Severe Impact of the COVID-19 Pandemic on the Global Economy 2.1.1.1

The World Economy in Deep Recession

The sudden outbreak of the COVID-19 pandemic in early 2020 which quickly swept across the world, is considered the most serious infectious pandemic in nearly 100 years. As of December 31, 2020, there had been more than 81 million confirmed COVID-19 cases and nearly 1.8 million deaths in more than 200 countries and regions (WHO 2021). During the pandemic, the world economy fell into a severe recession as countries resorted to social distancing, city lockdowns, and border closures, leading to a halt in global production, depressed consumption, and trade disruption. The International Monetary Fund (IMF) estimated that the global economy shrank by 3.3% in 2020. The developed economies contracted by 4.7% on average, while emerging markets and developing economies contracted by 2.2% on average. Apart from a few countries such as China, Turkey, and Vietnam, which achieved positive economic growth, the rest of the world experienced negative growth. Table 2.1 shows the economic growth of major economies in the world for 2016–2020. Table 2.1 Economic growth of major economies in the world, 2016–2020 (%) 2016

2017

2018

2019

2020

World economic growth

3.2

3.7

3.6

2.8

−3.3

Developed economies

1.7

2.3

2.3

1.7

−4.7

United States

1.5

2.2

2.9

2.2

−3.5

Euro zone

1.8

2.4

1.9

1.3

−6.6

Japan

1.0

1.7

0.8

0.7

−4.8

Emerging markets and developing economies

4.3

4.7

4.5

3.7

−2.2

China

6.7

6.9

6.6

6.1

2.3

Russia

−0.2

1.5

2.3

1.3

−3.1

India Brazil South Africa

7.1

6.7

6.8

4.2

−8.0

−3.6

1.0

1.1

1.3

−4.1

0.3

1.3

0.8

0.2

−7.0

Source Compiled from the World Economic Outlook (Oct. 2017, Oct. 2018, Oct. 2019, Oct. 2020, Apr. 2021), published by IMF

2.1 The Environment for China’s Logistics Development

25

Table 2.2 The growth rate of world merchandise trade, 2017–2020 (%) Volume of world merchandise trade Exports

Imports

2017

2018

4.9

3.2

2019

2020

0.2

−5.3

North America

3.4

3.8

0.3

−8.5

South and Central America

2.3

0.0

−2.2

−4.5

Europe

4.1

1.9

0.6

−8.0

Asia

6.7

3.8

0.8

0.3

North America

4.4

5.1

−0.6

−6.1

South and Central America

4.5

5.4

−2.6

−9.3

Europe

3.9

1.9

0.3

−7.6

Asia

8.4

5.0

−0.5

−1.3

Source Compiled from the WTO (2021)

2.1.1.2

Significant Contraction in Global Merchandise Trade Volume

In 2020, the global demand for traded goods fell sharply under the impact of the COVID-19 pandemic. Commercial and cross-border transport restrictions imposed by countries to contain the spread of the virus increased trade costs and further impeded the flow of goods, resulting in a significant contraction in the volume of global merchandise trade. According to the World Trade Organization (WTO), the global merchandise trade volume fell by 5.3% in 2020, as compared with the previous year. The merchandise trade volume in most parts of the world declined sharply, except in Asia. In 2020, the export volume of Asia grew by 0.3%, while imports fell by only 1.3%. Table 2.2 shows the growth rate of world merchandise trade for 2017–2020.

2.1.1.3

The Circulation of the Global Supply Chain Cycle is Severely Impeded

Since February 2020, the global supply chain cycle has been severely disrupted as major countries in the global production network have been hit by the COVID19 outbreak, and governments have introduced border controls and cargo restrictions, resulting in widespread cancellations of international shipping and aviation flights, forcing a slowdown in worldwide manufacturing activities, and disrupting the circulation of the global supply chain. China was the first to be hit by the outbreak in early February 2020. To contain its spread, strict control measures were implemented across the country, and manufacturing companies generally delayed the resumption of work, with production activities temporarily halted and order deliveries delayed. The world quickly began to feel the impact on the global supply chain. For example, most of Hyundai’s plants in Korea, Nissan’s Kyushu plant in Japan, and Renault’s Busan plant in Korea

26

2 The Development of China’s Logistics Market

announced temporary production stoppages due to supply disruptions from Chinese auto parts suppliers. China had initially contained the spread of COVID-19 on the mainland in March 2020, with over 90% of above-scale industrial companies1 resuming work by midApril, and industrial activities having largely resumed by mid-May. However, as the outbreak spread further across Asia, Europe, and North America, the global supply chain began to suffer the impact on a wider scale. For example, in early March, more than 3600 components, 9000 factories, and 1500 tier-1 and tier-2 suppliers in China were affected by the outbreak. Thousands of components, factories and tier-1 and tier-2 suppliers in Korea, Japan and Italy were similarly affected (Liu 2020). The COVID-19 outbreak’s impact on the global supply chain resulted in production shutdowns and supply chain disruptions in the short term. However, from the medium to long term, the pandemic prompted countries to re-examine the risks of global supply chains, resulting in more conservative industrial policies and attitudes, negatively impacting the development of global supply chains.

2.1.2 China’s Economy was the First to Recover 2.1.2.1

China Became the Only Major Economy in the World to Achieve Positive Economic Growth

China was the first country to be hit by the COVID-19 outbreak in 2020, but the outbreak was quickly and effectively contained, thanks to the firm and decisive control measures of the Chinese government. China’s economy was also the first to recover, improving quarter by quarter, and eventually becoming the only major economy in the world to achieve positive economic growth in 2020. According to preliminary estimates, China’s Gross Domestic Product (GDP) in 2020 was RMB 101.60 trillion, up 2.3% year on year. It was the most severely hit by the pandemic in the first quarter, with economic growth falling by 6.8% year on year. Growth gradually increased in the second and third quarters, by 3.2% and 4.9%, respectively, achieving a medium to high growth rate of 6.5% in the fourth quarter. Figure 2.1 shows China’s GDP and growth rate for 2011–2020.

2.1.2.2

The Consumer Market Recovered Steadily

In 2020, China’s consumer market steadily recovered, demonstrating the strong resilience and vitality of the domestic demand market. In the first half of 2020, the retail scale of consumer goods was consistently negative due to the impact of the COVID-19 pandemic. In the second half of 2020, as pandemic prevention and 1

Above-scale industrial companies refer to industrial legal-person companies with an annual main operational income of more than 20 million Yuan.

2.1 The Environment for China’s Logistics Development

27

120

12

80

91.93 9.6

7.9

60 48.79 53.86

7.8

7.4

59.30 64.36

10

83.2 68.89 7.0

74.64 6.8

8 6.9

6.7

6 6.1 4

40 20

2.3

0

Growth Rate (%)

GDP ( Trillion RMB)

100

99.09 101.60

2 0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year

Fig. 2.1 China’s GDP and growth rate, 2011–2020. Note GDPs are computed per current price of each year; growth rates are computed based on constant price of the respective base year (i.e., 2005, 2010, 2015, each the respective base year for the succeeding five years). Source Compiled from the China Statistical Yearbook (2020), and Statistical Communiqué of the People’s Republic of China on the 2020 National Economic and Social Development, both published by the National Bureau of Statistics of China (2020a, b)

containment continued to improve, with positive results seen from the policies and measures undertaken by the Central Government and local governments, enterprises quickly resumed business and production, and there was a steady release of consumer demand. China’s retail scale of consumer goods bucked the negative trend, achieving positive year-over-year growth in August, and finally reached RMB 39.2 trillion, down 3.9% from the previous year. Although consumption growth slowed due to the pandemic, overall consumption expenditure as a percentage of GDP was still 54.3%.

2.1.2.3

Foreign Trade Grew Against the Trend

In 2020, China’s foreign trade quickly stabilized after a sharp fluctuation in the first quarter, and the scale of imports and exports increased quarter by quarter, achieving counter-trend growth and reaching a historical high. The total value of import and export goods trade in 2020 was RMB 32.16 trillion, up 1.9% year on year. Export value was RMB 17.93 trillion, up 4.0% year on year. Import value was RMB 14.23 trillion, down 0.7%. Figure 2.2 shows China’s total value of import and export trade for 2011–2020. On the export side, the continued spread of the pandemic abroad and production shutdown or reduction by enterprises led to a significant rise in global demand for China’s traditional advantageous products and anti-pandemic supplies, becoming the main driver of its export growth. In 2020, China’s export of mechanical and electrical products was RMB 10.66 trillion, up 6% year on year, accounting for 59.4% of its total exports, an increase of 1.1% points. The exports of laptops, household appliances, and medical instruments and apparatus grew by 20.4%, 24.2%, and 41.5%, respectively.

28

2 The Development of China’s Logistics Market 35 30 25 20

12.48

14.09

14.32

14.23

11.32

11.48

12.10

12.04

10.43

10.50

13.71

14.39

14.12

13.84

15.33

16.41

17.93

12.94

17.23

12.32 2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

15 10 5 0

Export (Trillion RMB)

Import (Trillion RMB)

Fig. 2.2 China’s total value of import and export, 2011–2020. Source Compiled from the China Statistical Yearbook (2020), and Statistical Communiqué of the People’s Republic of China on the 2020 National Economic and Social Development, both published by the National Bureau of Statistics of China (2020a, b)

On the import side, as China’s economy was the first to recover from the pandemic, infrastructure projects began on a large scale, and consumption was stable, driving the import demand for bulk commodities to grow at a faster pace. In 2020, the import volume of resource-based products such as crude oil and metal ore increased by 7.3% and 7.0%, respectively, and the import volume of agricultural products such as grain and meat increased by 28.0% and 60.4%, respectively (General Administration of Customs of the People’s Republic of China 2021).

2.1.2.4

Digital Technology Helps to Control the Pandemic

In 2020, digital technologies based on big data, cloud computing, AI, 5G, and other new-generation information technologies were widely used in many areas, such as hospital construction, medical materials deployment, and the resumption of work and production. Digital technology has become an important tool, assisting China’s pandemic prevention and control. A number of industrial Internet platforms have managed to precisely coordinate hospital construction, and match the demand and supply of anti-pandemic materials. For example, during the construction of two makeshift hospitals in Wuhan, Chinese heavy machinery companies XCMG and SANY utilized their industrial Internet platforms and quickly deployed online facilities to help construct the hospitals. The two companies also provided real-time equipment data and malfunction monitoring for more than 300 pieces of construction machinery and equipment at the construction site, thus ensuring efficient operations. Haier’s COSMOPlat industrial online platform launched an emergency information sharing and resource convergence platform for anti-pandemic medical supplies, linking important information such as demand for preventative medical supplies, manufacturing enterprises, raw

2.1 The Environment for China’s Logistics Development

29

materials for medical supplies production, and logistics, enhancing the efficiency of supply dispatch. Internet technology corporations such as Tencent, Huawei, and Alibaba launched various video conferencing and online office solutions in a timely manner to help companies establish quick and low cost online collaborative offices. These enterprises fully unleashed big data, 5G, AI and other technologies, providing solutions and services for work resumption, including touchless elevator button pressing, employee temperature screening, and cloud development, effectively relieving the pressure on enterprises to resume work and production. The huge value released by digital technology during the pandemic has significantly increased its importance to both government and enterprises, further accelerating China’s digital infrastructure construction. In 2020, China’s investment in industrial Internet, big data centers, 5G, artificial intelligence, and other fields reached about RMB 1 trillion. New 5G base stations nationwide have exceeded 600,000. Every city above the prefecture level has realized full 5G network coverage, and the number of end-terminal 5G connections has exceeded 200 million (China Industrial Economic Information Network 2021).

2.1.3 A High-Level Institutionalized Opening-Up is Steadily Being Advanced 2.1.3.1

Further Expansion of the Pilot Free Trade Zones

In September 2020, the Chinese government approved the establishment of Beijing, Hunan and Anhui Pilot Free Trade Zones. At the end of 2020, the total number of Pilot Free Trade Zones in China has reached 21, covering two-thirds of the country’s provinces. The Pilot Free Trade Zones are to be “testing grounds” for China’s reform and opening up, aimed at system innovation as the core to formulate replicable experiences and practices that can be more extensively applied. By establishing more Pilot Free Trade Zones, China will be able to carry out its reform and innovation pilot projects on a larger scale, and gain more reform experiences.

2.1.3.2

The Hainan Free Trade Port Begins Construction

In June 2020, China announced the construction of the Hainan Free Trade Port. In face of a new round of major global changes and with economic globalization encountering greater headwinds, it was practical action taken by the Chinese government to promote China’s high-level opening up, and also to help support economic globalization and build a global community with a shared future for humanity. The guiding principles in constructing China’s Hainan Free Trade Port were to align with high-standard international economic and trade rules, liberalize and

30

2 The Development of China’s Logistics Market

facilitate trade and investment, establish a policy system that is compatible with a high-level free trade port, and build Hainan Province into a high-quality free trade port of global influence by the middle of this century. To achieve this, the Chinese government has proposed a series of major liberalization policies, covering trade, investment, finance, transportation, taxation, and industrial systems, as well as the flow of capital, personnel, and data.

2.1.3.3

The Formal Signing of the Regional Comprehensive Economic Partnership Agreement

In November 2020, the ASEAN, China, Japan, South Korea, Australia, and New Zealand formally signed the Regional Comprehensive Economic Partnership (RCEP) agreement. The RCEP is a comprehensive, high-quality, and mutually beneficial large-scale regional Free Trade Agreement. It covers many aspects, liberalizing and facilitating trade and investment, including market access for trade in goods, services, and investment, as well as many regulations on trade facilitation, intellectual property rights, e-commerce, competition policies, and government procurement. The overall volume of zero-tariff products for trade exceeds 90%. The RCEP also includes clauses on the free trade relationship between China and Japan, and Japan and Korea, which has significantly increased the degree of free trade in the region. The total population, economic volume and total trade of the RCEP member countries account for about 30% of the global total. Facing the serious impact of the COVID-19 pandemic on the world economy, the signing of the RCEP was an important and practical step for regional countries to uphold the multilateral trading system and build an open world economy. It has a landmark significance for further integrating the regional economies and stabilizing the global economy. As the agreement is gradually implemented, it will strongly promote regional prosperity and stability, bringing hope for the post-pandemic recovery of the world economy.

2.1.3.4

The China-EU Comprehensive Agreement on Investment Negotiations Completed on Schedule

On December 30, 2020, Chinese and European leaders jointly announced the conclusion of the China-EU Comprehensive Agreement on Investment (CAI) negotiations as scheduled. The CAI was announced in November 2013, and the first round of negotiations began in January 2014. After seven years and 35 rounds of negotiations, the two sides finally achieved their goal of completing negotiations by the end of 2020. Focused on institutional liberalization, the CAI is a comprehensive, balanced, high-level, mutually beneficial agreement linking the two major economies of China and the EU. First, the CAI includes nine chapters on market access, investment liberalization, fair competition, domestic supervision, transparency, standards setting,

2.2 Overall Scale of China’s Logistics Market

31

financial services and others, and is the most comprehensive investment agreement in the international arena. Second, the CAI is very open, mainly in terms of market access. In addition to markets on the negative list that China has already liberalized or intends to liberalize, it also plans to open up to the EU companies areas such as communication and cloud services, computer services, and international maritime transport. Third, the rules of the CAI are at a high level. In general, the CAI regulations are of a higher level than those in other existing international investment agreements, in areas such as fair competition, domestic supervision, transparency, standards setting, and sustainable development (Su 2021). Completion of the CAI negotiations, their subsequent signing and taking effect will be conducive to expanding the scale of bilateral direct investment. The further opening of Chinese and EU investment sectors will also drive the development of the bilateral commodity trade sectors and further enhance the trade partnership between China and the EU, which is of great significance to both sides.

2.2 Overall Scale of China’s Logistics Market 2.2.1 Total Value of Social Logistics2 In 2020, China’s total value of social logistics exceeded RMB 300 trillion for the first time, reaching RMB 300.1 trillion. At comparable prices, the year-on-year growth rate was 3.5%, down 2.4% points year on year. Seen on a quarterly basis, the growth rates of the first quarter, the first half of the year, and the first three quarters were −7.3%, −0.5% and 2.0%, respectively, showing a clear rebound each quarter. Figure 2.3 shows the total value and growth rate of social logistics for 2011–2020. Table 2.3 shows the composition of total value of social logistics for 2016–2020.

2.2.2 Total Expense of Social Logistics In 2020, China’s total expense of social logistics was RMB 14.9 trillion, an increase of 2.0% year on year, with a growth rate dropped by 5.3% points. The share of total social logistics expense in GDP was 14.7%, the same as in 2019. Table 2.4 shows the 2

Total value of social logistics is composed of five parts: (1) the total value of commodities of farming, forestry, animal husbandry and fishing products in the social logistics field (“total logistics amount of agricultural products” for short); (2) the total value of commodities of industrial products in the social logistics field (“total logistics amount of industrial products” for short); (3) the total logistics value of import goods; (4) the total value of commodities of renewable resources in the social logistics field (“total logistics value of renewable resources” for short); (5) the total logistics value of goods from institutes and residents (including luggage in railway and air transport, parcels and letters in mailing service, various donations from all sectors of society and handling, carrying and transportation of goods incurred by moving activities of institutes and residents).

32

2 The Development of China’s Logistics Market 14

300

283.1

12.3 9.5

250 9.8 200 158.4

197.8

298.0 300.1

12

252.8 213.5 219.2

10

229.7

8

177.3 7.9

150 5.8

6.1

6.7

6.4

6 5.9

Growth Rate (%)

Total Value of Social Logistics (Trillion RMB)

350

4

100 3.5

50

2 0

0 2011

2012

2013

2014

2015 2016 Year

2017

2018

2019

2020

Fig. 2.3 Total value and growth rate of social logistics, 2011–2020. Source Compiled from the National Logistics Operations Bulletin for 2011–2020, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

total social logistics expense, the increment and the share in GDP for 2011–2020. Table 2.5 shows the composition of the total expense of social logistics in 2020.

2.2.3 Freight Volume and Freight Turnover In 2020, China’s freight traffic experienced large fluctuations and continued to rebound after a sharp decline at the start of the year, eventually recovering to 2019 levels at the end of the year. The annual freight volume was 46.34 billion tons, down 0.5% year on year, and freight turnover was 19.66 trillion ton-km, down 1.0% year on year. Table 2.6 shows the annual nationwide freight volume, freight turnover, and growth rate for 2011–2020. Among the different modes of transportation, rail was the least affected by the pandemic, with a small increase in freight volume and freight turnover. Highway, waterway and aviation transport were relatively more affected by the pandemic. The waterway freight volume and aviation freight turnover were the worst affected, down 10.2% and 8.7%, respectively. Table 2.7 shows the freight volume, freight turnover and growth rate of different transportation modes in 2020.

2.2.4 Cargo Throughput and Container Throughput of Port In 2020, despite the sluggish international economic situation, China’s port production achieved counter-trend growth, driven by the rapid growth of crude oil, iron ore, and other bulk cargo imports. The completed cargo throughput of the national ports

2.2

100

5.2

229.7

Agricultural products logistics, etc.3

2018

2019

2020

252.8

5.8

12.5

234.5

100

2.3

4.9

92.8

283.1

12.2

14.1

256.8

100

4.3

5.0

90.7

298.0

14.0

14.3

269.6

100

4.7

4.8

90.5

300.1

16.0

14.2

269.9

1004

5.3

4.7

89.9

3 This data is the sum of the total logistics value of agricultural products, total logistics value of renewable resources, and the total logistics value of goods from institutes and residents. 4 Due to the rounding of decimals, the sum of the numbers in this column is slightly different from the total.

Source Compiled from the National Logistics Operations Bulletin for 2016–2020, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

4.6

10.5

Imported goods logistics

93.2

214.0

Total

2017

Value (trillion Share (%) Value (trillion Share (%) Value (trillion Share (%) Value (%) Share (%) Value (trillion Share (%) RMB) RMB) RMB) (trillion RMB) RMB)

2016

Industrial products logistics

Indicator

Table 2.3 Composition of total value of social logistics, 2016–2020

2.2 Overall Scale of China’s Logistics Market 33

34

2 The Development of China’s Logistics Market

Table 2.4 Total social logistics expense, increment and share in GDP, 2011–2020 Year

Total expense for social logistics cost (trillion RMB)

Increment from previous year (%)

Share in GDP (%)

2011

8.4

18.5

17.8

2012

9.4

11.4

18.0

20135

10.2

9.3

16.9

2014

10.6

6.9

16.6

2015

10.8

2.8

16.0

2016

11.1

2.9

14.9

2017

12.1

9.2

14.6

2018

13.3

9.8

14.8

2019

14.6

7.3

14.7

2020

14.9

2.0

14.7

Source Compiled from the National Logistics Operations Bulletin for 2011–2020, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

Table 2.5 Composition of the total expense of social logistics in 2020 Indicator

Value (trillion RMB)

Increment from previous year (%)

Share (%)

Total expense of social logistics

14.96

2.0

100

Transportation expense

7.8

0.1

52.3

Storage expense

5.1

3.9

34.8

Management expense

1.9

1.3

12.9

Source Compiled from the National Logistics Operations Bulletin for 2020, published by the National Development and Reform Commission, and the China Federation of Logistics and Purchasing

was 14.55 billion tons, up 4.3% year on year. Foreign trade cargo throughput was 4.50 billion tons, up 4.0% year on year. Table 2.8 shows the nationwide cargo throughput and growth rate of ports for 2011–2020. In 2020, ports nationwide completed 264 million TEUs of container throughput, an increase of 1.2% year on year, and the growth rate decreased compared with the previous year. Figure 2.4 shows nationwide container throughput and growth rate for 2011–2020.

5

In 2013, the Ministry of Transport of the People’s Republic of China adjusted the statistical indicators for freight volume and turnover. The National Bureau of Statistics of China used the new indicators to adjust the values for total social logistics expenses and its ratio to GDP in 2013. The table shows the adjusted values. 6 Due to the rounding up of decimals, the sum of the numbers in this column is slightly different from the total.

2.2 Overall Scale of China’s Logistics Market

35

Table 2.6 Annual nationwide freight volume, freight turnover, and growth rate, 2011–2020 Year

Freight volume Volume (billion ton)

Freight turnover Growth rate (%)

Freight turnover (trillion ton-km)

Growth rate (%)

2011

36.97

14.1

15.93

12.3

2012

41.00

10.9

17.38

9.1

2013

40.99

–

16.80

–

2014

41.67

1.7

18.17

8.2

2015

41.76

–

17.84

–

2016

43.87

5.1

18.66

4.6

2017

48.05

9.5

19.74

5.8

2018

51.53

7.2

20.47

3.7

2019

47.14

–

19.94

–

2020

46.34

−0.5

19.66

−1.0

Note In 2013, the Ministry of Transport of the People’s Republic of China adjusted statistical indicators for freight volume via highway and seaway. In 2015 and 2019, it adjusted statistical indicators for freight volume via highway. The data from these two years are non-comparable to the year before Source Compiled from the China Statistical Yearbook (2020), and Statistical Communiqué of the People’s Republic of China on the 2020 National Economic and Social Development, both published by the National Bureau of Statistics of China (2020a, b) Table 2.7 Freight volume, freight turnover and growth rate of different transportation modes in 2020

Indicator

Volume

Total freight volume (billion ton)

46.34

Growth rate (%) −0.5

4.46

3.2

Highway

34.26

−3.3

Waterway

7.62

−10.2

Among which: Rail

Civil aviation (megaton) Freight turnover (trillion ton-km) Among which: Rail

6.77

2.0

19.66

−1.0

3.04

1.0

Highway

6.02

0.9

Waterway

10.58

−2.5

Civil aviation (billion ton-km)

24.02

−8.7

Note The total volume of freight transport and turnover includes the completion volume of the four modes of transport: rail, highway, waterway, and civil aviation. The growth rate in 2020 is calculated in comparable terms. Due to reasons such as the formation of new national network management groups, and changes in some oil and gas transportation pipeline statistics, the data on pipeline transportation is not included Source Compiled from Statistical Communiqué of the People’s Republic of China on the 2020 National Economic and Social Development, published by the National Bureau of Statistics of China (2020a, b)

36

2 The Development of China’s Logistics Market

Table 2.8 Nationwide cargo throughput and growth rate of port, 2011–2020 Year

National cargo throughput of port

Cargo throughput of port in foreign trade

Volume (billion ton)

Growth rate (%)

Volume (billion ton)

Growth rate (%) 11.4

2011

10.04

12.4

2.79

2012

10.78

7.3

3.06

9.7

2013

11.77

9.2

3.36

9.9

2014

12.45

5.8

3.59

6.9

2015

12.75

2.4

3.66

2.0

2016

13.20

3.5

3.85

5.1

2017

14.01

6.1

4.09

6.3

2018

14.35

2.5

4.19

2.4

2019

13.95

5.7

4.32

4.7

2020

14.55

4.3

4.50

4.0

Note In 2019, the Ministry of Transport of the People’s Republic of China adjusted the statistical scope for port data. The 2019 year-on-year growth rate is calculated in comparable terms Source Compiled from the Statistical Bulletin of Transportation Industry for 2011–2020, published by the Ministry of Transport of the People’s Republic of China

250 200

12.0 163.67

177.47

190.21 202.44 211.56

220.05

261.00 264.00

12.0

8.0

8.3 7.2

100

6.4

6.0

4.5 5.3 4.0

50

2012

2013

2014

2015 2016 Year

4.0

4.4

2.0

0 2011

14.0

10.0

8.4

150

238.38

251.12

Growth Rate (%)

Container Throughput (Million TEU)

300

2017

2018

2019

1.2 2020

0.0

Fig. 2.4 Nationwide container throughput and growth rate, 2011–2020. Source Compiled from the Statistical Bulletin of Transportation Industry for 2011–2020, published by the Ministry of Transport of the People’s Republic of China

2.2.5 Cargo and Mail Throughput in Civil Airports In 2020, China’s air cargo market experienced its first negative growth in nearly a decade due to a sharp drop in international passenger flights and a significant decrease in aircraft belly cabin cargo capacity as a result of the COVID-19 outbreak. The national airports completed a total of 16.08 million tons of cargo and mail throughput, down 6.0% year on year. Domestic routes handled 9.47 million tons of throughput, down 11.0% year on year, while international routes handled 6.61 million

2.2 Overall Scale of China’s Logistics Market

37

7.8

16 14 12 10

11.58 11.99 3.6

12.59 13.56

15.10 14.09

7.2

16.18

16.74 17.10

16.08

10 8 6

7.1

4

4.9

3.9

3.5

2.5

2 2.1

8

0

6

-2

4

-4

2

Growth Rate (%)

Cargo & Mail Throughput (Million Tons)

18

-6 -6.0

0 2011

2012

2013

2014

2015 2016 Year

2017

2018

2019

-8

2020

Fig. 2.5 Nationwide cargo and mail throughput and growth rate in civil airports, 2011–2020. Source Compiled from the Statistical Bulletin on the Productivity of National Airports for 2011–2020, published by the Civil Aviation Administration of China

tons, up 2.2% year on year. In 2020, 59 airports nationwide handled an annual cargo and mail throughput of more than 10,000 tons, the same as that of the previous year. Completed cargo and mail throughput accounted for 98.6% of the cargo and mail throughput of all domestic airports, 0.2% points higher than that of the same period in the previous year. The cargo and mail throughput of airports in the three major cities of Beijing, Shanghai, and Guangzhou accounted for 44.0% of the cargo and mail throughput of all domestic airports, down 2.5% points from the previous year. Figure 2.5 shows the nationwide cargo and mail throughput and growth rate in civil airports for 2011–2020.

2.2.6 Business Volume of Express Industry In 2020, China’s express business volume achieved high growth due to the further online and offline integration and development of China’s consumer markets during the pandemic, as well as the fact that express delivery enterprises were the first to resume work and production. Express delivery enterprises delivered a total of 83.36 billion items, an increase of 31.2% year on year, and an increase of 5.9% points over the previous year. Figure 2.6 shows the business volume of express delivery enterprises and the growth rate in China for 2008–2020. Figure 2.7 shows the distribution of business volume of express delivery by category for 2008–2020.

38

2 The Development of China’s Logistics Market 90

83.36 70

61.6

80

60

70

57.0

63.52

54.8

60

51.9

50

51.4

48.0

50

50.71

40

40.06

40

31.28

30

25.9

20

22.8

25.9

20.67

5.69 1.51 1.86 2.34 3.67

10

9.19

28.1 26.6 25.3

31.2

30 20

13.96 10 0

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year

Fig. 2.6 Nationwide business volume of express delivery enterprises and the growth rate, 2008– 2020. Source Compiled from the Statistical Bulletin of Postal Service Industry for 2008–2020, published by the State Post Bureau 100

7.0

6.1

5.6

3.5

3.2

2.8

2.3

2.1

2.0

2.1

2.2

2.2

2.2

66.4

70.4

71.5

74.2

73.7

72.3

72.3

71.8

74.3

74.8

75.3

80.4

83.2

26.6

23.5

22.9

22.3

23.1

24.9

25.4

26.1

23.7

23.1

22.5

17.4

14.6

90 80 70 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year, % Intra-city

Cross-city

International and Hong Kong, Macao and Taiwan

Fig. 2.7 Distribution of business volume of express delivery by category, 2008–2020 (%). Source Compiled from the Statistical Bulletin of Postal Service Industry for 2008–2020, published by the State Post Bureau

2.3 Major Characteristics of China’s Logistics Market

39

2.3 Major Characteristics of China’s Logistics Market 2.3.1 The Logistics Market Withstood the Severe Test of the COVID-19 Pandemic 2.3.1.1

Overall Market Operation Remains Stable

In 2020, although China’s logistics market operation was severely challenged by the COVID-19 pandemic, its national economy was the first to recover as the domestic outbreak was quickly brought under control and foreign trade grew against the trend. These factors offered strong support to China’s logistics market, and its overall operation remained stable throughout the year. In 2020, total social logistics value exceeded RMB 300 trillion, up 3.5% year on year; the ratio of total social logistics expense to GDP remained the same as in the previous year. Freight volume and freight turnover basically recovered to 2019 levels, with growth rates falling by only 0.5% and 1.0%, respectively. Port cargo throughput and container throughput grew by 4.3% and 1.2%, respectively. Express business volume resumed high growth, up 31.2% year on year, an increase of 5.9% points over the previous year.

2.3.1.2

The Logistics Market Rebounded Rapidly After the Resumption of Work and Production

Looking at the performance of each quarter in 2020, the outbreak hit the Chinese logistics market hardest in the first quarter. In the first quarter, the growth rate of total social logistics value fell by 7.5% year on year. Freight volume, freight turnover, and port throughput also experienced a significant decline, with the largest drop occurring in February. In February, the growth rates of national freight volume, freight turnover, and port throughput fell by 29.9%, 18.7%, and 9.0%, respectively. After entering the second quarter, as China’s social production and life quickly recovered, the logistics market also achieved a rapid rebound, and the decline in overall logistics indicators began to narrow significantly. For example, the negative growth rate of China’s total social logistics value contracted to -0.5% in the first half of 2020, significantly less than in the first quarter, and the growth rates of port throughput, freight volume, and freight turnover turned from negative to positive in April, May, and June, respectively. Figure 2.8 shows the growth rates of China’s freight volume, freight turnover and port cargo throughput from December 2019 to December 2020. Compared with other market segments, China’s express delivery market rebounded most rapidly. This was because the demand for basic necessities moved from offline to online during the pandemic, together with the early resumption of work and production in the express industry. The growth rate of express delivery business declined sharply only in January 2020. The decline was less in February and returned to high growth from March. Figure 2.9 shows the growth rate of China’s express delivery business volume from December 2019 to December 2020.

40

2 The Development of China’s Logistics Market 15 10

Growth Rate (%)

5 0 -5 -10 -15 -20 -25 -30 Growth Rate of Freight Volume（%） Growth Rate of Freight Turnover（%） Growth Rate of Cargo Throughput of Port（%）

-35

Fig. 2.8 Growth rates of freight volume, freight turnover and port cargo throughput in China, December 2019–December 2020. Source Monthly data from the National Bureau of Statistics of China (2020a) 50 39.6

Growth Rate (%)

40

39.4

37.4 32.0

30

27.0

20

38.9

37.5

35.7 35.0

17.3

14.9 10 0

-2.2

-10 -20

-11.5

Fig. 2.9 Growth rate of China’s express business volume, December 2019–December 2020. Source China Express Development Index Report (December 2019–December 2020), published by the State Post Bureau of the People’s Republic of China

2.3 Major Characteristics of China’s Logistics Market

41

2.3.2 The Logistics Industry Makes Every Effort to Fight the Pandemic 2.3.2.1

The Urgent Delivery of Anti-pandemic Emergency Supplies

The most severe COVID-19 outbreaks were concentrated in Hubei Province, particularly Wuhan. After the outbreak, the logistics industry was the first to resume work and production. A number of key logistics enterprises opened up “green channels” for pandemic control materials. Air cargo enterprises opened additional all-cargo flights for anti-pandemic materials, and many national logistics hubs and demonstration logistics parks offered free emergency storage and transit services. As a result, a large number of emergency supplies were quickly transported to Hubei through these logistics channels, playing an important role in supporting Hubei and the whole of China to win the fight against the pandemic. From January 24 to January 26, 2020, more than 100 tons of medical and antipandemic supplies were flown to Wuhan from 11 domestic cities, including Beijing and Shanghai, as well as from overseas cities such as Manila in the Philippines and Phnom Penh in Cambodia. According to the statistics of the Ministry of Transport of the People’s Republic of China, between January 27 and February 17, 2020, a total of 317,400 tons of anti-pandemic materials and daily necessities were delivered to Hubei from the rest of China. 162,700 tons of epidemic prevention and control materials such as medical alcohol, disinfectant, and medical equipment were delivered by highways, while 6999 batches and 104,100 tons of such materials were shipped by rail. 420 flights were dispatched to Hubei, carrying 472,600 items and 4100 tons of anti-pandemic materials. On the waterways, 257 vessels were used to transport 714,000 tons of coal, 134,000 tons of fuel, and 42,000 tons of grain.

2.3.2.2

Ensuring a Supply of Livelihood Materials for the People

In 2020, due to the pandemic, a large number of consumers stopped going out to shop and shifted their daily consumption to online. Doubly tested by the pandemic and soaring orders, major e-commerce logistics and express delivery companies worked hard to improve their service capacity and level. They ensured that people’s need for basic necessities was being met, and the normal operation of society could resume, while promoting the growth of their companies at the same time. For example, Dada Now, a leading local on-demand delivery platform in China, was the first to launch a touchless service in the early stages of the pandemic, and was able to ensure safe deliveries of household goods by dispatching and encouraging more riders to make deliveries through various incentives, thus increasing capacity across the regions. Dada Now delivered 1.1 billion items in 2020, up 46.7% from 0.75 billion items in the previous year. SF Express relied on its own robust express delivery network, as well as its independent all-cargo aircraft, railroad and high-speed rail lines, drones, and Hive Box smart lockers, to quickly deliver a large number of daily

42

2 The Development of China’s Logistics Market

necessities to residents during the pandemic. In 2020, SF Express’s express delivery volume grew 68.46% year on year, which was much higher than the industry’s overall growth rate of 31.2%.

2.3.2.3

Efforts to Ensure the Smooth Flow of International Logistics

In 2020, the rapidly spreading COVID-19 pandemic caused many countries to ground and suspend flights, exercising entry controls, and suspending imports. International logistics operations were disrupted on a wide scale. Chinese logistics companies actively responded by making efforts to ensure the smooth flow of international logistics. Ocean shipping enterprises strongly supported foreign import and export by increasing capacity and container supplies. For example, China’s COSCO Shipping Group added 40 container vessels to its fleet in the second half of 2020, increasing its capacity by 200,000 TEUs, or 7%. Its container transport segment shipped back 3.3 million TEUs of empty containers from overseas, and released 850,000 TEUs of new container equipment into the market. Container holdings increased by 15%, effectively compensating for the container supply shortage.7 Air freight enterprises took emergency measures to introduce all-cargo aircraft, increase all-cargo flights and routes, and convert passenger planes to cargo aircraft. These measures were taken to rapidly increase international air cargo capacity and support the smooth flow of China’s international air logistics. In 2020, for example, SF Airlines, China Southern Airlines, China Postal Airlines, and five other airlines introduced a total of 14 all-cargo aircraft. China Southern Airlines also converted six passenger planes into cargo aircraft, and operated more than 6000 “passengerconverted-to-cargo” flights that year. There was a much higher demand for China–Europe freight trains due to the significant reduction in international air freight and sea container routes. China Railway Corporation and a number of large dry port companies have ensured the operation of China-EU trains, making them an important transport channel for Sino-foreign trade during the pandemic and playing an important role in maintaining the stability of the global supply chain. In 2020, China–Europe freight trains travelled to 92 cities in 21 countries, an increase of 37 cities compared with the same period in the previous year. A total of 12,400 trains operated that year, up 50% year on year; 1.135 million TEUs were dispatched, up 56% year on year; and the integrated heavy container rate reached 98.4%. Large e-commerce logistics and express delivery companies have restored and opened many new international routes to provide logistics support for domestic and foreign companies engaged in cross-border e-commerce. In 2020, China Post (EMS), SF Express, and YTO Express resumed flights and opened more than 30 dedicated international freight routes. Cainiao Network, working together with TMALL 7

The Party Leadership Group of COSCO Shipping Group: “Ensuring ‘Six Stabilities’ and ‘Six Guarantees’ Under the International Market Trends”, Study Times, March 3, 2021, p. 4.

2.3 Major Characteristics of China’s Logistics Market

43

Global, opened nearly 1500 air and sea routes, increasing logistics efficiency by 10% that year. As the pandemic spreads further, seafarers’ shift changes have become a knotty issue for the global port and shipping industry to help control the pandemic. In compliance with national anti-pandemic measures, Chinese coastal port enterprises have managed shift changes for their crew members in a safe and orderly manner. In the first three quarters of 2020, there was a total of 110,000 shift changes for Chinese crew members on international vessels, effectively safeguarding their legitimate rights and interests, as well as ensuring the smooth functioning of the international logistics supply chain.

2.3.3 Accelerating Market Restructuring of the Logistics Industry 2.3.3.1

Highway Express Transport Companies Compete for Market Share by Reducing Prices

In 2020, China’s highway express industry was still in the development stage, with low market concentration and a high degree of homogeneity of industry services. The CR88 concentration of highway express companies in the industry was only about 8%. Due to the pandemic, highway express freight demand has declined, leading to further industry competition. Some of the leading highway express transport companies have launched price wars to seize cargo sources and expand their market share. For example, SF Express cancelled the resource adjustment fee of RMB10 per ticket, while ZTO Express, ANE Logistics and Best Freight gave a 30% discount for the whole network transit fee (transfer fee + operating fee). Yunda Ground gave a 50% discount for the whole network transit fee, while Yimidida Group Limited offered a 30% discount for the intra-provincial transit fee and a 40% discount for the inter-provincial transit fee.

2.3.3.2

The Entry of New Companies in the Express Delivery Industry Has Led to a Decline in Market Concentration

In 2020, three new companies entered the relatively saturated and highly competitive Chinese express market, leading to further market competition and a decrease in market concentration. In March 2020, J&T Express, a franchise-based express delivery company founded in Indonesia entered China’s domestic market. Its network achieved nationwide coverage by September. Thanks to the company’s low price strategy, its business 8

CR8 refers to the proportion of market share held by the top 8 companies in terms of business size.

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2 The Development of China’s Logistics Market

volume grew rapidly, delivering 5 million, 10 million and 20 million items per day in June 2020, October 2020, and early 2021, respectively. The other two companies were franchise-based express delivery companies founded by JD.com and SF Express. In 2020, JD.com’s express delivery business covered eight provinces on the eastern coast, while SF Express’s delivery company began trial operations in five cities, including Guangzhou and Hangzhou, in September 2020. The brand concentration index CR8 for China’s express and parcel services has been moving upward from 2016 to 2019, at 76.7, 78.7, 81.2 and 82.5, respectively (State Post Bureau 2016–2019). The entry of these three new companies in 2020 disrupted this upward trend, with the index at 82.2 in 2020 (State Post Bureau of The People’s Republic of China 2020), down year on year by 0.3% points.

2.3.3.3

Speeding Up Mixed-Ownership Reform of Key State-Owned Air Logistics Companies

In 2020, the COVID-19 pandemic exposed China’s serious deficiency in air cargo capacity. China’s large key, state-owned air logistics enterprises, Air China Cargo and China Southern Airlines accelerated their mixed-ownership reform to strengthen the capital strength of their cargo businesses. They also attracted external investment to achieve strategic synergy and accelerated their companies’ transformation into integrated logistics service providers. In November 2020, Air China Cargo implemented mixed-ownership reform, introducing multiple upstream and downstream shareholders of the air cargo industry chain, such as Cainiao Network and Shenzhen International Holdings Limited with a capital inflow of RMB 4.85 billion, accounting for 31% of its total shares. Through this mixed-ownership reform, Air China Cargo enhanced its capital strength, optimized its industrial structure layout, and accelerated its development into an integrated “e-commerce + logistics” service provider with procurement, transportation and sales capabilities. In December 2020, China Southern Airlines began implementing mixedownership reform, with eight organizations investing a total of RMB 3.355 billion in the company, which is mainly used to increase air cargo capacity and construct ground logistics infrastructure. Through this mixed-ownership reform, China Southern Airlines has brought in synergistic strategic investors and promoted resource integration through equity cooperation, both within the industry and in its upstream and downstream divisions. This will help transform the company into a modern, internationally competitive logistics service provider.

2.3.3.4

Leading Logistics Enterprises Actively Acquiring High-Quality Resources Through Mergers and Acquisitions

In 2020, some large leading Chinese logistics companies in cold-chain logistics, ecommerce logistics and chemical logistics continued to consolidate their dominant

2.3 Major Characteristics of China’s Logistics Market

45

position in niche markets by acquiring and merging with high-quality companies in the industry. In cold-chain logistics, Global Freezer Services, the cold-chain platform of GLP Group, acquired a 75% stake in a cold-storage logistics company in Liaoning Province in April 2020. The acquired company was engaged in international oceanic fisheries resource trading and third-party cold-chain logistics business, with a modern 50,000-ton cold-storage facility and a 10,000-m2 refrigerated container yard. After the acquisition, Global Freezer Services continued to improve its cold-chain warehousing, transportation, and international freight forwarding services in China’s five major regions—East China, North China, South China, Southwest China, and Northeast China. In e-commerce logistics, Hive Box Technology, a subsidiary of SF Holding Co., Ltd, acquired Sposter.net in 2020 through equity restructuring. Hive Box Technology and Sposter.net are the top two Chinese smart package locker operators in terms of market share. After the acquisition, Hive Box Technology’s market share reached 69%. In August, Cainiao Network acquired ALOG Technology Logistics Co., Ltd, a third-party e-commerce logistics supply chain company. ALOG Technology is a 5A logistics company that provides a full range of supply chain system solutions and management services, with e-commerce warehousing as its core business. It also provides cross-border and third-party agent services for e-commerce. ALOG Technology has also been the main warehouse management service provider for Alibaba’s TMALL. This acquisition will help Alibaba to further improve its smart logistics system. In August, JD Logistics acquired a controlling interest in Kuayue Express for RMB 3 billion. Kuayue Express is a large express transport company mainly engaged in “limited time express” service, with distinct advantages in timesensitive express products, technological innovation, and refined management. The company will be crucial in helping JD Logistics build an industry-leading integrated supply chain service. In chemical logistics, Kerry IMS Chemical Logistics Co., Ltd. acquired a 51% stake in a Tianjin logistics company in November 2020, thus extending its chemical logistics services to the Bohai Rim and North China. In December 2020, the Milkyway Chemical Supply Chain Service Co., Ltd. acquired 100% of the shares of a Jiangxi logistics company. After this acquisition, Milkyway further extended its supply chain service network in the Guangdong-Hong Kong-Macao Greater Bay Area, deepening the integrated service functions of its warehousing and distribution.

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2.3.4 Logistics Enterprises Increase Capital Market Financing 2.3.4.1

Logistics Enterprises Actively Introduce Venture Capital

In 2020, despite the pandemic having a great impact on China’s logistics industry, it also brought new development opportunities to some logistics segments. During the pandemic, popular logistics segments such as LTL (Less than truckload) freight, urban distribution, fresh e-commerce logistics, and logistics technology have remained the hotspots of capital investment. Leading companies in these segments are actively introducing venture capital funds to accelerate their business development. According to incomplete statistics, the logistics sector attracted about RMB 45.7 billion of venture capital funding in 2020, with nearly 100 financing projects. Table 2.10 shows the partial projects with financing of RMB1 billion and above in 2020. Table 2.10 Selected financing projects in the logistics sector in 2020 Number

Investment period

Investment company

Segment of the industry

Investment amount

1

January

ANE Logistics

LTL freight

300 million USD

2

February

Yimidida Group Limited

LTL freight

1 billion RMB

3

February

SF Express

LTL freight

300 million USD

4

June

Geek+

Autonomous mobile robot

200 million USD

5

July and December

Miss Fresh

Fresh food e-commerce logistics

495 million USD +2 billion RMB

6

September

STO Express

Express services

3.295 billion RMB

7

November

Full Truck Alliance

Highway freight network platform

1.7 billion USD

8

November

TuSimple

Self-driving truck

350 million USD

9

December

Huolala

Intra-City distribution services

515 million USD

10

December

Quicktron

Intelligent warehouse robot

1 billion RMB

Source Jia, Y., “Summing Up the Year, Part 4: Logistics Investment Just Showing its Potential in 2020”, January 11, 2021, Sohu.com (https://www.sohu.com/a/443696165_747469)

2.3 Major Characteristics of China’s Logistics Market

2.3.4.2

47

Several Logistics Enterprises Went Public

In 2020, six companies in the logistics industry, including Dada Group, ZTO Express (Cayman) Inc. and Shanghai Zhonggu Logistics Co., Ltd, completed IPOs on Nasdaq, the Stock Exchange of Hong Kong, and the Shanghai Stock Exchange. Most of the funds raised by these companies were used to purchase and upgrade logistics infrastructure equipment to further enhance service levels and strengthen competitive advantages. Table 2.11 shows the IPOs of selected Chinese logistics companies in 2020. Table 2.11 IPOs of selected logistics companies in China in 2020 Number

Time of IPO

Company name

Segment of the industry

Place of IPO

Amount raised

Use of proceeds

1

April

Asia-express Logistics Holdings Limited

Air cargo terminal operation services

Growth enterprise market of the stock exchange of Hong Kong

60 million HKD

The purchase of new trucks to expand and upgrade the transportation fleet, upgrade the information system, etc.

2

June

Dada Group

Instant local retailing and delivery platform

Nasdaq (USA)

386 million USD

For marketing programs and expanding user base, technology, R&D, and other general corporate purposes

3

August

HICHAIN logistics Co., Ltd

Integrated logistics services for the electronic information sector

Growth enterprise market of Shenzhen stock exchange

1.024 billion RMB

The new automated warehouse project, Phase I construction project of the Hefei intelligent logistics base, the Shenzhen R&D center project, etc. (continued)

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2 The Development of China’s Logistics Market

Table 2.11 (continued) Number

Time of IPO

Company name

Segment of the industry

Place of IPO

4

September

Furande Co., Ltd

Steel logistics Shanghai supply chain stock services exchange main board

5

September

Shanghai Domestic Zhonggu container Logistics Co., shipping Ltd

Shanghai stock exchange main board

Amount raised

Use of proceeds

817.5 million RMB

Project to upgrade marketing network and information management platform, the product upgrade and optimization project of Chongqing and Shanghai processing and distribution centers, the construction project of Ningde and Wuhan processing and distribution centers

1.479 billion RMB

Container vessel and container acquisition projects, including acquiring six 1900 TEU container vessels and 82,000 TEU containers (continued)

2.3.4.3

Logistics Enterprises are Actively Issuing Asset Securitization Products

In recent years, issuing asset securitization products has become an important means of financing for Chinese logistics enterprises, encouraged by the government’s development of asset securitization. In April 2020, the China Securities Regulatory Commission (CSRC) and the National Development and Reform Commission jointly issued the “Notice on Promoting the Pilot Projects of Real Estate Investment Trusts (REITs) in the Infrastructure Sector”, which specifically proposed to prioritize

2.3 Major Characteristics of China’s Logistics Market

49

Table 2.11 (continued) Number

Time of IPO

Company name

Segment of the industry

6

September

ZTO Express Express (Cayman) Inc delivery logistics

Place of IPO

Amount raised

Use of proceeds

Main board of the stock exchange of Hong Kong

9.81 billion HKD

Mainly used for infrastructure and capacity development, empowering network partners, enhancing network stability, and investing in the logistics ecosystem

pilot projects of Real Estate Investment Trusts (REITs) in constructing warehousing and industry infrastructure. In 2020, four logistics enterprises issued different kinds of asset securitization products, with total financing close to RMB 5 billion. Table 2.12 shows the asset securitization products issued by logistics enterprises in 2020. Table 2.12 Asset securitization products issued by logistics enterprises in 2020 Number

Company

Product type

Scale of distribution

Underlying assets

1

GLP Group

Asset-Backed Security (ABS)

1.902 billion RMB

GLP Group’s high-standard storage facilities in Shanghai and Guangzhou

2

BLOGIS

Commercial Mortgage Backed Notes (CMBN)

1.4 billion RMB

BLOGIS’s four logistics parks in Chengdu, Wuxi and Wuhan

3

Cainiao Network Technology

Real Estate Investment Trusts (REITs)

885 million RMB

Cainiao Logistics’s Chengdu warehouse

4

VX Logistic Properties

REITs-like products

573.2 million RMB

VX Logistics Properties’ quality logistics warehouse real estate in several cities including Ningbo and Shanghai

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2 The Development of China’s Logistics Market

2.3.5 Speeding Up the Digital Restructuring of Logistics 2.3.5.1

The Logistics Industry Expands the Applications of the BeiDou System

In recent years, China’s logistics industry has continued to expand the applications of the BeiDou system,9 using it to empower the industry technologically and improve the industry’s service level. As of October 2020, about 6.99 million vehicles operating on the road, accounting for 96% of the total vehicles in operation, have been installed with the BeiDou system. 31,400 postal express vehicles have been installed with the BeiDou system, accounting for 88% of all postal express vehicles in operation. 1369 government ships have been installed with the BeiDou system, accounting for 75% of the total. Meanwhile, the first freight airplane has also been installed with the BeiDou system, achieving a zero breakthrough. In 2020, the port of Tianjin utilized the BeiDou system to upgrade their traditional container terminals, operating driverless container trucks 24 h a day. This was the first time the BeiDou system had been used to automate a container terminal in China. Since the upgrade, the overall operational efficiency of the terminal has increased by nearly 20%, and comprehensive operating costs have decreased by 10%.

2.3.5.2

Accelerating Digitalization in Shipping and Air Cargo

In shipping, China COSCO Shipping Co., Ltd. is vigorously promoting digitalization. In July 2020, COSCO Shipping Group signed a three-party strategic cooperation agreement with Alibaba Group and Ant Group to jointly promote strategic integration in shipping, ports, logistics, and finance using blockchain technology, offering a platform for upstream and downstream collaboration of the industry. During the 2020 “Singles Day” period, COSCO Shipping completed the first domestic paperless bill exchange and pick-up process for e-commerce import goods with the Shanghai International Port Group and Worldwide Logistics Group, shortening the business process from 1–2 days to just a few minutes on the Shanghai International Port Group’s electronic platform. In air logistics, e-freight is a key development trend; however at present, domestic air logistics information technology has not yet adapted to the requirements of the growing air cargo business. Hence, in May 2020, the Civil Aviation Administration of China launched a pilot air e-freight project at Zhengzhou Airport, and in December 2020, the Zhengzhou Airport air e-freight information service platform was launched. The platform is the first official air e-freight information service platform in China, with four core functions: government supervision, statistics query, public services, 9

The BeiDou system, or the BeiDou satellite navigation system in full, is a satellite navigation system independently built and operated by China. It is an important national space infrastructure that provides 24-h, all-weather, high-precision positioning, navigation and timing services to users worldwide.

2.4 Summary

51

and value-added services. In 2020, several airlines also expanded their application scope and use rate of electronic waybills.

2.3.5.3

Unmanned Distribution Methods Are Increasingly Being Used

During the 2020 COVID-19 pandemic, logistics companies faced labor shortages and customers faced the risk of infection through contacts with delivery personnel, causing companies to speed up the use of unmanned delivery methods. For example, during the pandemic, SF Express operated drones in five cities, including Wuhan and Harbin, for a total of 32 days, making over 3000 flights, and covering nearly 13,000 km of flight distance, delivering over 11 tons of anti-pandemic materials. Keenon Robotics, a Shanghai-based intelligent service robotics company, dispatched nearly 200 delivery robots to more than 100 hospitals and quarantine areas in more than a dozen provinces, including Hubei and Guangdong. Each robot provided contact-free delivery services for an average of 20 wards. White Rhino Auto, a Beijing-based unmanned delivery firm focused on logistics and delivery, helped deliver medical supplies to a Wuhan makeshift hospital using its unmanned vehicles for 18 days, delivering more than 1000 medical supply items, and serving more than 400 patients. The company’s unmanned vehicles also provided fresh food delivery services to residents of a driverless demonstration area in Beijing’s Haidian District for 109 days.

2.4 Summary This chapter introduces the domestic and international environments for the development of China’s logistics industry, the overall scale of the logistics market, and its key development characteristics in 2020. Severely hit by the COVID-19 pandemic, the world economy fell into a deep recession in 2020, with global merchandise trade plummeting and the circulation of the global supply chain severely disrupted. Although China was the first to be hit by the pandemic, under the strong leadership of the Chinese government and the concerted efforts of its people, the country quickly contained the pandemic’s spread, and its economic performance improved quarter by quarter. Its economic output reached a new historical high of RMB 100 trillion. Its consumer market steadily recovered, and its foreign trade grew against the trend. The Chinese government continues to promote a high level of institutional openness, to ensure China’s mutually beneficial cooperation with other countries. Although the COVID-19 pandemic had a serious impact on China’s logistics market in 2020, the market generally achieved stable operation due to the strong domestic containment of the pandemic, leading to a steady economic recovery. Total social logistics value and total social logistics expense both achieved modest growth, but their year-on-year growth rates dropped to some extent. The ratio of

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total social logistics expense to GDP remained the same as in the previous year. Freight volume and freight turnover continued to rebound after a sharp decline at the start of the year, finally recovering to 2019 levels. Port cargo throughput and container throughput achieved counter-trend growth, airport cargo and mail throughput declined significantly, and the express business volume maintained high growth. In 2020, China’s logistics market withstood the severe test brought about by the COVID-19 pandemic, and market operations remained generally stable. Logistics, as a basic industry for social operation fully unleashed its role in protecting the national economy in the urgent and critical fight against the pandemic. The pandemic also led to increased competitive pressure on logistics enterprises, and intensified competition in the logistics market. Logistics enterprises generally responded actively to the challenges, accelerating the integration of industry resources, increasing capital market financing, accelerating digital transformation, and achieving new development in the crisis year of 2020.

References Civil Aviation Administration (2011–2020) Statistical bulletin on the productivity of national airports. http://www.caac.gov.cn/XXGK/XXGK/TJSJ/index_1214.html. Accessed 10 June 2021 CINIC (2021) Ministry of Industry and Information Technology explains the hotspots of the 2020 industrial communication industry. http://www.cinic.org.cn/xw/cjxw/1028136.html?from= singlemessage. Accessed 4 Feb 2021 General Administration of Customs of the People’s Republic of China (2021) Press conference on the annual import and export situation in 2020. http://fangtan.customs.gov.cn/tabid/1106/Def ault.aspx. Accessed 4 Jan 2021 IMF (2017–2020) World economic outlook. https://www.imf.org/en/publications/weo. Accessed 23 Mar 2021 Liu Q (2020) Global supply-chain restructuring under the pandemic. http://www.inewsweek.cn/ world/2020-03-18/8867.shtml. Accessed 18 Mar 2020 Ministry of Transport (2011–2019) Statistical bulletin of transportation industry. https://www.mot. gov.cn/fenxigongbao/hangyegongbao/. Accessed 19 May 2021 National Bureau of Statistics of China (2020a) China statistical yearbook. http://www.stats.gov.cn/ tjsj/ndsj/2020a/indexch.htm. Accessed 1 Sept 2021 National Bureau of Statistics of China (2020b). Statistical communiqué of the People’s Republic of China on the 2020b national economic and social development. http://www.stats.gov.cn/tjsj/ zxfb/202102/t20210227_1814154.html. Accessed 28 Feb 2021 National Development and Reform Commission and the China Federation of Logistics and Purchasing (2011–2020) The national logistics operations bulletin. http://www.clic.org.cn/wlt jwlyx/index.jhtml. Accessed 26 Feb 2021 State Post Bureau (2008–2020) Statistical bulletin of postal service industry. http://www.spb.gov. cn/sj/tjxx_1/. Accessed 19 May 2021 Su Q (2021) The far-reaching impact of the China-EU comprehensive agreement on investment. China Foreign Exchange, No. 1, 2021 WHO (2021). Coronavirus (COVID-19) dashboard. https://covid19.who.int/. Accessed 1 Jan 2021

Chapter 3

Logistics Facilities and Technological Development Fan Qin

In 2020, China planned and constructed its logistics infrastructure while containing and controlling the COVID-19 pandemic. It improved and upgraded logistics facilities and equipment, and made progress in its logistics informationization and standardization. In logistics channel construction, the country made remarkable progress in transportation infrastructure construction in the western and rural regions, while the “Ten Vertical and Ten Horizontal” (10V10H) comprehensive transportation channels continued to be constructed. New progress was also made in the construction of international transport channels. In logistics nodes construction, intelligent logistics parks (centers) are constantly being built. The pace of constructing railway logistics parks and bonded logistics parks in western China has accelerated. Warehouse facilities are moving toward large-scale, unmanned, professional operations. In logistics equipment applications, China has significantly improved the heavy-duty, intellectualized and greening levels of its transportation vehicles. The use of unmanned transportation vehicles and intelligent logistic parcel delivery lockers is now widespread. In logistics informationization, the national comprehensive logistics public information platform has been further improved. Many regional logistics information sharing and supervisory platforms related to pandemic control and prevention, as well as professional information platforms for pharmaceutical logistics were quickly launched online. In terms of logistics standardization, many logistics standards have been officially implemented in national basic informationization and professional logistics. Logistics standards that support greening and intellectualization are also being formulated. This chapter contains five sections. Section 3.1 depicts the new progress made in terms of China’s transportation infrastructures and comprehensive transportation system in 2020. Section 3.2 analyzes the new development characteristics and status of China’s logistics parks (centers) and warehousing facilities. Section 3.3 shows new practice characteristics with regard to the applications of logistics equipment in 2020. Section 3.4 presents the new achievements in China’s logistics informationization and standardization construction. Finally, Sect. 3.5 concludes the chapter with a summary. © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_3

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3 Logistics Facilities and Technological Development

3.1 Transportation Infrastructures In 2020, China accelerated the pace of its transportation infrastructure construction and perfected its network. Its road network structure was optimized, and its rapid transit network became denser (Ministry of Transport of the People’s Republic of China, Comprehensive Planning Department 2021). The land transport network was also expanded; waterway infrastructure continued to be constructed; more aviation logistics hubs were built and overall layout extended. The construction of comprehensive transportation channels in the western region made new progress. International transportation corridors in Northeast Asia and Southeast Asia are being built and making phased progress.

3.1.1 Highway Infrastructures 3.1.1.1

The Scale and Structure of the Highway Network

The total mileage of national highways reached 5.20 million km by the end of 2020, an increase of 185.6 thousand kilometers over the previous year, which is the largest increase in the road network scale since 2010. China’s road network density reached 54.15 km/100 km2 in 2020, an increase of 1.94 km/100 km2 over the previous year, and also the largest increase in road network density in the past decade. Figure 3.1 shows total highway mileage and highway network density for 2011–2020. In 2020, the mileage of Class II-and-above graded highways in China was 702.4 thousand kilometers, an increase of 30.4 thousand kilometers over the previous year, 90

5 4.11

4 3

4.24

4.36

4.46

4.58

4.7

4.77

4.85

5.01

5.20

70

54.15 49.72 50.48 52.21 46.5 47.68 48.92 42.77 44.14 45.38

60 50 40

2

30 20

1 0

80

Highway Network Density (km/100 km2)

Total Highway Mileage (Million km)

6

10 2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

0

Year

Fig. 3.1 Total highway mileage and highway network density, 2011–2020. Source Compiled from the China Statistical Yearbook for 2012–2020, published by the National Bureau of Statistics, the Statistical Bulletin of Highway and Waterway Transportation Industry (2011–2012), and the Transportation Industry Statistical Bulletin for 2013–2020, published by the Ministry of Transport of the PRC

3.1 Transportation Infrastructures

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accounting for 13.5% of the total mileage of national highways,—an increase of 0.1 percentage points. Expressway mileage was 161.0 thousand kilometers, an increase of 11.4 thousand kilometers over the previous year. Expressway lane mileage was 723.1 thousand kilometers, an increase of 53.6 thousand kilometers over the previous year.

3.1.1.2

Highway Construction in the Western Region and Rural Areas

In 2020, the road conditions in western China continued to improve, with 21 expressways running out of the Inner Mongolia region. Graded highways in Tibet reached a mileage of 688 km. The total mileage of Guizhou expressways exceeded 7,600 km. Expressways in 16 prefecture-level cities/autonomous prefectures and 110 urban county areas in Yunnan Province are now open to traffic (People’s Government of Yunnan Province 2021). The “three rings, four vertical and six horizontal” expressway network in the Ningxia Autonomous Region has almost been completed. Expressways in Xinjiang exceeded 5,500 km in mileage, heralding an era whereby all its prefecture-level cities/autonomous prefectures and towns are reachable by expressways (www.gmw.cn 2021). High-speed and Class I expressways exceeded 6,000 km in mileage, with nearly 17,000 km of Class II-and-above highways linking urban and rural areas in Gansu Province. Expressways in Shaanxi Province reached more than 7,000 km in mileage, with 29 inter-provincial exits. Expressways in Sichuan Province reached 8,140 km in mileage, with 38 major routes leading in and out of the province. The total mileage of national expressways in Guangxi reached 6,803 km, with 96% of counties connected to expressways. In 2020, China’s rural road network continued to expand in scale, with further construction in the “Four Good Rural Roads”1 project. By the end of 2020, the mileage of rural roads had reached 4.38 million kilometers, 181.9 thousand kilometers more than at the end of the previous year. This was the largest growth in three years, accounting for 84.3% of the total national highway mileage, an increase of 0.5 percentage points. Roads in counties, townships and villages increased by 81.1 thousand kilometers, 40.4 thousand kilometers and 60.4 thousand kilometers, respectively. Inner Mongolia constructed eight national and 15 autonomous region demonstration counties of “Four Good Rural Roads”. In Gansu, the total mileage of national highways including natural village group roads reached 192 thousand kilometers. In addition, 16 thousand kilometers of rural roads were newly constructed or reconstructed. In Chongqing, the total mileage of national highways reached 162 thousand kilometers, with 100% of incorporated villages now connected to surfaced roads.

1

The “Four Good Rural Roads” is a project to promote people’s livelihoods, a highly popular moral governance project proposed and promoted by President Xi Jinping in 2014, to “build, manage, protect and operate” rural roads.

3 Logistics Facilities and Technological Development

Total Meliage (thousand km)

150

10.0

146

9.0

145

7.0

135

120

6.1

131

130 125

8.0

139

140

6.0 5.0

127 124

5.0 4.0

3.1

2.5

3.0

2.4

Growth Rate (%)

56

2.0

115

1.0

110

0.0

2016

2017

2018 Year

2019

2020

Fig. 3.2 Total mileage and growth rate of operating railways, 2016–2020. Source Compiled from the Transportation Industry Statistical Bulletin for 2016–2020, published by the Ministry of Transport of the PRC

3.1.2 Railway Infrastructures 3.1.2.1

Scale and Structure of Railway Networks

In 2020, the scale of China’s railroad networks was further expanded. At the end of 2020, the national operating railroad mileage reached 146 thousand kilometers, an increase of 5% over the previous year. Of this, the operating mileage of high-speed railway (HSR) was 38 thousand kilometers, an increase of 8.6% over the previous year. The national railroad network density was 152.3 km/10,000 km, an increase of 6.8 km/10,000 km over the previous year. Figure 3.2 shows the total mileage and growth rate of operating railways for 2016–2020. In 2020, China continued to optimize its railroad network structure, with a gradual rise in double track rate and electrification rate. At the end of 2020, the national double track rate was 59.5%, an increase of 0.5 percentage points over the previous year. The electrification rate was 72.8%, an increase of 0.9 percentage points over the previous year (China State Railway Group Co., Ltd. 2021).

3.1.2.2

Railway Construction in the Western Region

In 2020, railroad construction in western China continued to advance. Many important railroads opened for operation, while the pace of railroad construction in Xinjiang was significantly accelerated. The Altay–Fuyun–Zhundong Railway in Northern Xinjiang was fully operational by December, enhancing the long-distance bulk freight capacity within the Xinjiang region. The third railroad corridor of Xinjiang, the Geku Railway (linking Golmud, Qinghai to Korla, Xinjiang) became fully operational, further enhancing logistics access between Xinjiang and other regions. In

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addition, the Dali–Lincang Railway, a key project for poverty alleviation in Yunnan in the 13th Five-Year Plan2 period, was officially opened in December. This railway is connected to the national high-speed railway network, adding another railway access route to southwest China.

3.1.2.3

High-Speed Railway

In 2020, many vertical high-speed railways in China went into operation. In June, the Shangqiu–Hefei–Hangzhou high-speed railway line went into full operation, achieving “seamless high-speed railway integration” between Henan, Anhui and Zhejiang Provinces. In December, an important component of the “eight vertical and eight horizontal” high-speed railway network3 from Hohhot to Nanning, the Zhengzhou–Taiyuan high-speed railway passenger line, was officially opened for operation, shortening the logistics transport time between southeast Shanxi, western Inner Mongolia, and east-central China. In the same month, the Yinchuan–Xi’an high-speed railway, an important part of the “eight vertical and eight horizontal” highspeed railroad network from Baotou (Yinchuan) to Haikou, was officially opened, further enhancing the logistics efficiency of western China. In December, the Beijing– Xiong’an Intercity Railway line was fully opened, further improving the logistics and transportation capacity of the Beijing–Tianjin–Hebei region. By the end of 2020, China’s high-speed railroad covered nearly 95% of cities with a population of over one million, with 65% of railroad passenger traffic carried by electric multiple units. The rapid development of the high-speed rail network has not only effectively improved railroad passenger capacity, but also provides solid infrastructure support for the development of the high-speed railway express business, further enhancing the freight capacity of the original general-speed rail lines, thus accelerating the restructuring of China’s freight transport.

2

The “13th Five-Year Plan” refers to the 13th Five-Year Plan for Economic and Social Development of the People’s Republic of China, covering the period of 2016 to 2020. 3 The “eight vertical and eight horizontal” high-speed railroad network is a short-term plan proposed in China’s Medium and Long-term Railway Network Plan, released in July 2016. The “eight vertical” channels include the coastal channel, the Beijing–Shanghai channel, the Beijing–Hong Kong (Taipei) channel, the Beijing–Harbin, Beijing–Hong Kong (Macao) channel, the Hohhot– Nanning channel, the Beijing–Kunming channel, the Baotou (Yinchuan) Haikou channel, and the Lanzhou (Xining)–Guangzhou channel. The “eight horizontal” channels include the Suifenhe– Manzhouli channel, the Beijing–Lanzhou channel, the Qingdao–Yinchuan channel, the Eurasia Continental Bridge channel, the Yangtze River channel, the Shanghai–Kunming channel, the Xiamen–Chongqing channel, and Guangdong–Kunming channel.

3 Logistics Facilities and Technological Development 68 67

66.3 66.4 66.2 66.4

66

64.9

65 63 62.3 61

67.3

65.4

63.7

64 62

66.7

62.6

50.1 50.3

51

59 57 55 53

52.7 52.2 52.3 52.1 52.3 52.4 51.6 51.8

51 49 47

60 59

Proportion in Total Mileage (%)

Mileage of Graded Inland Waterways (Thousand km)

58

45 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year

Fig. 3.3 Mileage of graded inland waterways and their proportion in total mileage, 2010–2020. Source Compiled from the Statistical Bulletin of the Highway and Waterway Transportation Industry (2010–2012), and the Transportation Industry Statistical Bulletin for 2013–2019, published by the Ministry of Transport of the PRC

3.1.3 Waterway Infrastructures 3.1.3.1

Scale and Grading of Inland Waterways

In 2020, the mileage of China’s inland waterways and the proportion of its graded waterways further increased. By the end of 2020, the mileage of the country’s inland waterways had reached 127.7 thousand kilometers, an increase of 387 km over the previous year, showing a growth rate of 0.3%, the fastest growth in five years. Of this, the mileage of the Pearl River system had increased by 280 km over the previous year. By the end of 2020, China’s graded inland waterways had reached 67.3 thousand kilometers in mileage, accounting for 52.7% of total mileage, an increase of 0.2 percentage points over the previous year. The mileage of Grade III-and-above waterways reached 14.4 thousand kilometers, accounting for 11.3% of the total mileage, an increase of 0.4 percentage points. The mileage of graded inland waterways and their proportion in total mileage for 2010–2020 are shown in Fig. 3.3.

3.1.3.2

Port Berths

In 2020, the number of China’s large berths continued to increase, enhancing the traffic capacity of coastal and inland river logistics nodes. By the end of 2020, there were 2,592 berths in national ports with a capacity of 10,000 tons and above, 72 more over the previous year. Of these, 2,138 were coastal berths with a capacity of 10,000 tons and above, an increase of 62; 454 were inland river berths with a

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3,000 2,520 2,592 2,366 2,444 2,317 2,221 2,138 2,110 2,007 2,076 2,001 1,894 1,948 1,886 2,000 1,807 1,762 1,704 1,661 1,517 1,607 1,422 1,500 1,343

No. of Berth (No.)

2,500

1,000 500 318

340

369

394

406

414

423

418

437

444

454

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year Berths at Inland Ports

Berths at Coastal Ports

Total Berths

Fig. 3.4 Port berths with capacity of 10,000 tons and above, 2010–2020. Source Compiled from the Statistical Bulletin of the Highway and Waterway Transportation Industry (2010–2012), and the Transportation Industry Statistical Bulletin (2013–2020), published by the Ministry of Transport of the PRC

capacity of 10,000 tons and above, an increase of 10. Figure 3.4 shows port berths with a capacity of 10,000 tons and above for 2010–2020. In addition, China continued to increase the specialization level of its port terminals in 2020. By the end of 2020, there were 1,371 specialized berths with a capacity of 10,000 tons and above nationwide, an increase of 39 berths compared with the end of the previous year. This further enhanced the professional operation capacity and logistics efficiency of China’s port terminals.

3.1.4 Civil Airports 3.1.4.1

Number of Civil Airports

In 2020, there were 241 freight airports in mainland China (excluding those in Hong Kong, Macau and Taiwan). Among these were 240 airports with scheduled flights. Three additional cities were also operating scheduled flights, bringing the total number to 237 (CAAC 2021). Airport distribution by region in 2020 is shown in Fig. 3.5.

3.1.4.2

Aviation Logistics Hubs of Logistics Enterprises

In 2020, the COVID-19 pandemic exposed the logistics shortcomings of China National Aviation Corporation (Group), Ltd. Hence, after the government had approved the construction of a civil airport in Ezhou, Hubei by S.F. Holding Co.,

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3 Logistics Facilities and Technological Development Xinjiang Region, 9.1% Northwest, 9.9%

North, 14.5%    

                                                                                                                                                                                                                                                       

Northeast, 10.8%

Southwest, 21.2% East, 18.7%

Central South, 15.8%

Fig. 3.5 Airport distribution by region in 2020. Source Compiled from the National Airport Productivity Statistical Bulletin (2020), published by the Civil Aviation Administration of China

Ltd. in 2018, the construction of aviation logistics hubs was accelerated to promote the aviation industry, through both policies and corporate practice, simultaneously accelerating aviation logistics development. The “Management Measures for China (Yunnan) Pilot Free Trade Zone” came into effect in March, proposing the building of an international aviation hub and an airport national logistics hub in Kunming. In June, while the civil airport in Ezhou, Hubei Province was being constructed, the Shanghai Yuantong Jiaolong Investment Development (Group) Co., Ltd. invested and signed a contract to construct a global aviation logistics hub in Jiaxing—the Dongfang Tiandi Port (Qiu 2020). In August, the National Development and Reform Commission and the Civil Aviation Administration of China (CAAC) jointly issued the “Opinions on Promoting the Development of Air Cargo Facilities” (the National Development and Reform Commission, CAAC 2020). It proposed building an air cargo hub network consisting of comprehensive hub airports and specialized cargo hub airports by 2025, further optimizing the layout with comprehensive hub airports and specialized cargo hub airports complementing each other by 2035.

3.1.5 Comprehensive Transportation Channels In 2020, China’s “Ten Vertical and Ten Horizontal” (10V10H) comprehensive transportation channels achieved significant progress, with the opening of several expressways and railroads on the comprehensive transportation channels traversing Xinjiang and Yunnan. These comprehensive transportation channels have improved logistics

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access between southeastern and western China, thus providing strong infrastructure support for promoting the Belt and Road Initiative. Meanwhile, in 2020, China continued its construction of international transport corridors, including: (1) in January, along the international transportation corridor in Northeast Asia an important section of the national and Inner Mongolia Autonomous Region trunk highway network—the China National Highway 331 from Wulan Aobao to Wuzhu’er—was completed and opened to traffic, effectively improving the logistics and transport conditions from Baotou to the border areas; (2) in April, along the international transportation corridor in Southeast Asia, the tracks of the ChinaLaos Railway from Yuxi to Mohan were laid; (3) in July, the Honghe to Yuanyang section of the Yuanman Expressway was opened for pilot operation, ending the era when the southern regions of the Honghe Hani and Yi Autonomous Prefecture were without any expressways; (4) in December, the Guangxi Chongzuo–Shuikou Expressway was completed and opened to traffic, turning into a golden corridor linking southwest China and the ASEAN countries.

3.2 Logistics Parks (Centers) and Warehousing Facilities By 2020, the construction of logistics parks (centers) in China was being steadily promoted. Logistics enterprises accelerated the construction of intelligent logistics parks (centers) and further enhanced the intellectualization of China’s logistics parks. The construction of cold-chain logistics parks was carried out in an orderly manner, and many hub-type cold-chain logistics bases were being built in western China. The construction of railway logistics parks and bonded logistics parks was accelerated in western China. Cold storage and unmanned warehouse also sped up their development and construction.

3.2.1 Development Status of Logistics Parks (Centers) 3.2.1.1

Intelligent Logistics Parks (Centers)

By 2020, with the rapid development of data and information technology such as the Internet of Things, big data, artificial intelligence, 5G, blockchain, etc., more intelligent logistics parks (centers) were gradually being built throughout China. E-commerce and large logistics enterprises, in particular, constructed or put into operation many intelligent logistics parks (centers), fostering the development of China’s intelligent logistics. For example, in June, Huawei Technologies Co., Ltd., China Mobile Limited, Yunnan KSEC International Trading Co, Ltd. and Beckhoff Automation Co., Ltd jointly announced the construction of China’s first 5G allscenario smart incubation base for new logistics facilities, to help quicken the digital transformation of the whole of society to 5G smart logistics. In October, JD Logistics

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Holding Limited constructed the largest logistics hub center in Central Plains, and officially opened the Zhengzhou Asia No. 1 Intelligent Logistics Park. By the end of 2020, JD Logistics had built 28 Asia No. 1 intelligent logistics parks across the country (Zhao 2020).

3.2.1.2

Cold-Chain Logistics Parks

In 2020, China accelerated the construction of cold-chain logistics parks. In June, a cold-chain storage and logistics trading center for lemons began construction in Wanzhou District of Chongqing. In July, the National Development and Reform Commission announced a list of 17 key national cold-chain logistics bases, including bases in Pinggu, Jinzhong, Bayannur, Yingkou, and Suzhou. In October, China started building the key national cold-chain logistics base in Bayannur.

3.2.1.3

Railway Logistics Parks in the Western Region

In 2020, significant progress was made in the construction of railway logistics parks in western China. In April, the largest integrated railway logistics park in western Inner Mongolia, the Wuhai North Railway Integrated Logistics Park, was completed and put into operation, strongly driving the economic development of the western part of the Inner Mongolia Autonomous Region. In November, the Qisumu International Logistics Hub and Railway Logistics Center opened for operation in Ulanqab, Inner Mongolia. In December, an important part of the Gansu (Lanzhou) International Land Port Logistics Hub, the Lanzhou Dongchuan Railway Logistics Center, was fully opened.

3.2.1.4

Bonded Logistics Centers

In 2020, a number of new bonded logistics centers in China were formally accepted after construction, or put into customs closure operation, and some existing bonded logistics centers were approved to participate in cross-border e-commerce. (1) In the Beijing-Tianjin-Hebei region, the first A-type bonded logistic center in Hebei Province—the Suning (A-type) Bonded Logistics Center—was officially put into operation. (2) On the Silk Road Economic Belt, the Chongqing Guoyuan (B-type) Bonded Logistics Center and the Qisumu (B-type) Bonded Logistics Center in Inner Mongolia were put into customs closure operation. The Guangxi Liuzhou (B-type) Bonded Logistics Center formally passed the acceptance test. (3) On the Yangtze River Economic Belt, the Jiangsu Nanjing Airport (B-type) Bonded Logistics Center and the Anhui Tongling (South of Anhui) (B-type) Bonded Logistics Center were put into customs closure operation. (4) On the Maritime Silk Road, the construction of Hainan’s first bonded logistics center—the Sanya (B-type) Bonded Logistics Center—was approved.

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As new bonded logistics centers went into operation, some existing bonded logistics centers began to gradually transform and upgrade themselves to support crossborder e-commerce. In August, the Jiangsu Xinyi (B-type) Bonded Logistics Supervisory Center for cross-border e-commerce successfully passed customs acceptance. A new business form began operation officially in this center. In November, the Yunnan Kunming High-tech (B-type) Bonded Logistics Center became the first batch of cross-border e-commerce industrial parks approved in Kunming.

3.2.2 Warehousing Facilities 3.2.2.1

Warehousing Area

In recent years, China’s warehouse investment has maintained a high growth rate due to the strong demand for quality warehouses in the domestic market. In 2020, a new batch of warehouses was built, with a total completion area of 26.89 million square meters, an increase of 13.96% over the previous year. The completed area and growth rate of China’s warehouses for 2013–2020 are shown in Fig. 3.6.

3.2.2.2

Cold Storage

In 2020, during the COVID-19 pandemic, cold-chain logistics played an important role in safeguarding people’s livelihoods and linking the global demand and supply for fresh food. Accordingly, the market demand for cold storage grew significantly. In 2020, the Ministry of Agriculture and Rural Affairs, together with the relevant departments, launched a construction project to build cold-chain logistics facilities 20.00 31.05

14.27

Warehouse Completed Area (million square meter)

30.00 25.00

11.32 25.07

28.65

27.04

28.05

31.09

13.99

10.68

26.89 23.59

10.00 5.00

3.75 0.14

20.00

15.00

0.00 -5.00

-5.64 15.00

-10.00 -15.00

10.00

Growth Rate (%)

35.00

-20.00 5.00

-24.13

0.00

-25.00 -30.00

2013

2014

2015

2016

2017

2018

2019

2020

Year

Fig. 3.6 The completed area and growth rate of China’s warehouses, 2013–2020. Source Compiled from data on the official website of the National Bureau of Statistics (http://data.stats.gov.cn/)

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for the storage and preservation of agricultural products. According to preliminary estimates, by the end of December 2020, the project would be supporting about 9,000 organizations operating new types of agriculture to build or renovate 14,000 new cold-chain storage and preservation logistics facilities in agricultural production areas, on a scale of more than 6 million tons (China Logistics Industry website 2020b). According to a survey in the “Analysis Report of the Global Cold-Chain Capacity Under COVID-19,” China’s cold storage area grew by about 10% in 2020.

3.2.2.3

Unmanned Warehouses

In 2020, guided by the Central Government’s policy to “accelerate new infrastructure construction”, a few unmanned warehouses were built and put into operation. The application scenarios of unmanned warehouses were becoming more abundant. The first unmanned warehouse for large items was officially opened in Qingdao Ririshun Logistics (Jimo) Industrial Park in June. This unmanned warehouse adopted artificial intelligence technology to realize 24-h, non-stop, light-free operation. In the same month, Suning Logistics Co., Ltd. officially put into operation its first 5G unmanned warehouse, the Suning Super Cloud-based Warehouse, in Nanjing’s Yuhua Logistics Base. It deployed automated systems, including AS/RS (Automated Storage and Retrieval System), Miniload, SCS, unmanned forklift, and AGV. In October, S.F. Holding Co., Ltd. launched a fully automated express transit hub in Tianjin. This hub runs fully automated, unmanned sorting operations, handling a maximum daily capacity of more than 1.5 million pieces, significantly improving sorting efficiency.

3.3 Logistics Equipment In 2020, China’s logistics equipment moved further toward heavy-duty, green, intellectualized, and unmanned operations. Its heavy-load transport capabilities were significantly improved, the number of new energy vehicles continued to grow, and its air cargo fleet continued to expand. The application ratios of environmentally friendly forklifts and packaging were on the rise, intelligent storage equipment was more widely used, and the use of 5G technology in unmanned port construction was being promoted. In particular, the COVID-19 pandemic has prompted a significant increase in the use of unmanned transportation and intelligent self-express service machines.

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3.3.1 Transportation Vehicles 3.3.1.1

Possession and Loading Capacity of Transportation Vehicles

In 2020, China’s various transport modes continued to develop toward heavy-duty loading. By the end of 2020, the country had 11.10 million freight trucks, an increase of 2.06% over the previous year, the fastest-growing year in the past five. The total load capacity of freight trucks reached 157.84 million tons, a year-on-year increase of 16.17%, also the fastest-growing year in the past five years. The average tonnage of freight trucks increased from 12.5 tons at the end of 2019, to 14.2 tons. Large truck tonnage accounted for 97.5% of the total tonnage of ordinary trucks, an increase of three percentage points (Ministry of Transport of the People’s Republic of China, Comprehensive Planning Department 2021). The number of freight ships continued to decline. China had 126.8 thousand freight ships in 2020, down 3.6% over the previous year (Ministry of Transport of the People’s Republic of China 2021). The net load capacity was 270.60 million tons, a year-on-year increase of 5.4%. The average net loading capacity of freight ships was 2,134.0 tons per ship, an increase of 9.3% (Ministry of Transport of the People’s Republic of China, Comprehensive Planning Department 2021). The number of owned freight trains continued to increase, reaching 912 thousand units, an increase of about 34 thousand units over the previous year, a year-on-year increase of 3.87%. Among them, the number of national freight trains was 857 thousand units (China State Railway Group Co., Ltd. 2021).

3.3.1.2

New Energy Transportation Vehicles

In 2020, there was a wider use of new energy transport vehicles in China. Some regions and enterprises significantly increased their new energy truck inventories, and progress was made in the use and promotion of new energy ships. By 2020, the number of domestic new energy trucks had reached about 500,000 (Wang 2021a). China Post greatly increased its new energy vehicle fleet, with more than 7,800 new energy vehicles in its network. Compared with the fuel consumption of normal vehicles, these bought or leased new energy vehicles reduced total fuel consumption by about 10.00 million liters from the 2017 level (Wang 2021b). From 2018 to 2020, Suzhou increased its new energy urban delivery vehicles by 5.3 times (China Logistics Industry website 2020a). As for the application of new energy ships, in September 2020, “Yuanhua Yang”, a new energy, environmentally friendly, anti-silt 319,000-ton VLCC (Very Large Crude Carrier) owned by COSCO Shipping Energy Transportation Co., Ltd, was delivered after construction. This is the largest deadweight tonnage vessel registered in China (China Ports 2020). In December, “Xiangshuiyun 26”, China’s first 10,000-ton dual-fuel container ship for direct transportation between river ports and seaports on specific routes safely berthed at the Shengdong Container Terminal of Shanghai Yangshan Port on its maiden voyage.

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3.3.1.3

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Application of Unmanned Transportation Vehicles

In 2020, after the COVID-19 outbreak, delivery robots, unmanned aerial vehicles (UAVs) and other unmanned delivery machines that support contactless delivery were rapidly brought in to maintain social distancing. During the pandemic, at least eight driverless vehicle manufacturers and service providers provided delivery services using driverless vehicles (China Federation of Logistics and Purchasing (CFLP) 2020). Driverless logistics vehicles were further used in ports. For example, in August 2020, the demonstration operation area of Chongqing Cuntan Bonded Port Airport Logistics Park completed the piloting of a driverless automated driving system for Qingling commercial logistics vehicles. In December, Tianjin Port was approved by the Tianjin Municipal Transportation Commission (TMTC) to build a driverless port demonstration zone. In order to construct the demonstration zone, Tianjin Port will form a fleet of more than 50 driverless vehicles. With respect to UAVs, some logistics companies continue to apply these to branch-line distribution, further expanding the application scope of these drones and achieving efficient linkage of logistics trunk and feeder lines. In August, S.F. Holding Co., Ltd.’s FH-98 large UAV completed its first cargo flight from Ningxia to Inner Mongolia. In the same month, Yunda’s X470 delivery drone, specially designed for 5G+ end-logistics, completed its first cargo flight in Zhejiang Province. In September, S.F. Holding Co., Ltd. launched its first delivery drones to transport seafood products in Zhejiang Province on a large scale. After the first logistics flight of its large UAV—“Jinghong”—in 2018, JD logistics developed a second branch-line UAV, the autogyro “Jingting,” which made its first successful flight in December.

3.3.1.4

Air Cargo Fleet of Logistics Enterprises

In 2020, in order to improve logistics services, some Chinese logistics enterprises, particularly express delivery enterprises with independent air logistics needs, continued to expand the size of their air cargo fleet. In 2020, SF Airlines, China Southern Airlines, China Post Airlines and five other airlines purchased a total of 14 all-cargo aircrafts. At the end of 2020, there were 186 cargo planes in China’s civil aviation industry.

3.3.2 Warehousing Equipment 3.3.2.1

Forklift

In 2020, China made significant progress in the use of the electric forklift. 410.27 thousand units of electric forklifts were sold that year (as shown in Fig. 3.7), accounting for 51.3% of total forklift sales, up from 49.1% in 2019, an increase of 2.2 percentage points.

Sales (Thousand units)

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900 800 700 600 500 400 300 200 100 0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Electric forklift 83.21 80.03 88.94 110.22 120.12 141.53 203.65 281.10 298.64 410.27 Internal-combustion forklift 230.64 208.63 239.82 249.40 207.51 228.54 293.09 316.06 309.70 389.97

Fig. 3.7 Sales of electric forklifts and internal-combustion forklifts made in China, 2011–2020. Source Compiled from data in China Construction Machinery Industry Yearbook (2012–2021), published by CNCMA (China Construction Machinery Association) and wind.com (https://www. wind.com.cn/)

3.3.2.2

Packaging

In 2020, various departments of the Chinese government introduced green packagingrelated policies. Many logistics enterprises, especially express delivery enterprises, also advanced the development of green logistics, by using eco-friendly packaging materials, reducing package volume, and recycling. On a policy level, in October 2020, in order to manage green express packaging in an orderly manner, the State Administration for Market Regulation and the State Post Bureau jointly issued the “Directory for Green Express Packaging Certification (the first batch)” and the “Regulations for Green Express Packaging Certification”. Packaging boxes, tape, and eight other kinds of widely used products were included in the first batch of the green express packaging certification directory. In December, the National Development and Reform Commission, the State Post Bureau, and six other departments jointly issued “Opinions on Accelerating the Transformation to Green Express Packaging”. The Opinions proposed to prohibit double packaging in 85% of e-commerce express items by 2022, and to use recyclable express packaging in 7 million items. Furthermore, to achieve green transformation, China aims to eliminate double packaging for e-commerce express deliveries, and to intensify its application of recyclable express packages to 10 million by 2025. The municipality of Shanghai and the provinces of Shandong, Shanxi, Guangdong, Shaanxi, Jiangsu, and Xinjiang have also introduced relevant policies to support the greening of logistics packaging. In industrial practice, China Post utilized green packaging in more than 50,000 outlets in 2020 (China Post 2021) and established a basic recycling system for recyclable postal boxes. Compared with 2017, China Post reduced the use of disposable woven bags by several billion in 2020 (Wang 2021b). In September, Cainiao Guoguo was the first to use environmentally friendly bags in Beijing, Guangzhou and Hangzhou, woven from renewable raw materials to achieve “green shipping”.

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Compared with other delivery bags of the same size, the production of each environmentally friendly bag uses 4.4 g less plastic, while reducing carbon emissions by 11.69 g (Southcn.com 2020). In 2020, SF Express promoted the use of “FengBOX” recycling boxes in Ningxia. YTO Express used 6.5 million recyclable transit bags during the “Double 11”. By the end of 2020, ZTO Express was sealing more than 90% of its packages with “slim tape narrower than 45 mm”, did not pack more than 80% of its e-commerce express parcels twice, and had more than 21,000 waste recycling stations at end outlets. Recycled transit bags are now used routinely in every operating stage of Suning Logistics Co., Ltd.

3.3.2.3

Intelligent Logistics Facilities

In 2020, intellectualized facilities were being increasingly used in China’s warehousing, loading and unloading, and handling. 5G communication, automated sorting, automated handling, and other technologies were increasingly employed in a wider range of applications. In 5G communication technology, in August 2020, Tianjin Petrochemical used driverless forklifts integrating “5G + robotics” to achieve unmanned handling for the first time in China’s petrochemical industry. From 2019 to 2020, Suning integrated “5G end-module—park logistics MEC (multi-access edge computing)—core network—services” in its cloud-based warehouse in Nanjing’s Yuhua District. In automated sorting, the Jingnan transit center of ZTO Express went into operation in November 2020 with a fully automated sorting line, processing more than 5 million parcels per day (Zhu 2021). During the “Double 11”, the Tibet Post Department (TPD) used “small-item sorter + matrix balance” automated sorting facilities for the first time to achieve full clearance, zero backlog, zero delay, and zero damage. In automated handling, by the end of November 2020, domestic market shipments of natural navigation AGV/AMR (Automated Guided Vehicles/Autonomous Mobile Robots) had reached about 2,800 units, with an annual growth rate of about 86%, and a market size of about RMB 560 million (Mobile Robot And AGV/AMR Industry Alliance of China, Hangzhou Iplus Mobot Technology Co., Ltd, New Strategic Mobile Robot Industry Research Institute 2020). Figure 3.8 shows China’s natural navigation AGV/AMR sales scale and sales volume for industrial applications from 2017 to 2020. In the field of intelligent manufacturing, mobile machinery is the key to achieving efficient operation of intelligent material transport, warehousing, sorting and handling operations. According to the survey in the “Research Report on the Development of Natural Navigation AGV/AMR Industry in Industrial Manufacturing, 2020–2021”, intelligent conveying, intelligent warehousing, and intelligent sorting and handling accounted for 12%, 10% and 8% of intelligent manufacturing solutions, respectively, and 30% overall, with a significant impact on the overall system solutions. Figure 3.9 shows the market segmentation of intelligent manufacturing system solutions in 2020.

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1,000

3,000 2,500

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Fig. 3.8 China’s Natural Navigation AGV/AMR Sales Scale and Sales Volume for Industrial Applications, 2017–2020. Source Mobile Robot And AGV/AMR Industry Alliance of China, Hangzhou Iplus Mobot Technology Co., Ltd, New Strategic Mobile Robot Industry Research Institute. Research Report on the Development of Natural Navigation AGV/AMR Industry in Industrial Manufacturing, 2020–2021. Accessed on 7 Dec 2020 Flexible assembly, 20%

Others, 13%

Automated Testing, 15%                                               

ERP, 9%

Digitalization of the processing, 13%

                                                                                                                                             

Intelligent Sorting and Handling, 8%

                

Intelligent Storage, 10%

Intelligent conveying, 12%

Fig. 3.9 The market segmentation of intelligent manufacturing system solutions in 2020. Source Mobile Robot And AGV/AMR Industry Alliance of China, Hangzhou Iplus Mobot Technology Co., Ltd, New Strategic Mobile Robot Industry Research Institute. Research Report on the Development of Natural Navigation AGV/AMR Industry in Industrial Manufacturing, 2020–2021. Accessed on 7 Dec 2020

3.3.2.4

“5G+” Unmanned Ports

In 2020, China continued to construct fully automated container terminals incorporating 5G technology, while promoting the use of 5G technology in the construction of unmanned ports, effectively enhancing the operational efficiency of Chinese ports.

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In May, the COSCO Shipping Group, China Mobile, and Dongfeng Group jointly built China’s first 5G all-scenario smart port which was put into operation in Xiamen Ocean Gate Terminal. The smart port uses 5G networks and “driverless” container trucks to greatly improve the overall operational efficiency of the automated terminal. The automated terminal saves 25% more energy and reduces carbon emissions by more than 16% compared with conventional terminals (Xie 2020). In August, the first 5G smart port in the Guangdong-Hong Kong-Macao Bay Area, the Mawan Smart Port of Shenzhen, Guangdong, achieved full 5G network coverage and driverless container truck automation.

3.3.2.5

Intelligent Self-Express Service Machines

In 2020, the use of contactless delivery at terminal points quickly gained popularity during the COVID-19 pandemic. As a contactless end-terminal delivery logistics facility, intelligent self-express service machines are widely accepted and widely used in community logistics. By the end of 2020, China had built 114,000 express endterminal public service stations and 400,000 intelligent self-express service machines (The Chinese Academy of Industry Economy Research 2021).

3.4 Logistics Informationization and Standardization In 2020, China’s logistics informationization continued to advance, with significant progress made in the construction of national, regional and specialized logistics information platforms. China Transport Telecommunications & Information Center’s waterway traffic information service platform went officially online on the national transportation logistics public information platform (“National Public Information Platform for Transport and Logistics,” English logo “LOGINK”). Six types of transportation e-license information platforms achieved interoperability in the Yangtze River Delta region. The construction of regional cold-chain logistics supervisory platforms and regional industry-chain information platforms to help contain the COVID19 pandemic has been accelerated significantly. New progress has been made in the construction of specialized logistics information platforms in the fields of medicine, ports of entry, and freight transport. In logistics standardization, a number of national basic and professional logistics standards have been issued, or are being formulated.

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3.4.1 Development of Logistics Informationization 3.4.1.1

National Logistics Public Information Platform

In 2020, China continued to advance the construction of a comprehensive national logistics public information platform, and improved its service level. As a main task and key project of the State Council’s “Medium and Long-term Plan for Developing the Logistics Industry (2014–2020),” in January, the national transportation logistics public information platform officially launched China Transport Telecommunications & Information Center’s waterway traffic information service platform (www. myships.com). The platform is based on the principle of win–win cooperation in the building of shipping data ecology, will further promote and develop integrated water transportation, and help the transformation and upgrading of the shipping industry. In September 2019, the Ministry of Transport of the People’s Republic of China drafted the “Implementation Plan on Accelerating and Promoting the Application of Road Freight E-Licenses to Enhance Digital Services and Supervisory Capacity (a draft for comments)”. This lays out the general plan for popularizing and promoting e-licenses for road freight transport, and requires the construction and improvement of the e-certificate system for road transport. Based on the Plan, in August 2020, the transportation and government authorities of Zhejiang, Jiangsu, and Anhui Provinces, and the municipality of Shanghai jointly issued a “Notice on Mutually Recognizing Transportation E-licenses in the Yangtze River Delta Region.” On September 1, 2020, the first phase of six types of transportation e-licenses was launched. The Notice specifies that the transportation departments of the three provinces and Shanghai must mutually recognize legally approved transportation e-licenses issued by the provincial or municipal governments. This Notice will enhance the overall logistics efficiency of the Yangtze River Delta region.

3.4.1.2

Regional Logistics Information Platforms

In 2020, due to frozen food imports triggering several local cases of COVID-19, the key national cold-chain logistics hub cities actively promoted the construction of a cold-chain logistics supervisory platform to manage the traceability of coldchain food products. In November, “Yunzhisu”, the cold-chain food safety information traceability platform of Yunnan, went online officially, further strengthening the safety management of cold-chain food imports. In December, the traceability management platform for national cold-chain food imports was completed and put into operation. It was first put into trial operation in nine provinces and cities. In the same month, the Anhui cold-chain food traceability platform went online in trial operation. The informationization and traceability platform for cold-chain food imports in Hubei Province uses blockchain technology to provide full-range commodity information traceability for cold-chain food imports, warehouses, vehicles and personnel, as well as anti-pandemic information such as nucleic acid testing and disinfection.

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In the construction of industry-chain platforms in other fields, some regions have launched industrial supply-and-demand chain-matching platforms to reduce the impact of the pandemic on the enterprises’ supply chain, and promote the recovery and reconstruction of the industry chain. For example, in February 2020, Beijing officially launched the “Beijing Cloud Sharing Platform for the Industry Chain”. This platform provides online services for enterprises affected by the pandemic, offering online demand and supply submissions, demand and supply searches, and the checking, tracking and submissions of demand information status, to help protect Beijing and the rest of China from COVID-19 outbreaks, and to promote efficient resource sharing in the industry chain. In the same month, the online matching platform for the production and marketing of fresh agricultural products for Shandong Province was launched in Jinan, aiming to help build a fresh agricultural products supply system, so as to guarantee the sales of these products under pandemic control measures and alleviate the problem of stagnated local sales due to supply-chain mismatches. In June, the Beijing information platform for vegetables brought in from other provinces went online, offering information linkages to strengthen interregional communication, establish supply and marketing channels, and ensure the steady supply of vegetables and other essential goods in the capital.

3.4.1.3

Professional Logistics Information Platforms

In 2020, further progress was made in the use of China’s pharmaceutical, port of entry, freight, recycling and other types of specialized logistics information platforms. This not only helps China’s epidemic prevention and control, but also provides good platform infrastructure support for the development of China’s smart logistics. In the field of pharmaceutical logistics, Jointown Pharmaceutical Group Co., Ltd. took over the management of the Wuhan Red Cross’s donated resources in January, solving the problem of operating the domestic Red Cross warehouses. In November, Guizhou Province officially launched the “Quality Traceability Service Platform for Chinese Herbal Medicine” to promote the quality and efficiency of the province’s Chinese herbal medicine industry. In port logistics, a number of ports of entry launched comprehensive online service platforms to provide one-stop information services. In July, Xiamen Customs in Fujian Province launched a customs clearance and insurance assessment platform, “Customs e-Protection”, which analyzes past customs clearance data using big data and cloud computing to provide decision-making support for import and export enterprises and facilitate “tax payment after release.“ In September, the comprehensive online service platform of Beijing cross-border e-commerce pilot zones was officially launched, providing one-stop services for market players such as crossborder e-commerce comprehensive service enterprises, logistics service enterprises, and financial service enterprises. In October, the Zhejiang integrated sea container service platform went online in the northern Zhejiang region (Huzhou, Jiaxing),

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allowing visualization of the entire logistics process, from freight forwarder declaration to container loading of the freight ship. This platform offers a variety of business services covering sea, rail, feeder lines, inland waterways, and highway transport. In freight transport, the Shandong Jinan International Inland Logistics Information Exchange and Settlement Center was launched in November 2020. Through its online freight platform, the center offers logistics transportation, warehousing, logistics trade, and other related industrial services for Shandong Province and the rest of China. In December, Fujian Province’s Xiamen “single window” international trade platform for aviation electronic export goods, and Henan Province’s Zhengzhou Airport information service platform for aviation electronic goods went online. In addition, in recycling logistics, China’s first online battery recycling platform was launched in Hunan in April 2020, offering a comprehensive used battery recycling solution for the entire industry chain. This will contribute greatly to the development of green logistics in China.

3.4.2 Status of Logistics Standardization 3.4.2.1

Compilation of National Fundamental Logistics Standards

In 2020, China formulated, revised, promulgated, and implemented a number of national basic logistics standards in the fields of logistics services, logistics operations, and logistics informatization. It began formulating service standards, particularly in reverse logistics and intelligent logistics, and has started to implement, formulate or revise national standards in logistics operations to regulate the use of new energy and automated vehicles. This will further promote the greening and intellectualization of logistics. In logistics informationization, China has begun formulating the “Technical Specifications for Interfaces in Logistics Robotics Control Technology”. The national standard “Technical Specifications for Standardizing Logistics Robotics Information System”, which was being formulated, passed review. This will effectively fill the gap in logistics robotics standardization, which will be of great significance to the high-quality, standardized development of China’s logistics robotics industry, promoting the widespread use and application of logistics robots. With the release of the “Specifications for the Regulatory Data Access of intelligent mail & parcel locker and intelligent self-express service machine”, the application data for intelligent mail & parcel lockers and intelligent self-express service machines will gradually be standardized in their management and use.

3.4.2.2

Compilation of Professional Fundamental Logistics Standards

In 2020, China implemented, promulgated, developed and revised a number of professional logistics standards in the fields of cold-chain logistics, e-commerce

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logistics, emergency logistics, and hazardous materials logistics. In emergency logistics, many emergency logistics-related standards have been formulated, such as the “Basic Requirements for Integrated, Multi-level Emergency TMS at End-Terminal” and “Design Guide for Labeling Emergency Logistics Materials.” In cold-chain logistics, China’s first national standard in e-commerce cold-chain distribution, “Specification of E-Commerce Cold-Chain Distribution Service Management,” was released in December, providing technical and operational standards for building a quality management system for e-commerce cold-chain logistics distribution services. In addition, in July 2020, the State Administration for Market Regulation and seven other departments jointly issued the “Guiding Opinions on Strengthening the Standardization of Express Green Packaging”, to assist China’s express green packaging work. This helped to advance standardization of green express packaging, fully supporting the key role that standardization plays in the development of the green express industry, promoting the efficient use of express packaging resources, and reducing packaging consumption and environmental pollution.

3.5 Summary This chapter discusses China’s development from the perspective of logistics facilities and relevant logistics technologies and standards in 2020. In 2020, China continued to promote the construction and applications of logistics facilities and equipment, logistics-related standards, and information platforms. These have not only provided the necessary hardware support to fight COVID-19, but also ensure the rapid development of China’s logistics industry: (1) In transportation infrastructure construction, the country continues to optimize its highway network structure. Road conditions in the western and rural areas have continued to improve. The network of railroad trunk lines have expanded, and many new high-speed railway lines have opened for operation. The mileage of inland waterways has increased rapidly, port berths being further improved, moving toward larger-scale and more professional operations. Aviation logistics hubs are constantly being built. Significant progress has been made in the construction of the “Ten Vertical and Ten Horizontal” (10V10H) comprehensive transportation channels and international transportation channels. (2) As for logistics park (center) and warehouse facilities construction, China has made progress in the building of intelligent logistics parks, cold-chain logistics parks, railway logistics parks, and bonded logistics parks. It has also made rapid strides in the fields of cold storage and unmanned warehouses, two types of warehouses that require more professional construction technologies. (3) in terms of logistics equipment applications, more green, intelligent transport vehicles have been adopted with high load capacity in logistics operations. The use of two types of environmentally friendly logistics equipment has increased: the electric forklift and green packaging. The application scenarios for intelligent logistics equipment have

References

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gradually expanded. (4) With respect to logistics informationization and standardization, China has constructed various logistics platforms, actively promoting emergency pandemic management and logistics information management. Many national logistics standards and professional logistics standards have been promulgated and implemented.

References CAAC (2021) Statistical bulletin on the productivity of national airports in 2020. http://www.caac. gov.cn/XXGK/XXGK/TJSJ/202104/t20210409_207119.html. Accessed 9 Apr 2021 China Federation of Logistics and Purchasing (2020) Suning logistics releases the “White Paper on Innovative Demonstration in 5G Smart Logistics”. http://www.chinawuliu.com.cn/zixun/202 008/19/521586.shtml. Accessed 19 Aug 2020 China Logistics Industry Website (2020a) New prospect for new energy logistics vehicles: is Suzhou the next breakthrough point? https://www.z56c.com/qiche/xinnengyuan/2912.html. Accessed 17 Dec 2020a China Logistics Industry Website (2020b) 14,000 new and reconstructed cold-chain logistics facilities for storage and preservation to be built by the end of the year. https://www.z56c.com/lin glian/2020b/1215/2687.html. Accessed 15 Dec 2020 China Ports (2020) The naming and delivery of COSCO shipping energy’s 319,000-ton VLCC, the Yuanhua Liner. http://www.chinaports.com/portlspnews/6033. Accessed 24 Sept 2020 China Post (2021) China post releases green development report. http://www.chinapost.com.cn/ html1/report/2103/633-1.htm. Accessed 2 March 2021 China State Railway Group Co., Ltd. (2021) Statistical Bulletin of China Railway Group Co., Ltd. in 2020. http://www.china-railway.com.cn/wnfw/sjfw/202104/t20210429_114598.html. Accessed 5 March 2021 Comprehensive Planning Department, Ministry of Transport of the People’s Republic of China (2021) Stable recovery, quality improvement and upgrading of the transport industry—interpreting the statistical bulletin of transportation industry in 2020. https://www.mot.gov.cn/2021zh engcejd/hangyetjgb_2021/index.html. Accessed 19 May 2021 Ministry of Transport of the People’s Republic of China (2021) Statistical bulletin of transportation industry in 2020. http://www.gov.cn/xinwen/2021-05/19/content_5608523.htm. Accessed 19 May 2021 Mobile Robot And AGV/AMR Industry Alliance of China, Hangzhou Iplus Mobot Technology Co., Ltd, New Strategic Mobile Robot Industry Research Institute (2020) Research report on the development of natural navigation AGV/AMR industry in industrial manufacturing, 2020–2021. Accessed 7 Dec 2020 National Development and Reform Commission, Civil Aviation Administration (CAAC) (2020) Opinions on promoting the development of air cargo facilities. http://www.gov.cn/zhengce/zhe ngceku/2020-09/04/content_5540595.htm. Accessed 24 Aug 2020 Qiu J (2020) Construction project on Jiaxing international aviation logistics hubs officially signed. Jiaxing Daily. N. http://jxrb.cnjxol.com/jxrbPaper/pc/layout/202006/17/node_01.html. Accessed 17 Jun 2020 Southcn.com (2020) Plastic use can be reduced by 4.4 g in a single express delivery! https://baijia hao.baidu.com/s?id=1677234240123579044&wfr=spider&for=pc. Accessed 8 Sept 2020 The Chinese Academy of Industry Economy Research (2021) Review and analysis of China’s logistics industry in 2020 and market forecast for 2021. https://www.askci.com/news/chanye/ 20210107/1544481332330_2.shtml. Accessed 7 Jan 2021 The People’s Government of Yunnan Province (2021) Notice on the issuance of the 14th fiveyear plan for national economic and social development of Yunnan Province and outlining the

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visionary goals for 2035. http://yn.yunnan.cn/system/2021/02/09/031283704.shtml. Accessed 19 Feb 2021 Wang J (2021a) Bottlenecks in commercializing new-energy logistics vehicles yet to be broken. https://www.z56c.com/qiche/xinnengyuan/4611.html. Accessed 4 Feb 2021a Wang X (2021b) China post’s green development report: 20,000 tons of paper saved in 2020 compared to the end of 2017. https://www.50yc.com/information/redian/18151. Accessed 4 Mar 2021b www.gmw.cn (2021) Xinjiang’s road network mileage exceeds 200,000 km, realizing “Every County Connected to Class II roads”. https://m.gmw.cn/baijia/2021-01/11/1302026092.html. Accessed 11 Jan 2021 Xie X (2020) The new dynamics of 5G: Xiamen ocean gate’s fully automated terminal is truly unmanned. http://fj.people.com.cn/n2/2020/1023/c181466-34369991.html. Accessed 23 Oct 2020 Zhao L (2020) Another large logistics hub constructed in Zhengzhou. Zhengzhou Daily. N. https:// zzrb.zynews.cn/html/2020-10/29/node_3.htm. Accessed 29 Oct 2020 Zhu J (2021) The 2021 express delivery industry: smoother, smarter and greener. Economic Daily. N. http://paper.ce.cn/jjrb/html/2021-01/20/node_9.htm. Accessed 20 Jan 2021

Chapter 4

Regional Logistics Market in China Yong Liu

In recent years, the coordination of China’s regional economic development has been enhanced, but the economic development of the Central and Western regions still lags behind that of the Eastern region, due to developmental foundations and other factors. Owing to this uneven economic development status, the differences in regional logistics development are still relatively pronounced, with different characteristics for each region. The most obvious traits are that the Eastern region is vigorously developing intelligent logistics, and leading the transformation and upgrading of the country’s logistics industry, while the Central and Western regions are focused on building a “channel + hub + network” logistics system to strengthen economic ties with Southeast Asia, Central Asia and the Southeast coastal regions of China. The Northeastern region is actively promoting the construction of an international logistics system for Northeast Asia. With the implementation of major regional strategies such as the Hainan Free Trade Port, the Yangtze River Economic Belt,1 and the new western land-sea corridors,2 the logistics industries of these hotspots are also developing rapidly. This chapter consists of three sections. Section 4.1 describes the developmental environment of China’s regional logistics market. Section 4.2 introduces the market demand scale and infrastructure development of provincial logistics, and summarizes the main characteristics of regional logistics markets in China. Section 4.3 introduces 1

The Yangtze River Economic Belt connects the Yangtze River Delta region, the middle reaches of the Yangtze River, and the Chengdu-Chongqing Economic Zone via the Yangtze River Golden Waterway. The Yangtze River Economic Belt covers 11 provinces and cities, which include more than 1/5 of China’s land area and more than 2/5 of China’s total population. 2 There will be three new land-sea corridors built in the Western region: Chongqing—Guiyang— Nanning—Beibu Gulf Port/Yangpu Port on the Northern coast; Chongqing—Huaihua—Liuzhou— Beibu Gulf Port/Yangpu Port; and Chengdu—Luzhou (Yibin) —Baise—Beibu Gulf Port/Yangpu Port, forming the main land-sea corridors in Western China. The new western land-sea corridors are located in the hinterland of Western China, connected to the Silk Road Economic Belt in the north, the 21st Century Maritime Silk Road in the south, and linked synergistically to the Yangtze River Economic Belt. They occupy important strategic positions in the regional coordinated development pattern. © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_4

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the logistics development status of three hotspots—namely, Hainan province, the Yangtze River Economic Belt, and the new land-sea corridors in Western China.

4.1 China’s Development Environment for Regional Logistics Markets In terms of the economic environment, China’s regional economy gradually resumed normal operations after being badly hit by COVID-19 in the first quarter of 2020. The Western region led the other regions in economic growth; the Eastern region maintained a faster economic growth rate by enhancing scientific and technological innovation and industrial upgrading; the Central and Western regions actively undertook industrial transfers, with certain provinces and cities experiencing faster growth in foreign trade exports. The Northeastern region has recovered economically and is developing well. In terms of the policy environment, a series of major, intensively implemented regional development strategies has continued to optimize China’s regional logistics infrastructure layout and improve its regional logistics service levels.

4.1.1 Regional Economic Operations Gradually Returned to Normal, with the Western Region Leading in Economic Growth Faced with the severe impact of COVID-19, Chinese provinces and cities coordinated pandemic prevention and control measures with economic and social development. Economic operations improved quarter by quarter, and gradually returned to normal. In 2020, there was positive growth in regional GDP for the four major regions3 : Eastern, Central, Western, and Northeastern China. In 2020, the GDP growth rate of the Eastern region4 was 2.97%, exceeding the national average growth rate by 0.67 percentage points in the same period. Hebei, Jiangsu, Shandong, Zhejiang and Fujian had faster growth rates of more than 3%; Guangdong’s growth rate was on par with the national level; while Shanghai, Tianjin and Beijing showed lower growth rates. The GDP growth rate in the Central region 3

The GDP growth rate of the four major regions excludes the price factor. It is a weighted average of the GDP growth rate for provinces and municipalities in the four major regions. The weight is the ratio of each province or municipality’s annual GDP to the total GDP of all regions in that province or municipality. 4 Eastern Region: Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan. Central Region: Shanxi, Anhui, Jiangxi, Henan, Hubei and Hunan. Western Region: Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang. Northeastern Region: Liaoning, Jilin and Heilongjiang.

4.1 China’s Development Environment for Regional Logistics Markets

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Table 4.1 GDP and growth rates of the four major regions in China, 2016–2020 Region

GDP (trillion RMB) 2016

2017

2018

Growth rate (%) 2019

2020

2016

2017

2018

2019

2020

Eastern

40.37

44.97

48.1

51.12

52.53

8.23

11.39

6.96

6.00

2.97

Central

15.91

17.94

19.27

21.87

22.22

8.23

12.76

7.41

6.88

1.34

Western

15.65

17.10

18.4

20.52

21.33

7.93

9.27

7.60

6.94

3.34

5.23

5.54

5.02

5.12

-9.52

5.93

4.69

4.17

1.13

Northeastern

5.68

Sources Compiled from the China Statistical Yearbook (2017–2020) and the Statistical Communiqué of the People’s Republic of China on the 2020 National Economic and Social Development, both published by the National Bureau of Statistics of China

was 1.34%, of which Hubei Province was the only province with a negative GDP growth rate due to being most badly hit by COVID-19. The GDP growth rate of the Western region was 3.34%, higher than that of the other three regions. Tibet, Guizhou and Yunnan provinces and autonomous regions ranked among the top three in the country in terms of growth rate. The regional GDP growth rate of the Northeastern region was still low at 1.13%; with the exception of Jilin Province, Liaoning and Heilongjiang were both below the national average in growth rate. In 2020, the GDP for China’s Eastern region was RMB 52.53 trillion, or 51.90% of the national total, up 0.03 percentage points year on year. GDP for the Central region was RMB 22.22 trillion, or 21.95% of the national total, down 0.24 percentage points year on year. GDP for the Western region was RMB 21.33 trillion, or 21.07% of the national total, up 0.25 percentage points year on year. GDP for the Northeastern region was RMB 5.12 trillion, or 5.06% of the national total, down 0.04 percentage points year-over-year. The GDP and growth rates of the four major regions in China for 2016–2020 are shown in Table 4.1.

4.1.2 The Eastern Region Transforms and Upgrades to Promote High-Quality Economic Development The Eastern region is accelerating its scientific and technological innovation. The China Regional Science and Technology Innovation Evaluation Report 2020 shows that its six provinces or cities, namely, Shanghai, Beijing, Guangdong, Tianjin, Jiangsu and Zhejiang, are in the top tier on the national comprehensive science and technology innovation index. The number of enterprises conducting research and development (R&D) in the Yangtze River Delta accounts for more than 40% of the national total, while the number of personnel engaged in R&D activities, expenditure on enterprise technology acquisition and transfer, number of invention patents, and export value of high-tech products account for more than 30% of the national total. Revenue from international technology made up nearly 50% of the national total (She 2020).

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The economic transformation of the Eastern region has made positive progress. First, the proportion of service industries has increased. In 2020, the value added service industries in Jiangsu, Zhejiang and Shandong Provinces accounted for 52.5%, 55.8% and 53.6% of GDP, respectively, an increase of 1, 1.2 and 0.8 percentage points, respectively from the previous year. Second, high-tech industries and other industries have increased their share in industrial output value. For example, the output value of high-tech industries in Jiangsu Province increased by 7.7% over the previous year, accounting for 46.5% of the total output value for enterprises above designated size,5 an increase of 2.1 percentage points over the previous year. The output value of emerging strategic industries rose by 11.0%, accounting for 37.8% of the total output value of enterprises above designated size, an increase of 5.0 percentage points over the previous year. The value added of the “three new industries” in Zhejiang Province—new industries, new business forms and new models— accounted for 27.0% of GDP. The value added of core industries in the digital economy was RMB 702 billion, up 13.0% over the previous year at comparable prices. The output value of high-tech industries in Shandong Province accounted for 45.1% of the output value of enterprises above designated size, 5.0 percentage points higher than in the previous year.

4.1.3 The Central and Western Regions Actively Promote Industrial Transfers, with Certain Provinces and Cities Experiencing Faster Growth in Foreign Trade Exports In recent years, the Central and Western regions have taken advantage of their low cost and geographic advantages to increase industrial transfers from the Eastern region. For example, Anhui Province has attracted many leading enterprises and key supporting enterprises, such as BOE and Visionox, through industrial transfers, forming a strong cluster for the new display industry. Hefei in Anhui Province has become an important national base for the new energy automobile industry, actively attracting projects from Weilai Automobile and Weltmeister. Guizhou Province has leveraged the big data industry after introducing the sector to the province and nurturing its development. Its regional GDP ranking in China has risen from 25th in 2015, to 20th in 2020. By undertaking industrial transfers, Yunnan Province has attracted many leading enterprises like Jinlong, the Tongwei Group and Jinko, forming a relatively complete silicon photovoltaic industry chain, ranging from silicon rods production to silicon wafers and cell modules. Foreign trade in the Central and Western regions, especially in the southwest, is growing at a relatively fast pace. In 2020, the export trade volume of Yunnan, Guizhou, Sichuan, Jiangxi, Anhui and Chongqing grew by 46.4%, 31.9%, 19.2%, 5

Above designated size industrial companies refers to industrial legal-person companies with an annual main operational income of more than 20 million yuan.

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17.0%, 13.5% and 12.8%, respectively over the previous year, far higher than the national average of 4.0%. In addition, fixed-assets investment has become an important means of stabilizing the economy in the Western region. To cope with COVID-19, China has increased investment in infrastructure projects, making the west a key investment region. In 2020, fixed-asset investment in the Western region grew by 4.4% year on year, ranked first among the four major regions. The increased fixed-assets investment will help the region to eliminate deficiencies in infrastructure construction, boost economic growth in relevant provinces and cities, and achieve the strategic goal of narrowing the regional development gap.

4.1.4 Economic Growth in the Northeastern Region is Still Slow, but Shows Positive Signs of Improvement In terms of economic growth, the Northeastern region is lagging behind the other three regions, with only Jilin Province’s economic growth rate exceeding the national average. However, the economic development of the Northeastern region is showing some positive signs of improvement. First, the momentum of industrial development is improving. In 2020, the value added by enterprises above designated size in Liaoning, Jilin and Heilongjiang provinces grew by 1.8%, 6.9% and 3.3%, respectively, with Jilin Province ranked first in the country and Heilongjiang Province exceeding the national average growth rate for the first time since 2013. Second, fixedasset investment is growing at a relatively fast pace. In 2020, the fixed-assets investment in Liaoning, Jilin and Heilongjiang provinces grew by 2.6%, 8.3% and 3.6%, respectively (Baidu.com 2021), with those of Jilin and Heilongjiang higher than the national growth rate of 2.9%. Third, by actively improving the business environment, Jilin has made efforts to fully implement the market access negative list system and promote reforms to streamline administration, delegate powers, and improve regulation and services. This has speeded up working practices, allowing government services to be accessed via a single website and offering one-stop services. In 2019, the Shenfu Reform and Innovation Demonstration Zone in Liaoning Province processed business start-up applications in 3.5 h. In April 2019, Harbin launched an initiative, requiring new officials to meet the commitments undertaken by their predecessors. As of April 2020, more than 2,000 of such cases have been looked into and rectified. Improvement in the business environment has strongly contributed to corporate investment growth, such as a 9.8% growth in private investment for Jilin Province in 2020, and a 17.6% increase in construction projects involving RMB 100 million or more for the same province (Liu 2021).

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4.1.5 Intensively Implementing Major Regional Strategies and Boosting the Construction of Regional Logistics Network In recent years, in order to promote high-quality coordinated regional development, China has put forward major regional strategies, such as the Coordinated Development of the Beijing-Tianjin-Hebei Region and the Yangtze River Economic Belt. In 2020, the “Guiding Principles on Advancing the Development of the Western Region in the New Era to Promote Coordinated Regional Development”, the “Overall Plan for the Construction of Hainan Free Trade Port”, and other regional policies were issued to help initiate major regional strategies. The intensive implementation of these major regional strategies will improve the spatial layout of China’s economic development, enhance the rational movement and effective concentration of factors of production, optimize the layout of regional logistics infrastructure, and improve regional logistics service levels. In May 2020, the Central Government issued the “Guiding Principles on Advancing the Development of the Western Region in the New Era to Promote Coordinated Regional Development”. These propose to strengthen the construction of open channels; actively implement the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI); improve the infrastructure of the Beibu Gulf Port; actively develop multimodal transport; accelerate the construction of railroads, highways, ports, logistics parks and connecting lines; enhance the transport capacity of railroad channels along the Yangtze River, and the port logistics assembly and distribution system; construct land-sea and air-rail intermodal transports, China–Europe Railway Express, and other organically synergized transport modes and major logistics corridors based around the Yangtze River Golden Waterway; optimize the organization and operation of the China–Europe Railway Express, and construct more hub nodes along these lines. In May 2020, the Ministry of Transport (MOT) of the People’s Republic of China issued the “Outline for the Development of Inland River Shipping”. The Outline proposes to build a high-quality national shipping network in the Yangtze River Delta and Pearl River Delta that can adapt to the integrated development of Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area, connecting them with major coastal ports to improve internal coordination and build a river-sea intermodal transport corridor for these regions. In June 2020, the Central Government of China issued the “Overall Plan for the Construction of Hainan Free Trade Port”. The Plan proposes to establish a more open and liberal shipping system and facilitate transport to ensure quality services. In October 2020, the Fifth Plenary Session of the 19th CPC Central Committee adopted the “Recommendations of the CPC Central Committee for Formulating the 14th Five-Year Plan for Economic and Social Development and the LongRange Goals for 2035”. The Recommendations propose to build a comprehensive national transport network through the key economic sectors, and to promote the transport integration of the Beijing-Tianjin-Hebei Area, the Yangtze River Delta,

4.2 The Current Status and Characteristics of China’s Regional Logistics

83

the Guangdong-Hong Kong-Macao Greater Bay Area, and Chengdu-Chongqing Economic Circle. This will be achieved by developing transit rail and expressways into a network of multi-nodes spanning the entire region, which can function as integrated hubs for international and domestic transport.

4.2 The Current Status and Characteristics of China’s Regional Logistics Due to the complex developmental environments at home and abroad, the growth scale in market demand for regional logistics has diverged, as represented by freight volume, freight turnover, cargo and mail throughput in civil airports, and business volume of the express industry. In order to foster logistics growth, each region will continue to develop its own transport infrastructure, and build more logistics parks and warehousing facilities. Each region of China has its distinct characteristics in logistics development. The Eastern region has human resource and technological advantages that have helped the upgrading of China’s logistics industry through the use of smart technology. The Central and Western regions have geographic advantages, since they are connected to the Eastern region, Southeast Asia and Central Asia, actively constructing a “channel + hub + network” logistics system that can provide good logistics support for the two-way opening-up of the Central and Western regions. The Northeastern region is actively constructing logistics hubs for Northeast Asia, and developing cross-border e-commerce logistics.

4.2.1 The Scale of China’s Market Demand for Regional Logistics 4.2.1.1

Freight Volume and Turnover

The proportion of freight volume and freight turnover in the Eastern region is higher than that in the other three regions. In 2019, the proportion of freight volume in the Eastern region was 38.38% compared to the national total, up 2.26 percentage points; the proportion of freight volume in the Central region decreased by nearly 5 percentage points as compared to the national total. The proportion in the Western region basically remained unchanged. In 2019, the proportion of freight turnover in the Eastern Region was 58.91% as compared to the national total, up 3.77 percentage points, while the proportion of the Central, Western and Northeastern regions all fell by varying degrees, as shown in Table 4.2.

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Table 4.2 Proportions of freight volume and turnover in China’s four major regions Freight volume (%)

Region

Freight turnover (%)

2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

Eastern

36.55

36.81

36.73

36.12

38.38

52.98

53.95

55.82

55.14

58.91

Central

29.01

28.96

29.46

28.85

24.12

21.77

21.41

20.39

19.97

18.53

Western

27.09

27.11

29.99

26.85

26.14

15.88

15.58

15.33

15.31

13.50

7.35

7.11

6.82

6.42

5.77

9.37

9.06

8.46

6.82

6.19

Northeastern

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

4.2.1.2

Cargo Throughput of Port

From 2016 to 2020, the cargo throughput of ports in the Eastern region continued to grow steadily, from 99.94 billion tons in 2016, to 118.27 billion tons in 2020, an average annual growth rate of 4.30%. The cargo throughput of ports in the Eastern region rose in 2020 by 4.34% year on year, as shown in Fig. 4.1. In 2020, the cargo throughput of Ningbo-Zhoushan Port was ranked first in the world for the 12th consecutive year, with cargo throughput hitting 11.7 billion tons. The Central and Western regions are dominated by inland river ports, such as those in the Yangtze River, Xijiang River, Jialing River and Hongshui River, with their numerous inland river ports. From 2016 to 2019, the cargo throughput of ports in these regions showed a downward trend, decreasing from 2,111.22 million tons in 2016, to 1,752.78 million tons in 2019. In 2020, driven by the relatively fast growth of port cargo throughput in Guangxi, Hubei and Jiangxi, the port cargo throughput in the Central and Western regions reversed the downward trend and grew by 147.26 million tons, up 8.40% year on year, as seen in Table 4.3.

Cargo Throughout (billion tons)

7.74

115.00

107.68

110.00 105.00 100.00

112.14

113.35

4.15

99.94 3.27

95.00

1.07

90.00 2016

2017

2018

2019

9.00 8.00 7.00 6.00 5.00 4.34 4.00 3.00 2.00 1.00 0.00 2020

Growth Rate (%)

118.27

120.00

Fig. 4.1 Cargo throughput and growth rates in ports above designated size in the Eastern region, 2016–2020. Sources Compiled from China’s Port Cargo and Container Throughput in December 2020, Port Cargo and Container Throughput above Designated Size in 2018, and China Port Yearbook (2017–2020), issued by the Ministry of Transport of the People’s Republic of China.

4.2 The Current Status and Characteristics of China’s Regional Logistics

85

Table 4.3 Cargo throughput at ports in the Central region and Western region, 2016–2020 (million tons) 2016

Province

2017

2018

2019

2020

Shanxi

0.16

0.19

0.23

–

–

Henan

2.22

1.78

0.64

1.73

3.82

Hubei

351.92

369.03

346.24

306.61

379.76

Hunan

316.78

291.97

243.43

153.37

135.80

Anhui

519.17

512.49

511.35

554.88

540.95

Jiangxi

310.75

281.14

244.88

159.71

187.55

Guangxi

320.76

344.49

378.66

379.16

469.13

Chongqing

173.72

197.22

204.44

171.27

164.98

94.77

87.30

56.85

19.09

13.60

Sichuan Guizhou

0.966

10.83

10.66

0.27

0.23

Yunnan

8.16

10.39

10.73

6.69

4.22

Shaanxi

3.15

2.86

2.73

–

–

2111.22

2109.69

2010.84

1752.78

1900.04

Total

Sources Compiled from relevant data on national port cargo throughput in the China Port Yearbook (2017–2020), and China’s Port Cargo and Container Throughput in December 2020, issued by the Ministry of Transport of the People’s Republic of China

4.2.1.3

Cargo and Mail Throughput in Civil Airports

In 2020, the cargo and mail throughput of civil airports in the Eastern region was much higher than that in the other three regions. The cargo and mail throughput of civil airports in the Eastern region was 11.68 million tons, 72.7% of the total, and much higher than that in the Central, Western and Northeastern regions, which were 1.37, 2.52, and 0.50 million tons, respectively, as shown in Table 4.4. In recent years, the growth rates of cargo and mail throughput in civil airports in the Central region have been gradually growing, showing its advantages. From 2016 to 2020, the average growth rate of cargo and mail throughput in the Central region Table 4.4 Throughput of cargo and mail in civil airports in China’s four major regions, 2016–2020 (million tons) Region

2016

2017

2018

2019

2020

Eastern

11.31

12.16

12.46

12.46

11.68

Central

0.96

1.03

1.13

1.25

1.37

Western

2.31

2.45

2.60

2.79

2.52

Northeastern

0.53

0.55

0.55

0.60

0.50

Source Compiled from the Statistical Bulletin of Nationwide Airports (2016–2020), published by the Civil Aviation Administration of China

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Table 4.5 Growth rates of cargo and mail in civil airports in China’s four major regions, 2016–2020 (%) 2016

Region

2017

2018

2019

2020

Average annual growth rate for 2016–2020

Eastern

6.44

7.47

2.50

−0.03

−6.22

0.81

Central

11.18

7.43

10.53

9.88

10.11

9.48

Western

8.83

6.07

6.13

7.55

−9.71

2.23

Northeastern

8.59

3.01

0.55

9.82

−17.38

−1.54

Source Compiled from the Statistical Bulletin of Nationwide Airports (2016–2020), published by the Civil Aviation Administration of China

was 9.48%, which was significantly higher than that in the other three regions, as shown in Table 4.5.

4.2.1.4

Business Volume of Express Industry

From 2016 to 2020, driven by the rapid development of e-commerce, the business volume of express delivery in China’s four major regions grew at a fast rate, with average annual growth rates of over 30%. The COVID-19 situation has led to more consumers being willing to purchase online, and the year-on-year growth rates of express business volume accelerated in all four major regions in 2020, with the growth rates in the Eastern, Central, Western and Northeastern regions being 5.60, 4.48, 8.22 and 16.24 percentage points higher, respectively, than those in 2019, as seen in Table 4.6.

4.2.2 Development Status of China’s Regional Logistics Infrastructure 4.2.2.1

Transportation Infrastructure

(1) Status of Railway Construction The inter-regional differences in China’s railway infrastructure are more prominent. In terms of operating mileage, by the end of 2019, the railway mileage in the Eastern region reached 33,139 km, up 5.1% year on year; it was 32,850 km in the Central region, up 13.8% year on year. The railway mileage in the Western region was 48,665 km, up 3.9% year on year; but only 18,336 km in the Northeastern region, down 0.68% year on year, as shown in Table 4.7. By the end of 2020, China’s railway operating mileage reached 146,000 km, including 38,000 km of high-speed rail. 4,933 km of new lines were put into operation in 2020, including 2,521 km of high-speed rail. China’s new lines are mainly

2020

0.92

0.76

Northeastern

1.18

3.97

5.72

1.45

4.74 2.02 62.95

6.05 61.63

7.51 10.22 60.63

2018

2019

2020

Average annual growth rate for 2016–2020

22.12 28.19 22.92 39.16 34.29

29.98 35.46 19.44 27.68 34.01

25.80 35.33 31.48 35.96 37.35

28.35 24.59 25.02 30.62 31.23

2017

Source Compiled from the Statistics Bulletin on the Development of the Postal Industry (2016–2020), published by the State Post Bureau

2.93

2.25

Western

4.22

3.36

24.92 31.98 39.85 49.82 65.07 49.09

2019

2016

2018

2016

2017

Growth rate of express delivery (%)

Business volume of express delivery (Billion items)

Central

Eastern

Region

Table 4.6 Business volume and growth rates of express delivery in China’s four major regions for 2016–2020

4.2 The Current Status and Characteristics of China’s Regional Logistics 87

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Table 4.7 Operating railway mileage and growth rates in China’s four major regions, 2015–2019 Year

Eastern

Central

Mileage

Growth rate

Mileage

2015

28,743

8.4

27,162

2016

28,935

0.7

27,975

2017

29,633

2.4

2018

31,527

6.4

2019

33,139

5.1

Western Growth rate

Northeastern

Mileage

Growth rate

Mileage

Growth rate

4.3

42,138

10.1

17,060

8.9

3.0

44,367

4.6

16,845

−1.3

28,247

1.0

45,954

3.3

17,191

2.1

28,864

2.2

46,838

1.9

18,462

7.4

32,850

13.8

48,665

3.9

18,336

−0.68

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

in the Eastern, Central and Western regions. The Eastern region has eight new railroads, including Shanghai-Suzhou-Nantong Railway; the Central and Western regions have eight new railroads, including the Zhengzhou-Taiyuan-Jiaozuo line; there is another new railway line connecting the Eastern and Central regions, the Hefei-Hangzhou High-Speed Railway. In addition, China is also constructing more special railway lines and logistics bases to open up multimodal transport, as well as “the first kilometer” and “last kilometer” of intermodal rail-water transport. In terms of network density, the density of the railroads in the Eastern region was as high as 355.2 km/10,000 km2 in 2019; it was 319.5 km/10,000 km2 and 226.8 km/10,000 km2 in the Central and Northeastern regions, respectively. Railway network density was only 79.9 km/10,000 km2 in the Western region, as shown in Table 4.8. On the whole, the density of China’s railway system varies significantly from east to west, characterized by heavy density in the east and sparseness in the west. (2) Status of Highway Construction From January to November 2020, the Eastern region of China received a fixed-asset investment of RMB 733.91 billion for highway construction, up 11.7% year on year. The Central region had a fixed-asset investment of RMB 418.83 billion, up 10.66% year on year. The Western region had a fixed-asset investment of RMB 1.05 trillion, Table 4.8 Railway network density of China’s four major regions, 2015–2019 (km/10,000 km2 ) Year

Eastern

Central

Western

Northeastern

2015

308

264.3

69.9

211

2016

310.1

272.2

73.1

208.4

2017

317.6

274.8

75.5

212.7

2018

336.9

280.8

76.8

228.4

2019

355.2

319.5

79.9

226.8

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

4.2 The Current Status and Characteristics of China’s Regional Logistics

89

up 12.48% year on year. The Northeastern region received a fixed-asset investment of RMB 58.22 billion, down 1.11% year on year. The Western region ranked first in the country in terms of highway and expressway mileage. In 2019, the highway mileage of the Western region was 2.06 million km, up 3.6% year on year, accounting for 41.1% of China’s total. Expressway mileage was 57,040 km, up 6.4% year on year, accounting for 38.1% of the total, as shown in Table 4.9. However, in terms of network density, the road density in the Western region is still low. In 2019, the highway and expressway density in the region was only Table 4.9 Mileage of highways and expressways in China’s four major regions, 2015–2019 Year

Indicator

2015

Highway mileage (million km) Expressway mileage (thousand km)

2016

Western

1.23

1.85

Northeastern 0.38

123.52

35.71

32.50

44.14

11.17

3.2%

2.7%

2.4%

2.9%

Highway mileage (million km)

4.70

1.14

1.27

1.90

0.39

130.97

37.29

34.43

47.59

11.66

Proportion of expressways (%)

2.8%

3.3%

2.7%

2.5%

3.0%

Highway mileage (million km)

4.77

1.15

1.29

1.94

0.39

136.45

38.47

35.12

51.02

11.84

Proportion of expressways (%)

2.9%

3.3%

2.7%

2.6%

3.0%

Highway mileage (million km)

4.85

1.16

1.30

1.99

0.40

137.79

40.76

36.07

53.62

12.14

Expressway mileage (thousand km)

2019

Central

1.12

2.7%

Expressway mileage (thousand km)

2018

Eastern

4.58

Proportion of expressways (%)

Expressway mileage (thousand km)

2017

Nationwide

Proportion of expressways (%)

2.9%

3.5%

2.8%

2.79%

3.1%

Highway mileage (million km)

5.01

1.18

1.37

2.06

0.40

149.57

42.74

37.36

57.04

12.43

Expressway mileage (thousand km) Proportion of expressways (%)

3.0%

3.6%

2.7%

2.8%

3.1%

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

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Table 4.10 Highway network density and expressway network density in China’s four major regions, 2015–2019 (km/10,000 km2 ) Year

Indicator

National average

Eastern

Central

Western

Northeastern

2015

Highway network density

4,746.0

12,147.0

11,909.7

2,682.7

4,737.9

Expressway network density

128.1

386.0

64.1

138.9

Highway network density

4,873.2

12,170.7

2,774.6

4,794.6

Expressway network density

135.9

399.6

69.3

144.2

Highway network density

4,972.4

12,378.7

2,830.8

4,846.8

Expressway network density

142.1

413.6

74.3

146.2

Highway network density

5,048.4

12,489.6

2,890.0

4,882.6

Expressway network density

148.5

438.3

78.1

148.5

Highway network density

5,221.4

12,675.1

3,002.9

4,940.0

Expressway network density

155.8

459.6

83.1

153.4

2016

2017

2018

2019

315.9 12,332.9 335.1 12,480 341 12,559.8 350.2 13,312.0 362.8

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

3,002.9 km/10,000 km2 and 83.1 km/10,000 km2 respectively, much lower than those in the other three regions. Furthermore, the highway density in the Central region has been catching up with the Eastern region since 2016, with highway density in the Central and Eastern regions being 13,312.0 km/10,000 km2 and 12,675.1 km/10,000 km2 respectively, in 2019, as shown in Table 4.10. (3) Status of Waterway Construction From January to November 2020, China’s fixed-asset investment for inland river construction in the Eastern region was RMB 27.10 billion, up 24.3% year on year. Its fixed asset investment for coastal construction was RMB 48.07 billion, up 5.8% year on year. China’s fixed-asset investment for inland river construction in the Central region was RMB 24.37 billion, up 3.7% year on year. Its fixed-asset investment for inland river construction in the Western region was RMB 9.89 billion, up 4.5% year on year; its fixed-asset investment for coastal construction in the same region was RMB 4.81 billion, up 121.3% year on year. The fixed-asset investment for inland river construction in the Northeastern region was RMB 58 million; its fixed-asset investment for coastal construction in the same region was RMB 3.56 billion, up 444.0% year on year.

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In 2018–2019, most of the ports above designated size on the Eastern coast showed increases in wharf length and number of berths. The wharf lengths of Rizhao Port and Yantai Port grew at a relatively fast rate, from 19,203 m and 34,604 m in 2018, to 21,968 m and 36,588 m in 2019, with growth rates of 14.40% and 5.73%, respectively. The number of berths in Tianjin Port and Rizhao Port also grew at a fast rate, from 167 and 75 in 2018, to 189 and 83, respectively, with growth rates of 13.17% and 10.67%, respectively, as shown in Table 4.11. Shipping in the Central and Western regions is mainly dominated by inland rivers. In recent years, in order to scientifically develop and protect shipping resources and modernize inland river shipping, China has made efforts to integrate the port resources of inland rivers, upgrading and renovating its wharves, and constructing large, specialized ports. Thus, the number of inland river wharves and berths is Table 4.11 Wharf length and number of berths in ports above designated size in the Eastern region’s coastal areas, 2018–2019 Port

Wharf length (m) 2018

Growth rate (%)

Growth rate (%)

2018

2019

Qinhuangdao

17,161

17,161

0.00

92

92

0.00

Tianjin

39,509

40,620

2.81

167

189

13.17

Yantai

34,604

36,588

5.73

207

213

Weihai

16,058

13,666

−14.90

99

83

−16.16

Qingdao

30,429

30,489

0.20

128

123

−3.91

Rizhao

19,203

21,968

14.40

75

83

10.67

107,234

107,037

−0.18

1,054

1,032

−2.09

Shanghai

2019

Number of berths

2.90

Lianyungang

16,634

16,634

0.00

73

73

0.00

Ningbo-Zhoushan

96,840

100,152

3.42

707

718

1.56

Taizhou

14,601

14,989

2.66

194

195

0.52

Wenzhou

16,923

17,043

0.71

199

202

1.51

Fuzhou

28,359

29,659

4.58

200

207

3.50

Xiamen

31,246

31,526

0.90

173

179

3.47

Shantou

10,223

10,223

0.00

91

91

0.00

Shenzhen

32,932

33,196

0.80

156

157

0.64

Guangzhou

55,285

56,055

1.39

556

558

0.36

Zhanjiang

17,388

17,388

0.00

132

132

0.00

9,867

9,867

0.00

70

70

0.00

2,488

2,488

0.00

12

12

0.00

596,984

606,749

1.64

4,385

4,409

0.55

Haikou Basuo Total for the Eastern coastal regions

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

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decreasing. In 2019, the average wharf length and number of berths of the nine major inland river ports in the Central region decreased by 6.44% and 21.03%, respectively, as shown in Table 4.12. In 2019, the mileage of inland-river waterways in the Western region increased by 210 km to 34,115 km, as shown in Table 4.13. (4) Status of Airport Construction In terms of the regional distribution of civil airports, the infrastructure of the civil aviation industry in the Eastern region is relatively more developed. In 2020, there Table 4.12 Wharf length and number of berths in nine major inland-river ports in the Central region, 2018–2019 Port

Wharf length (m) 2018

2019

2018

Growth rate (%)

2019

249

194

15,834

−3.78

162

158

−2.47

4,904

−37.86

89

35

−60.67

16,994

−3.31

176

161

−8.52

24,676

23,986

Wuhan

16,456 7,892 17,576

Jiujiang

Number of berths

−2.80

Yichang Huangshi

Growth rate (%)

−22.09

Anqing

7,621

6,183

−18.87

190

68

−64.21

Chizhou

8,393

8,129

−3.15

86

77

−10.47

Tongling

7,414

7,414

0.00

74

74

0.00

13,544

12,515

−7.60

124

115

−7.26

9,027

9,393

4.05

110

113

2.73

112,599

105,352

−6.44

1,260

995

−21.03

Wuhu Ma’anshan Total for the Central regions

Source Compiled from the China Statistical Yearbook (2018–2019), published by the National Bureau of Statistics of China

Table 4.13 Mileage of inland-river waterways in cities and provinces in the Western region, 2019 Province

Inland river navigable mileage (km)

Province

Inland river navigable mileage (km)

Inner Mongolia

2,403

Shaanxi

1,146

Guangxi

5,707

Gansu

911

Chongqing

4,352

Ningxia

130

Sichuan

10,818

Qinghai

674

Guizhou

3,751

Xinjiang

–

Yunnan

4,223

34,115

Tibet

–

Total for the Western region

Source Compiled from the China Port Yearbook (2018–2019), published by the Journal of China Port

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Table 4.14 Regional distribution of China’s airports, 2016–2020 Region

2016

2017

2018

2019

2020

Eastern

53

54

54

54

54

Central

32

34

36

36

36

Western

110

114

118

121

124

23

27

27

27

27

218

229

235

238

241

Northeastern Total

Source Compiled from the Civil Aviation Airports Statistics Bulletin (2016–2020), published by the CAAC

were 54 civil airports in the Eastern region, with a density of 0.58/million km2 ; this number was 1.7 times that of the Central region, 1.7 times that of the Northeastern region, and 3.4 times that of the Western region. The Central, Western and Northeastern regions had 187 civil airports in total. However, the density and development levels of their airports varied significantly from the Eastern region, as shown in Table 4.14.

4.2.2.2

Construction of Logistics Warehouses

In recent years, the number of logistics parks in China has increased significantly. In terms of regional distribution, unbalanced spatial distribution is still a prominent feature. By the end of 2020, China Federation of Logistics and Purchasing had released a list of two batches of, in total, 56 demonstration logistics parks. The Eastern region had 26 logistics parks selected, the most of all the regions; the Western region had 15; the Central region had 12, and the Northeastern region had 3. At the end of 2020, the China Federation of Logistics and Purchasing selected 123 outstanding logistics parks, of which 58 were in the Eastern region, 28 in the Central region, 29 in the Western region, and 8 in the Northeastern region. In terms of their distribution among provinces and cities, Jiangsu ranked first with 18 logistics parks; Shandong was next with 12; while Hebei and Inner Mongolia had 10 each. According to the statistics of 50yc.com,6 as at the end of 2019, general-purpose warehouses in China occupied an area of about 300 million m2 , accounting for more than 80% of the total area of all warehouses. These are mainly concentrated in the Eastern region, followed by the Western and Central regions. Newly constructed general-purpose warehouses occupied about 20.89 million m2 in 2019. These were mainly concentrated in the Eastern region, followed by the Western and Central regions, with relatively few new general-purpose warehouses in the Northeastern region (The Institute of Forward-Looking Industries 2021). The total inventory area of cold-storage warehouses exceeded 6.65 million m2 in 2019, accounting for 2.15% 6

50yc.com’s statistics cover warehouse resources in 32 provinces, 219 cities and 7,187 parks in China.

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of all logistics warehouses. In terms of regional distribution, China’s cold-storage logistics warehouses (sorted by storage area) are mainly concentrated in the Eastern and Central regions, with relatively few cold-storage resources in the Northwestern and Western regions.

4.2.3 Main Characteristics of Regional Logistics in China 4.2.3.1

The Eastern Region Vigorously Develops Smart Technology to Lead the Upgrading of China’s Logistics Industry

The Eastern region makes use of its human resource and technological advantages to promote the widespread application of smart technologies such as 5G, AI, IoT, blockchain and robotics/automation, and to lead the transformation and upgrading of China’s logistics industry. By 2020, the use of unmanned delivery vehicles was on the rise during the COVID19 outbreak. In early 2020, Meituan launched its unmanned delivery services in Beijing’s Shunyi District, planning to deploy 1,000 self-drive vehicles in the district over the next three years. The Alibaba Group launched its logistics robot “Xiaomanlv” in September 2020, subsequently operating a fleet of 22 such robots in Zhejiang University. In October 2020, JD Logistics announced its plans to make Changshu of Jiangsu Province the world’s first unmanned delivery city. It would also deploy more than 100,000 unmanned delivery vehicles across the country over the next five years (Meng 2021). In December 2020, JD.com’s self-developed large logistics drone successfully made its maiden flight. This drone is the first domestic drone with a hundred-kilogram load capacity and airdrop function (Chen 2020). In September 2020, the Alibaba Group launched its “Rhino Smart Manufacturing” platform. This is a smart digital manufacturing platform specifically designed for SMEs, using Alibaba’s cloud computing, IoT, AI and other technologies to solve production supply chain problems for SMEs, such as problems in pre-sales forecasting, response speed and inventory storage (Logistics Business 2021). In November 2020, JD.com launched its digital supply-chain platform “Jinghui”. Jinghui is capable of providing integrated services for enterprises, including big data, network optimization, intelligent forecasting, smart replenishment and smart execution (Lu 2020).

4.2.3.2

The Central and Western Regions Create an Interactive Logistics System to Linking the East and the West

Under the new development paradigm, the Central and Western regions have leveraged their geographical advantages and focused on building a “channel + hub +

4.2 The Current Status and Characteristics of China’s Regional Logistics

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network” logistics service system to enhance the economic ties between Southeast Asia, Central Asia, and the southeast coastal region of China. One of the ways is by actively constructing transportation channels. In August 2019, the National Development and Reform Commission released an overall plan on the country’s new western land-sea corridors, with the western provinces being actively integrated. Western provinces and cities such as Sichuan, Chongqing, Guizhou, Guangxi and Yunnan have issued “Implementation Plans for the Construction of the New Western Land-Sea Corridors” to promote the construction of highways, railroads and aviation infrastructure. Meanwhile, Yunnan, Guizhou, Chongqing, Sichuan, Hubei and other central provinces and cities along the Yangtze River Economic Belt are also actively building comprehensive transportation corridors along the river, and strengthening economic ties between China’s Central and Western regions and its Eastern and Western regions, as well as with Southeast and Central Asia. The second way is by actively constructing logistics hubs. In October 2020, the National Development and Reform Commission and the Ministry of Transport of the People’s Republic of China jointly issued a “Notice on the Construction of National Logistics Hubs in 2020”. 22 logistics hubs were selected for this list. There were 13 from China’s Central and Western regions, covering all six types of national logistics hubs.7 For example, Chongqing Logistics Hub meets the conditions for servicing railhighway-waterway-air intermodal transport and river-sea intermodal transport. It is connected to ports and cities on the Yangtze River Economic Belt in the east via the Yangtze River Golden Waterway, and also to the Pacific Ocean in the Asia–Pacific region. It is connected to the China–Europe Railway Express (Chongqing) in the west, facing northwestern China, Central Asia and Europe. It is connected to the China–Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity in the south, facing the southern coast of China, the ASEAN and South Asia. The third way is by increasing the frequency of China–Europe Railway Express. In 2020, China–Europe Railway Express (Chongqing–Xinjiang–Europe Railway) operated 2,603 trains, up 72% year on year, and transported cargoes worth over RMB 90 billion, up 65% year on year. China–Europe Railway Express Chang’an launched innovative products such as public trains, customized trains and German express, with 3,720 trains and 15 routes in operation throughout the year (Ndrc.gov.cn 2021). From January to November 2020, the China–Europe Railway Express (Changsha) operated 497 trains with a cargo value of USD 1.88 billion, up 1.37 times and 1.32 times, respectively year on year. The fourth way is by accelerating the construction of international routes. In 2020, Zhengzhou Airport took full advantage of its international air cargo corridor by introducing nine new cargo airlines, 18 new cargo routes, and 21 new cities. At present, 31 all-cargo airlines are operating at Zhengzhou Airport, with 51 all-cargo routes to 63 cities (Zhang and Chen 2021). In 2020, Xi’an Xianyang International Airport opened six new all-cargo routes, with 33 all-cargo routes currently in operation. It 7

The six national hub logistics types are the land port type, airport type, port type, production service type, business service type, and land border port type.

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also launched the first intercontinental Fifth Freedom all-cargo flight, from Seoul to Xi’an to Los Angeles (Shaanxi.gov.cn 2021).

4.2.3.3

The Northeastern Region is Actively Constructing International Logistics for Northeast Asia

The Northeastern region is an important channel for China to open to the north and a key hub for cooperation with Northeast Asia. International logistics is crucial for the development of logistics in the Northeastern region. One of the ways to achieve this is by accelerating the construction of logistics hubs for Northeast Asia. In November 2019, the Liaoning Provincial Government issued a document proposing to build Dalian Free Trade Port, as well as Dalian Northeast Asia International Shipping Center. It will also enhance channel access to Russia, Mongolia and North Korea, and build a regional international aviation hub for Northeast Asia. In March 2020, the government of Yingkou, Liaoning Province, issued a document proposing to build a Northeast Asian distribution and trade hub for commercial products. In August 2019, the State Council issued the “General Plan for China (Heilongjiang) Free Trade Pilot Zone”, proposing to build a cross-border logistics service center in the Heilongjiang Free Trade Zone in the Heihe District. In April 2020, Changchun in Jilin Province, proposed increasing the number of flights from Changchun to popular domestic cities and regional hub airports. It planned to expand international routes to major Northeast Asian cities in Japan, South Korea, North Korea, Russia and Mongolia, as well as major cities in Europe and the U.S. The second way is by actively developing cross-border e-commerce logistics. In May 2020, the State Council announced the fifth list of comprehensive pilot zones for cross-border e-commerce, with four cities in the Northeast Region shortlisted, namely, Yingkou, Panjin, Jilin and Heihe. Together with the seven cities shortlisted in the first four lists, there will be 11 comprehensive pilot zones for cross-border ecommerce in the Northeastern region by the end of 2020. Harbin City has utilized its e-commerce advantage to actively promote small-item postal air logistics to Russia. It has constructed an e-commerce logistics base for Northern China. At the end of 2020, it had an international postal exchange bureau, and over 20 domestic ecommerce logistics companies doing business with leading Russian e-enterprises had established offices in the base. It has become the city with the largest number of cross-border e-merchants servicing Russia, with the highest volume of e-commerce parcels exported, and the highest volume in cross-border retail exports to Russia. Jilin Province has opened a cross-border cargo charter flight from Changchun to Seoul; the Jilin-Zhejiang Cross-border E-commerce Center was also officially put into operation. In 2020, the cross-border e-commerce transaction volume of Jilin Province was RMB 3.36 billion, up 25% year on year. The retail import and export value for cross-border e-commerce was 970 million RMB, up 178% year on year. The third way is by actively expanding the scale of China–Europe Railway Express. Harbin launched the “Harbin-Europe Express,” and “Harbin-Russia Express” with three operating lines—“Harbin-Hamburg,” “Daqing-Ghent,” and

4.3 Logistics Development in Hotspot Areas of China

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“Harbin-Moscow.“ In 2020, China–Europe Railway Express (Harbin) operated 213 trains; China–Europe Railway Express (Shenyang) operated 376 trains, up 79.05% year on year. In 2020, China–Europe Railway Express (Changchun-ManzhouliEurope) transported 9,804 TEUs of cargo weighing 107.9 kilotons (up 11.6% year on year) and worth about RMB 3.09 billion.

4.3 Logistics Development in Hotspot Areas of China The implementation of national strategies such as the construction of the Hainan Free Trade Port, the development of the Yangtze River Economic Belt, and the building of new land-sea corridors in Western China has provided new opportunities for logistics development in Hainan Province, as well as for hotspot provinces and cities along the Yangtze River and in the Western region. Hainan Province has seized the strategic opportunity to constantly improve its logistics infrastructure while constructing its free trade port. It is developing international import logistics and actively constructing international aviation and shipping hubs. The Yangtze River Economic Belt has accelerated the pace of building comprehensive transport corridors, and is developing green shipping, and actively integrating into the “Belt and Road Initiative.“ Provinces and cities along the new western land-sea corridors are intensively promoting infrastructure construction and improving their communication and negotiation systems.

4.3.1 Logistics Development in Hainan Province The construction of the Hainan Free Trade Port will be crucial in spearheading China’s transformation from a commodity and factor movement-based market to a more liberal system with institutional openness, promoting deeper reform with a higher level of opening-up. Given that the province is constructing a free trade port, there will be huge potential for developing modern logistics. In recent years, Hainan Province has been improving its logistics infrastructure, accelerating the integration of its port and shipping resources in the Qiongzhou Strait, and actively building international shipping and aviation hubs, which have led to the rapid growth of international import logistics.

4.3.1.1

Constantly Improving Logistics Infrastructure

The first way the province has achieved this is by increasing the density of its road network. By the end of 2020, the total mileage of roads in Hainan Province exceeded 40,000 km. Expressways accounted for 1,255 km of the total mileage, ordinary state and provincial trunk lines accounted for 3,562 km, and rural roads accounted for

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35,200 km, an increase of 56.3%, 30.6%, 50.9%, respectively compared with the end of 2015. The density of road network has increased from 79.2 km/100 km2 in 2015, to 118 km/100 km2 in 2020 (Jt.hainan.gov.cn 2021). Hainan Province has built a highway network with extensive expressways around the island, with a central expressway as the main framework. The “three vertical and four horizontal” national and provincial highways function as main trunk lines connecting the east, west, north and south, covering the entire island. The second way is by constructing ports and shipping infrastructure. During the “13th Five-Year Plan” period, a number of projects, such as Phases I and II of the passenger and cargo ro-ro terminal in Hainan’s new port were put into operation. They have enhanced the supply capacity of the Qiongzhou Strait. Several deep-water berths of more than 10,000 tons were built in Yangpu Port, raising marine transport capacity significantly. In aviation, Bo’ao Airport and Yongxing Island Airport were put into operation. The Phase III expansion of Fenghuang Airport and the main Phase II construction of Haikou Meilan International Airport have been completed. The third way is by accelerating the construction of logistics parks. JD.com, Suning, Singapore’s Mapletree Group, GLP and other logistics centers have set up bases in Chengmai Jinma Modern Logistics Center. The Hainan Xichenghui Logistics Center and other projects within the Haikou Mei’an Comprehensive Logistics Park have begun construction. According to statistics, Hainan Province currently has a cold storage capacity of about 1 million cubic meters. During the “13th Five-Year Plan” period, the Province increased its cold storage capacity by about 550,000 cubic meters (Hainan.gov.cn 2020).

4.3.1.2

Accelerating the Integration of Port and Shipping Resources in the Qiongzhou Strait

Hainan Province and Guangdong Province are actively integrating port and shipping resources in the Qiongzhou Strait in order to build a safer, more efficient, more convenient, and more economic transport corridor for the Strait. In September 2016, the provincial governments of Guangdong and Hainan held a joint meeting to promote the integrated development of port and shipping resources in the Qiongzhou Strait, which requires their orderly integration, as well as cooperation between the two provinces in resource operation and dispatch. Hainan Province adopted a “port before navigation” policy to promote the integration of port and navigation resources. In July 2018, the Hainan Provincial Government and COSCO Shipping Group signed a strategic cooperation agreement, agreeing to use Hainan Port and Shipping to build an integrated port resource, investment and operation platform for the province. At present, Hainan Province has integrated all the ferry wharves on the southern coast of the Qiongzhou Strait. Meanwhile, the Province will continue to integrate shipping resources on the southern coast of the Qiongzhou Strait and has decided to use the platform of the Hainan Strait Shipping Co., Ltd to integrate its port and shipping resources, merging the assets and operating resources of the five vessels under Haikou Nengyun Shipping Co. Ltd and Hainan Xianglong Shipping Co., Ltd.

4.3 Logistics Development in Hotspot Areas of China

99

In the future, Qiongzhou Strait will further integrate port and shipping resources on its northern and southern coasts, and strive to achieve full integration of port and shipping resources by 2022.

4.3.1.3

Actively Constructing International Shipping and Aviation Hubs

According to the “Overall Plan for the Construction of Hainan Free Trade Port”, Hainan has made positive progress in constructing international shipping and aviation hubs for the new western land-sea corridors. One of the ways of achieving this is by actively expanding shipping and aviation routes. By the end of 2020, Yangpu Port had opened 33 international and domestic commercial routes for container liners, forming a basic network of domestic trade routes covering all major ports along China’s coasts, with foreign trade routes to Southeast Asia extending to Asia and Europe. Hainan Province has opened more than 400 domestic routes, eight freight routes, and over 100 passenger routes to 19 countries, including the 10 ASEAN countries, the UK and Italy, as well as regions such as Hong Kong, Macao and Taiwan (Jt.hainan.gov.cn 2021). The second way is by converging shipping resources. Hainan Province has attracted famous multinational shipping logistics companies to set up regional headquarters and operation centers in Hainan, promoting the convergence of shipping resources. In September 2019, China’s largest trade container e-commerce shipping platform, Panasiashipping.com for the Shanghai PANASIA Shipping Co., Ltd., was established in the Yangpu Economic Development Zone. In September 2020, China’s largest civil shipping company, “Hainan Haifeng Shipping Co., Ltd” set up an office in Haikou. At the same time, Hainan Province is actively promoting the construction of shipping exchange centers, to develop services such as the sales and purchase of ships, leasing transactions, and cruise yacht transactions. It is also exploring freight futures, freight derivatives trading, and other services. The third way is by introducing more convenient and liberal transport service policies. To actively support the construction of Hainan Free Trade Port, in July 2018, the Ministry of Transport issued the “Implementation Plan of the Ministry of Transport to Implement the ‘Guiding Principles of the CPC Central Committee and State Council on Supporting Hainan’s Deepening Reform and Opening-Up’”, proposing 27 initiatives in eight areas to comprehensively support Hainan’s deepening reform and opening-up. At the end of 2020, the policies implemented included: introducing preferential financial and taxation policies in international shipping; allowing coastal shipping of Chinese-funded foreign ships of international sails in Hainan waters; improving the “single window” function for international imports and exports, and the application function for freight vessels entering and departing China, facilitating the integrated boarding and inspection of the port; piloting Seventh Freedom projects in passenger and freight, to achieve the lowest domestic price for bonded jet fuel; formulating a policy to classify ships in Hainan Free Trade Port; and upgrading Bo’ao Airport to become an international port of entry.

100

4.3.1.4

4 Regional Logistics Market in China

Rapid Growth of International Import Logistics

In 2020, Hainan Province imported RMB 23.95 billion worth of duty-free goods, an 80.5% increase year on year. In 2020, Hainan’s four off-island duty-free stores had a total sales value of over RMB 32 billion. The stores were visited 10.83 million times by tourists who purchased 130% more goods year on year. Cross-border e-commerce imports have become a new highlight of Hainan’s foreign trade development, and the cross-border e-commerce industrial park in Haikou Comprehensive Free Trade Zone continues to develop. From January to August 2020, Haikou Customs supervised and permitted 483,000 bonded import orders on the declaration list purchased through cross-border e-commerce, worth RMB 210 million, up 9.5 times and 15.9 times, respectively year on year. The number of orders was 3.1 times that of the total permitted orders in 2019 (Viltd.com 2020). Driven by the import of duty-free and cross-border e-commerce goods, the import logistics of Hainan Province have seen rapid growth. In 2020, the total logistics value of imported goods in Hainan Province was RMB 65.66 billion, up 16.8% year on year (Hainan Provincial Development and Reform Commission 2021).

4.3.2 Logistics Development on the Yangtze River Economic Belt The construction of the Yangtze River Economic Belt will help to extend China’s economic growth from the coastal to the inland regions along the river, forming a comprehensive and open pattern along the coast, rivers, and borders. It is an important approach to coordinate China’s regional economy and high-quality development, and to facilitate the dual circulation of domestic and international markets. In recent years, significant progress has been made in the logistics development of the Yangtze River Economic Belt, the construction of comprehensive transport corridors, the development of green shipping, and the integration with the “Belt and Road Initiative”. These have provided solid support for the high-quality development of the region.

4.3.2.1

The Accelerated Formation of Comprehensive Transportation Corridors

One of the ways is by vigorously expanding the waterway capacity, adopting the concept of “dredging the downstream, unblocking the midstream, and expanding the upper reaches of the waterways”, and accelerating the systematized management of the Yangtze River Golden Waterway. At the end of 2020, the mileage of graded waterways on the Yangtze River Economic Belt was 10,000 km, accounting for more than 60% of the country’s graded waterways (China.com.cn 2021). Navigation of 50,000-ton ships is allowed upstream from the Nanjing region, and navigation of

4.3 Logistics Development in Hotspot Areas of China

101

5,000-ton ships from the Wuhan region. Navigation of 3,000-ton ships is allowed upstream from the Chongqing region, and that of 2,000-ton ships from the Yibin region. The second way is to accelerate the pace of transport infrastructure construction. Besides actively constructing graded waterways during the 13th Five-Year Plan period, the Yangtze River Economic Belt aimed to plan and construct high-speed rail along the river in an orderly manner, complete construction projects for national inter-provincial expressways, and implement hub airport projects such as expanding Chengdu Tianfu Airport and Guiyang Airport. As of November 2020, the railway and high-speed rail mileage along the Yangtze River Economic Belt reached 43,700 km and 15,400 km, respectively, an addition of 9,120 km and 7,824 km compared to 2015. Expressway mileage has reached 63,700 km, an addition of 15,500 km compared to 2015 (Sina.com.cn 2021). In order to construct more high-speed rail along the Yangtze River, in December 2020, China National Railway Group Co. Ltd. founded the Yangtze River Coastal Railway Group Co. Ltd. with six other provinces and cities, including Shanghai and Jiangsu. The third way is by actively promoting the development of multimodal transport. In August 2018, the Ministry of Transport released the “Three-Year Action Plan for Deepening the Development of Multimodal Transport on the Yangtze River Economic Belt”, proposing to develop multimodal transport and focusing on direct river-sea transport, and intermodal river-sea and rail-water transport. During the 13th Five-Year Plan period, the Yangtze River Economic Belt actively fostered multimodal transport with ports as hubs, implementing 14 rail-water intermodal transport projects, such as the Baiyang Port Logistics Railway on the Three Gorges Hub, and 29 demonstration projects for multimodal transport, such as the Zhengzhou-Europe International Freight Express.

4.3.2.2

Significant Achievements in the Construction of Green Waterways

In August 2017, the Ministry of Transport issued the “Guiding Opinions on Promoting Green Waterway Development on the Yangtze River Economic Belt”, proposing to build green waterways, green ports, green ships, organize green freight transport, and cultivate green methods to promote the green, low-carbon development of the shipping industry. As of 2020, significant progress had been made in the construction of green waterways on the Yangtze River. First, a joint supervisory and information service system for ships polluting the Yangtze River was developed and put into operation. This is now used in all ports on the Yangtze River Economic Belt, allowing digital supervision, online services, and shared multi-departmental construction and governance. Second, a number of green waterways have been constructed, such as the Jingjiang Ecological Channel. Third, water pollutant treatment plants for ports now cover the main waterways of the entire Yangtze River. Eight comprehensive water treatment areas, 12 cabin washing stations for traveling

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4 Regional Logistics Market in China

ships, and more than 30 wharves for transferring pollutants to shore have been basically completed. Fourth, clean energy such as shore power and LNG is increasingly being used and promoted, with the construction of 4,700 shore power berths (Liu and Li 2021).

4.3.2.3

Actively Promoting Integration with the “Belt and Road Initiative”

The first way to do so is by actively and seamlessly connecting the Yangtze River Economic Belt with the “Belt and Road Initiative”. Zhejiang Province has connected the “Belt and Road Initiative” corridor with the open, two-way land-sea YiwuNingbo-Zhoushan channel along the Yangtze River Economic Belt. In November 2020, Zhejiang Province released the “Action Plan for Opening a Westward Channel for Yiwu-Yongjin-Zhoushan”, proposing to expand eastwards to the sea via ports, and westwards to the outbound lands. It aims to function as an important engine integrating the Yangtze River Economic Belt and the Yangtze River Delta with the infrastructure development of the “Belt and Road Initiative.“ Chongqing is actively promoting cooperation between Chongqing-Xinjiang-European Railway and the “eastward” channel. In 2020, more than 18,000 TEUs were transported intermodally, first on the Chongqing-Xinjiang-Europe Railway, then on the Yangtze River, up nearly 800% year on year. 3,400 TEUs were transported intermodally on the Chongqing-Ningbo Railway, up 224% year on year. These have promoted the seamless connection of the “Belt and Road Initiative” with the Yangtze River Economic Belt (Sohu.com 2021). Another way is by interacting and interconnecting with countries in the “Belt and Road Initiative” to achieve further progress. Zhejiang Province has accelerated the construction of the electronic World Trade Platform (eWTP), actively introducing the eWTP in global markets and piloting its cooperation projects. It has used the eWTP as a logistics hub for COVID-19 prevention and control, and launches regular weekly flights to the eWTP hub in Liège, Belgium. The provinces along the Yangtze River Economic Belt are actively building and operating public warehouses overseas, using them as focal points for linking trade in the “Belt and Road Initiative”, integrating into the foreign trade infrastructure of the global supply chains. At present, Zhejiang Province has constructed 32 provincial-level public warehouses in 20 countries, such as the U.S., Germany, the UK and Japan, occupying a total area of 400,000 square meters, serving more than 5,000 Zhejiang enterprises, and covering all the major target markets and global commercial hubs (Thepaper.cn 2021).

4.3 Logistics Development in Hotspot Areas of China

103

4.3.3 Logistics Development of the New Land-Sea Corridors in Western China The new western land-sea corridors are of great significance in fully unleashing the Western region’s role in bridging the “Belt” and “Road” hubs. They will deepen the two-way opening-up of land and sea, promote the development of the Western region to form a new paradigm, and promote the high-quality development of the regional economy. In recent years, the new land-sea corridors in Western China have made significant progress in infrastructure construction, systematized communication and consultation, and logistics scale.

4.3.3.1

Actively Promoting the Construction of Channel Infrastructure

Guangxi and Hainan have strengthened their infrastructure construction of ports and port logistics channels. In order to upgrade the port capacity, Guangxi has completed Phases I and II expansion of the eastern channel of the Qinzhou Port. It has also completed other projects such as constructing a 300,000-ton oil terminal in Qinzhou Port, and Berth 401 of Fangcheng Port. By 2022, Beibu Gulf Port will be open to 200,000-ton container ships and 300,000-ton bulk carriers. In June 2019, Phase I of Qinzhou Railway Container Center Station was completed; container ocean-rail intermodal transport in this channel has been unblocked. In April 2020, a special railroad line terminating in Beihai Tieshan Port was completed, unblocking the “last kilometer” of Tieshan Port and extending into the port railway. Hainan’s Yangpu Port plans to upgrade and expand the capacity of its Xiaochantan Terminal during the 14th Five-Year Plan period. It will also carry out major port and navigation projects, such as constructing the Yangpu Port channel, shallow dredging for wastewater recycling in the Qiongzhou Strait, and building an anchorage point at Yangpu Port. These will help construct an assembly and distribution system for port logistics highways, expressways, and the Yangpu branch railway line. Besides these, other western provinces are focusing on constructing rail and highway corridors. In 2020 for example, Sichuan completed the Xuyong-Bijie section of the Long-Huang Railway along the main western railroad corridor. Phase I of the expansion and reconstruction projects for the Chengdu-Longchang section of the Chengdu-Chongqing Railway has been completed. The province has also advanced construction projects like the Guang’an high-speed transit expressway and the YubeiGuang’an branch line on the Sichuan-Chongqing-Yunnan-Guizhou inter-provincial expressway corridor. In 2020, Chongqing put into operation the second line of the Chongqing–Huaihua railway, and completed the East Ring Line of the Chongqing Railway Hub. It also expanded and reconstructed the container collection stations in its rural villages.

104

4.3.3.2

4 Regional Logistics Market in China

Continuously Improving Channel Communication and Consultation Mechanism

At the international level, Singapore is already deeply involved in the construction of new land-sea corridors in Western China. Many other countries and regions along the corridors, such as Kazakhstan, Vietnam, Thailand and Hong Kong are also actively involved. China and Singapore established a joint working committee for the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity. In October 2020, China and Singapore agreed to continue promoting the ChinaSingapore (Chongqing) Demonstration Initiative on Strategic Connectivity and the new land-sea corridors, and to expedite the formulation of a cooperation plan. In August 2020, at the Third Leaders’ Meeting of the Lancang-Mekong Cooperation, the participating countries agreed to facilitate the connection of the Lancang-Mekong Cooperation with the new land-sea corridors in Western China. At the national level, the National Development and Reform Commission has initiated the Joint Provincial Inter-Ministerial Conference on the Construction of New Western Land-Sea Corridors, with 14 ministries and five provinces, autonomous regions and municipalities participating. In December 2019, the National Development and Reform Commission held its first meeting, and adopted the “Work Regulations for the Joint Provincial Inter-Ministerial Conference on the Construction of the New Western Land-Sea Corridors” and “Key Points in the Constructing of the New Western Land-Sea Corridors for 2020.” At the inter-provincial level, an inter-provincial consultation and cooperation system involving 12 provinces, autonomous regions and municipalities in the Western region, as well as Hainan Province and Zhanjiang City in Guangdong Province, has been established. A regional system for interactive customs cooperation has also been launched. In November 2020, the first inter-provincial consultation and cooperation meeting on the new western land-sea corridors was held in Chongqing. Its participating members signed the “Framework Agreement on Co-construction of the New Western Land-Sea Corridors.” At the enterprise level, the Logistics Development Alliance for the new western land-sea corridors was established in Chengdu, attracting more than 400 major logistics and commercial companies from provinces, regions, and municipalities along these corridors, such as China Waterborne Transport Research Institute, Zhanjiang Port (Group) Co., Ltd., and the Beibu Gulf Port Group Co., Ltd. The alliance will speed up the formation of major channels, ports, and logistics in the west, through information and resource sharing and sincere cooperation, to jointly promote the high-quality and high-efficiency development of logistics in Western China (Gzw.sc.gov.cn 2020).

4.3.3.3

The Continuous Expansion of Channel Logistics

Railway express routes have been expanding. By the end of 2020, Beibu Gulf Port had opened six sea-rail transport routes to Chongqing, Sichuan and Guizhou. Sea-rail

4.4 Summary

105

intermodal trains increased from less than 180 in 2017, to 4,607 in 2020, an increase of nearly 25 times. Cross-border highways from the Western region to Vietnam, Thailand, Laos, Cambodia, Malaysia and other countries in the Indochina Peninsula have been in regular operation, via land ports in Guangxi. The China-Vietnam (Nanning-Hanoi) direct cross-border railway express has been operating regularly since August 2019. 1,264 cross-border trains (via Pingxiang Railway Port) were in operation in 2020, an increase of 23.2%. There were 166 cross-border container trains (Nanning-Hanoi) operating in 2020, an increase of 49.5% (Fgw.gxzf.gov.cn 2021). The shipping service network of Beibu Gulf Port and Yangpu Port has been increasing in density. By the end of 2020, Beibu Gulf Port had opened 52 container routes to more than 200 ports in over 100 countries and regions around the world. There are 19 routes from the Beibu Gulf to the ASEAN, daily shipment trips from Beibu Gulf Port to Hong Kong, as well as two weekly liners to Singapore (Fgw.gxzf.gov.cn 2021). By the end of 2020, there were 33 domestic and foreign trade routes from Yangpu Port, among which were 14 foreign trade routes to countries such as Vietnam, Singapore, Myanmar, Malaysia, Thailand, and Bangladesh, and 19 domestic trade routes, covering all the major port cities in China. Port throughput continues to grow rapidly. The container throughput of Beibu Gulf Port was 3.82 million TEUs in 2019, up 34.6% year on year; its container throughput was 5.05 million TEUs in 2020, successfully ranked in the top ten domestic coastal ports (Scio.gov.cn 2021). The container throughput of Yangpu Port was 708,000 TEUs in 2019, up 27.1% year on year. Its container throughput was 1.02 million TEUs in 2020, up 44.0% year on year.

4.4 Summary This chapter analyzes the economic and political environment of China’s regional logistics, its development status and main characteristics, and the development characteristics of three hotspot areas in 2020. In 2020, the growth rate of China’s Western region exceeded those of the other regions. The Eastern region maintained a higher growth rate by promoting highquality economic development through innovation and industrial upgrading. The Central and Western regions actively undertook industrial transfers, with certain provinces and cities experiencing faster growth for foreign trade exports. The economy of the Northeastern region has recovered and is showing improvement. The intensive implementation of major regional strategies has optimized the layout of China’s regional logistics infrastructure and improved regional logistics service levels. Affected by economic development foundation, development stage and policies, the differences in logistics development between the four regions are relatively obvious. They can be seen mainly in these areas: the Eastern region leads the upgrading of the logistics industry through the use of smart technology; the Central

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4 Regional Logistics Market in China

and Western regions are actively building a “channel + hub + network” logistics service system to provide good logistics support for the two-way opening-up of the regions; the Northeastern region is actively constructing logistics hubs for Northeast Asia and developing cross-border e-commerce logistics. Logistics development in hotspot areas shows different characteristics. Hainan Province is seizing the strategic opportunity of its free trade port construction and actively building international aviation and shipping hubs. It is focused on developing international trade logistics. The Yangtze River Economic Belt is quickening the construction of comprehensive transport corridors, promoting green shipping, and actively integrating into the “Belt and Road Initiative”. The provinces and cities linked to the new western land-sea corridors are focused on constructing channel infrastructure and vigorously developing channel logistics.

References Baidu.com (2021) Economic growth rates of the three Northeastern Provinces have reversed the downward trend and turned from negative to positive in 2020. https://baijiahao.baidu.com/s?id= 1690381824999362647&wfr=spider&for=pc. Accessed 31 Jan 2021 Chen, Z. (2020). JD Logistics’ Self-developed ‘Jingting’ Drone for Branch Logistics Makes Its Successful Maiden Flight. https://new.qq.com/omn/20201224/20201224A0ALAH00.html. Accessed 14 Dec 2020 China.com.cn (2021) The National Development and Reform Commission held a special press conference on the effective development of the Yangtze River economic belt in its fifth anniversary year. http://www.china.com.cn/zhibo/content_77080897.htm. Accessed 05 Jan 2021 Development and Reform Commission of Hainan Province (2021) Report on the operation of modern logistics in Hainan Province in 2020. http://web.hainan.gov.cn/sfgw/ttxw/202102/9ee 1dd594ce44511aa98bc3b0f423db2.shtml. Accessed 23 Feb 2021 Fgw.gxzf.gov.cn (2021) Guangxi: promoting the New Land-Sea Corridors in the West—New Highlights to Invigorate the Region. http://fgw.gxzf.gov.cn/cszz/tdb/gzdt_57628/t7640524.shtm. Accessed 13 Jan 2021 Gzw.sc.gov.cn (2020) Advancing the construction of New Land-sea corridors in the West, to serve the overall national strategies—the inaugural meeting of the logistics development alliance for the New Western Land-Sea corridors in Chengdu. [2020–07–28]. http://gzw.sc.gov.cn/scsgzw/ c100112/2020/7/28/14ad8c8abe8f443c841158ad7fa770d7.shtml. Accessed 28 Jul 2020 Hainan.gov.cn (2020) Logistics industry development to improve both in quantity and quality. https://www.hainan.gov.cn/hainan/cyfz/202011/48268fcb9e3c4553b00c4ee56e62ebd6. shtml. Accessed 31 Oct 2020 Jt.hainan.gov.cn (2021) Review of Hainan’s 13th Five-year plan for transport. http://jt.hainan.gov. cn/ywdt_384/zwdt/202101/t20210121_2922612.html. Accessed 21 Jan 2021 Liu J (2021) Revitalizing the northeast: how to get the industries going? http://www.haoqoo.cn/cai jing/57462.html. Accessed 19 Apr 2021 Liu J, Li L (2021) The cargo throughput of the Yangtze river exceeds three billion tons. http://big5.xinhuanet.com/gate/big5/www.xinhuanet.com/fortunepro/2021-01/02/c_1126 937835.htm. Accessed 2 Jan 2021 Logistics Business (2021) Reviewing innovative technology in the logistics supply chain: what were the major breakthroughs for 2020? https://new.qq.com/omn/20210104/20210104A09FVA00. html. Accessed 4 Jan 2021

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Lu Y (2020) JD.com announces its construction of a smart digital social supply chain that can reduce inventory cycle by 30% and reduce social logistics cost to less than 10% over the next 10 years. http://n.eastday.com/pnews/1606289733024971. Accessed 25 Nov 2020 Meng J (2021) Looking back at 2020: honoring every milestone—reviewing logistics technology products of 2020. https://www.sohu.com/a/445293412_168370, 18 Jan 2021 Ndrc.gov.cn (2021) CHINA RAILWAY express (Chongqing-Xinjiang-Europe Railway) is top each year in cargo value. https://www.ndrc.gov.cn/fggz/dqjj/sdbk/202102/t20210223_1267661.html. Accessed 23 Jan 2021 Scio.gov.cn (2021) Guangxi held a press conference on meeting the phase target in the framework plan for new land-sea corridors for the western regions. http://www.scio.gov.cn/xwfbh/gssxwfbh/ xwfbh/guangxi/Document/1697678/1697678.htm. Accessed 22 Jan 2021 Shaanxi.gov.cn (2021) Top ten highlights in Shaanxi Province’s ‘belt and road initiative’ construction in 2020. http://sndrc.shaanxi.gov.cn/fgyw/wngzdt/YJfMJz.htm. Accessed 20 Jan 2021 She H (2020) The 2020 evaluation report on China’s regional science and technology innovation: the prominent and leading positions of science and technology innovation centers in Beijing, Shanghai and Guangzhou. http://www.ce.cn/xwzx/gnsz/gdxw/202011/28/t20201128_36058900. shtml. Accessed 28 Nov 2020 Sina.com.cn (2021) Railroad and high-speed rail mileage of the Yangtze river economic belt reached 43,700 km and 15,400 km respectively in November 2020. http://finance.sina.com.cn/tech/202101-05/doc-iiznctkf0215662.shtml. Accessed 5 Jan 2021 Sohu.com (2021) The CHINA RAILWAY Express (Chongqing-Xinjiang-Europe Railway) operated more than 2,600 trains in 2020. https://www.sohu.com/a/446047128_124722. Accessed 22 Jan 2021 The Institute of Forward-Looking Industries (2021) Analysis of the current development and operation state of China’s warehousing industry in 2020: industry enterprises operating under greater pressure. https://www.sohu.com/a/442388875_473133. Accessed 04 Jan 2021 Thepaper.cn (2021) Focus on the two sessions. Committee Member Wang Jian: helping high-quality enterprises ‘Go Global’. https://www.thepaper.cn/newsDetail_forward_11602432. Accessed 7 Mar 2021 Viltd.com (2020). Hainan’s Cross-border E-commerce Developing Rapidly: Total Import Value in the First Eight Months Exceeded 200 Million Yuan. http://www.viltd.com/ce/2020/090929090. html. Accessed 09 Sep 2020 Zhang Q, Chen S (2021) Zhengzhou Airport’s passenger and cargo volumes rise in the 2020 domestic rankings. https://www.sohu.com/a/443386827_160386. Accessed 9 Jan 2021

Chapter 5

The Development of Transport and Logistics in China Jinglei Yang

The substantive development of the overall transport system in China has laid a solid foundation for safe, efficient, smart, and green transport and logistics and for the country to strengthen its transport capability. In 2020, the volume of goods transported by road, rail, water, and air registered steady growth in China. The infrastructure network continues to improve, the market environment is being continuously optimized, and the transport and logistics services continue to steadily improve. Transportation and logistics played an important role in the prevention and control of the COVID-19 pandemic and provided strong support for social and economic development. This chapter consists of four sections, discussing the development of four types of transportation methods—road, rail, water, and air. Section 5.1 investigates China’s road freight development from four aspects—transport volume, market environment, the construction of cold chain infrastructure, and the maintenance and management of the rural road network. Section 5.2 investigates railway logistics development from five aspects—transport volume, railway network construction, institutional reform for railway management, digitization of railway logistics information, and the development of the China–Europe Railway Express. Sections 5.3 and 5.4 summarize the development of China’s ports, airlines, and aviation logistics in 2020 from three major aspects—transport volume, infrastructure development, and industry development. The final section concludes this chapter.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_5

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Table 5.1 Volume of goods transported by road freight and turnover in 2019 and 2020 in China Year

Volume of goods

Goods turnover

In billion tons

Growth (%)

In trillion t-km

Growth (%)

2019

34.36

–

5.96364

–

2020

34.26

−0.3

6.01719

0.9

Source Compiled from the Statistical Bulletin of Transport Development in the People’s Republic of China (2019–2020), published by the Ministry of Transport of China

5.1 Development of Road Freight in China 5.1.1 Slight Fluctuations in the Volume of Goods Transported by Road Freight and a Slight Increase in its Proportion in the Total Volume of Goods Transported as a Whole Road freight is the main mode of cargo transportation in China. The volume of goods transported by road shows an overall upward trend. In 2020, due to global factors such as COVID-19, the total demand for road freight transportation declined slightly. The volume of road freight decreased from 34.36 billion tons in 2019 to 34.26 billion tons in 2020, a year-on-year decrease of 0.3%. Unlike the decline in volume, road freight volume turnover maintained a momentum of growth in 2020. It increased from 5.96364 trillion ton-kilometer in 2019 to 6.01719 trillion ton-kilometer in 2020, a year-on-year increase of 0.9%. China’s road freight volume and turnover in 2019 and 2020 are shown in Table 5.1. In addition, road freight acted as an effective means of support in the transportation of supplies in response to COVID-19. As of 5 June 2020, 509.3 thousand tons of medical products such as medical alcohol, medical equipment, and personal protective equipment, as well as daily necessities had been transported to Hubei Province via road (Ministry of Transport of China 2020).

5.1.2 The Continued Optimization of the Road Freight Market Environment and the Strengthening of Leading Companies in This Sector In recent years, the taxation and fees related to the road freight market have become more favorable in China, providing a guarantee for the sustained and rapid development of the road freight market. In 2019, China’s “tax and fee cuts” started to cover the transport and logistics industry. VAT was lowered from 11% in March 2018 to 10% and eventually to 9% (EqualOcean 2019), effectively relieving the tax burdens of transportation-related industries. In June 2020, the General Office of the

5.1 Development of Road Freight in China

111

State Council promulgated the Implementation Opinions on Further Lowering the Logistics Costs to continue to bring down the costs of road transport. In terms of market segments, the express delivery market in China continued to experience accelerated growth in 2020. The total business volume and revenue of express delivery companies reached 83.36 billion items and RMB 879.54 billion, a year-on-year increase of 31.2% and 17.3%, respectively (State Post Bureau 2021). The concentration of China’s express delivery market has been relatively high in recent years. China’s express delivery brand concentration index (CR8) published by the State Bureau of Posts of China has remained at a high level, growing from 78.7% in 2017, 82.5% in 2019, to 82.2% in 2020 (State Post Bureau 2021). The market share of leading LTL (Less-than-Truck-load) transport enterprises further increased. According to 2020 Top 30 LTL Transport Enterprises released by the TUC Research Institute, the top 10 enterprises recorded total revenue of RMB 61.7 billion. This accounts for about 79.2% of these 30 enterprises’ total revenue (RMB 77.94 billion), which is an increase of 4% compared with the previous year (TUC Research Institute 2020). Leading truckload shipping enterprises witnessed growth in technological capabilities with expanding service scope. In August 2020, For-U Smart Freight, a tech platform for truckload shipping established a joint venture with Trunk, a technology provider for autonomous driving trucks. The two companies will explore the business model of “Autonomous Driving + Smart Operation”, empowering the truckload shipping industry with more advanced technologies.

5.1.3 Gradual Improvement in Infrastructures for Cold Chain Logistics and Rapid Development of Road Cold Chain Logistics China has ascribed great importance to infrastructure development for cold chain logistics. In July 2020, the National Development and Reform Commission promulgated the Notice on Promoting the Construction of National-Level Backbone Cold Chain Logistics Bases in 2020, setting out plans to construct the first 17 nationallevel backbone cold chain logistics bases to form an infrastructure network in China. In addition, the State provided a total of RMB five billion of financial support to 16 Provinces, Autonomous Regions, and Municipalities such as Hebei Province and Shanxi Province throughout 2020 to fund infrastructure development for cold chain warehousing. Cities benefiting from such financial support fully leveraged these regional advantages to actively promote the construction of national-level backbone cold chain logistic bases. In September 2020, the General Office of Hubei Provincial People’s Government issued the Three-Year Action Plan of Hubei Province to Strengthen Infrastructures for Cold Chain Logistics and Contingency Reserve Facilities in the Post-COVID Era (2020–2022). The plan proposed building a national-level backbone

112

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cold chain logistics base while also promoting the construction of cold-chain logistics infrastructures such as handling and sorting facilities based on local conditions. Cities like Fuzhou, Jinan, Hefei, and Zigong also seized the opportunity presented by the initiative to construct national-level backbone cold chain logistics bases, thus speeding up the cold chain infrastructure development (Professional Committee of Cold Chain Logistics under China Federation of Logistics and Purchasing 2021). According to the statistics published by the Cold Chain Logistics Committee of the China Federation of Logistics and Purchasing, the total cold storage capacity of China exceeded 70.8 million tons in 2020, indicating a year-on-year increase of 17.1%. The overall growth rate of the number of refrigerated trucks reached 21.7%, with the total number exceeding 261,000 (Cui 2020). As the main force of cold chain logistics, road cold chain logistics experienced rapid growth. In October 2020, on top of the new cold chain business, Full Truck Alliance announced that it would further utilize its advantages in matching services and better empower its clients at the two ends of the cold chain transport business. Since 2020, SF Express has provided clients across the pharma cold chain with one-stop solutions and services for transporting medicine.

5.1.4 Active Promotion of the Management and Maintenance of Rural Road Networks and Accelerated Development of Rural Logistics System Construction To further promote high-quality development of rural roads and resolve existing problems in the management and maintenance of rural roads, the General Office of the State Council promulgated the Opinions of the General Office of the State Council on Deepening the Reform of Rural Road Management and Maintenance Systems in September 2019 in a bid to establish a long-term mechanism for road management and maintenance in rural China. In October 2020, regions like Hebei Province started piloting rural road management and maintenance reforms and adopting performance assessment approaches for rural road management. In order to strengthen policy guidance, provinces such as Shanxi, Zhejiang, Jiangxi, Hunan, Sichuan, and Guizhou also issued concrete implementation plans to reform the management and maintenance mechanism for rural roads. Relying on the roadways, the construction of the rural logistics system was progressing steadily. In February 2020, the Opinions of the CPC Central Committee and the State Council on Carrying out Priority Work to Address Three Rural Issues and Completing the Building of the Moderately Prosperous Society in All Respects Within the Set Timeframe pointed out that supply and marketing cooperatives and postal express companies would be supported in the expansion of their logistics service networks in rural areas. In May 2020, the Ministry of Finance, the Ministry of Commerce, and the Poverty Alleviation Office of the State Council jointly issued the Notice on Promoting the Demonstration Project of Introducing E-Commerce to

5.2 Development of Railway Logistics in China

113

Rural Areas in 2020, proposing to support the construction of logistics and delivery systems in counties, townships, and villages and contribute to rural revitalization efforts. Road logistics in rural areas saw accelerated development. Jilin Province continued to construct road logistics points. As of September 2020, the coverage of township logistics services had reached 80% (Jilin Provincial Bureau of Transport 2020), meeting the demand for delivering small parcels and exchanging goods between urban and rural areas. Shexian County of Hebei Province made full use of the advantages of passenger transport stations, exploring the practice of using the same networks for both passenger and goods transportation as a way to provide e-commerce and logistics services to local villagers.

5.2 Development of Railway Logistics in China 5.2.1 Slowdown in Growth of the Volume of Goods Transported by Rail and Improvements in Cargo Categories The volume of goods transported by railway continued to increase in China from 2016 to 2020. In 2020, railways transported 4.46 billion tons of goods, a year-on-year increase of 3.2%. This represented a 4% decrease in the growth rate compared to the previous year. The turnover of railway freight maintained a steady growth trajectory from 2016 to 2020, reaching 3.03718 trillion ton-kilometers in 2020, as shown in Table 5.2. Among the major categories of goods transported, the volume of containers and bulk cargo such as coal, metals, metal ores, steel, and non-ferrous metals increased between 2016 and 2019. The volume of containers transported via railway experienced relatively rapid growth of 41% on average each year. However, the volume of Table 5.2 Volume of goods transported by railway, turnover, and growth rates from 2016 to 2020 in China Year

Volume of goods

Goods turnover

In billion tons

Growth (%)

In trillion t-km

Growth (%)

2016

3.33

–

2.37923

–

2017

3.69

10.7

2.69622

13.3

2018

4.03

9.1

2.88206

6.9

2019

4.32

7.2

3.00747

4.4

2020

4.46

3.2

3.03718

1.0

Source Compiled from the China Statistical Bulletin of National Economic and Social Development (2016–2020), published by the National Bureau of Statistics of China

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Table 5.3 Breakdown of goods transported by railway from 2016 to 2019 in China (in 10 thousand tons) 2016

Year Volume of goods transported by rail freight Category

Coal Fuel coke

2017

2018

2019

265,086

291,759

318,958

343,905

131,791

149,130

166,422

172,263

7,659

8,165

8,512

8,736

Petroleum

12,478

11,747

11,508

11,761

Steel and non-ferrous metals

15,276

17,131

18,474

20,467

Metal ores

36,188

38,749

41,870

46,426

Non-metal ores

5,071

5,706

6,273

7,824

Phosphate ores

1,298

1,257

1,633

1,347

Mining and construction materials

9,471

8,712

7,928

12,022

Cement

2,131

2,306

2,436

2,418

Timber

2,409

2,557

2,187

1,996

Grain

5,981

7,795

8,451

7,836

LCL goods

3,709

1,328

332

9

Containers

11,990

17,735

25,647

33,491

Source Compiled from the China Statistical Yearbook (2017–2020), published by the National Bureau of Statistics of China

LCL (Less-than-Container-load) goods continued to decline, particularly in 2019, where it decreased by 97.3%. Table 5.3 shows the breakdown of goods transported by railway from 2016 to 2019 in China. Worthy of note is that railway transportation played an important role in COVID19 containment and the resumption of work and production during the pandemic. In 2020, 992,000 tons of supplies were transported by railway to places such as Hubei Province and Wuhan City in 26,000 batches in response to the COVID-19 pandemic. Furthermore, 401 special trains were launched to send employees back to work; 13,900 medical staff traveled via railway to Hubei Province in 458 batches to assist in the fight against the pandemic (China State Railway Group 2021a).

5.2.2 Further Optimization of the Railway Network and Steady Progress Made in Overseas Railway Development Projects The railway network has been increasingly optimized in China with the construction of railway infrastructures. A backbone system was put in place, consisting of four north–south (vertical) and four east–west (horizontal) arterial high-speed railway lines. Construction was fast-tracked for the “Eight north–south (vertical) and Eight

5.2 Development of Railway Logistics in China

115

east–west (horizontal)” high-speed corridor railway lines and express trunk lines. In 2020, fixed asset investments in the railway sector reached RMB 781.9 billion in China and 20 new projects were undertaken. The amount of overall investment remained steady. A total of 4,933 km new railway lines were put into operation throughout the year (China State Railway Group 2021b). Progress was made in the development of the New International Land-Sea Trade Corridor (ILSTC). In 2020, freight trains made a total of 3,600 trips, transporting 190,000 TEUs, a year-on-year increase of 73% and 80%, respectively, covering all 12 western provinces/municipalities (Xinhuanet 2021). In December 2020, the Transport Coordination Committee for the ILSTC Railway Freight was officially established, aiming to reduce costs and improve services by sharing information and resources. The construction of overseas railway projects was accelerated. In November 2020, the Orange Transit Line of Lahore in Pakistan, the Belgrade–Zemun railway, and the left line of the Zemun–Batajnica railway started operations. In December 2020, the construction of the Vientiane–Luang Prabang section was finished ahead of schedule, completing the construction of the main structure of the China–Laos Railway. In the same month, all 237 sites for the Jakarta–Bandung High-Speed Rail started construction and the key control project, the No. 1 Tunnel, was completed.

5.2.3 The Acceleration of Mixed-Ownership Reforms and the Participation of Social Capital in the Development of the Railway Industrial Chain State-owned enterprises in the railway sector carried out mixed-ownership reforms and accelerated their listing process. In January 2020, Beijing–Shanghai High-Speed Railway Co., Ltd. was listed on the mainboard of the Shanghai Stock Exchange. In August 2020, Cars (Beijing) Railway Equipment Technology Co., Ltd. was listed on the STAR Market of the Shanghai Stock Exchange. In December 2020, the Daqin Railway Co., Ltd. convertible bond was issued. In addition, China State Railway Group Co., Ltd. (hereinafter referred to as China Railway) has been promoting mixedownership reforms and the listing of companies such as China Railway Special Cargo Services Co., Ltd. and Gemac Engineering Machinery Co., Ltd. Since 2020 the national railway asset securitization rate has increased from 1.3 to 5.4% and a modern enterprise system and operation mechanism has been initially established (China State Railway Group 2020b). State-owned railway enterprises also attracted non-government social capital to explore new business models across the railway industrial chain. In May 2020, China Railway Investment Co., Ltd., a subsidiary of China Railway Group and Bank of Hainan Co. Ltd., signed the Strategic Cooperation Framework Agreement and began to collaborate in areas such as railway capital operation, e-payment for cargo and passenger transport, and the leasing business. In November 2020, Guangxi Ningtie

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Catering Service Co., Ltd. was founded as a joint venture by Guangxi Railway Tourism & Media Group Co., Ltd., a subsidiary of the China Railway Nanning Group, Guangxi High-Speed Railway Catering Management Co., Ltd., and the Huzhou Tianluo Technology Partner Enterprise. The three parties hold, respectively, 35, 33, and 32% of the equity (Cnr.cn 2020).

5.2.4 Increased Digitalization of Railway Freight Operation and Constant Innovations in Logistics Operation Models There have been advancements in the construction of railway freight information systems in recent years. Since 2015, 95306.cn, a comprehensive service and marketing platform for railway logistics in China, has provided clients with all-inone services for cargo handling and information accessing. In 2018, railway freight documents were digitalized, enabling comprehensive information sharing, more efficient circulation of freight information and internal data, and seamless data connectivity (Wang et al. 2021). In July 2020, the 95306 “Digital Portal” was brought into service at all railway port stations in China. Customs clearance efficiency was greatly boosted with the online sharing of information related to customs and railway freight (China State Railway Group 2020a). With the continuous improvement of railway freight information technology, in order to further meet the increasingly diversified freight demand, the railway department continued to accelerate the promotion of logistics service innovation. In September 2020, China Railway Express Co., Ltd. teamed up with China Eastern Air Logistics Co., Ltd. to jointly develop the “high-speed railway + aviation” intermodality service. In November 2020, China Railway piloted the “high-speed railway + e-commerce” transportation model to transport goods with Fuxing bullet train fleets.

5.2.5 Significant Increase in the Number of China–Europe Railway Express Trips and Continued Improvements Made to Infrastructure and Service In 2020, 12,400 trips were made on the China–Europe Railway Express, a yearon-year increase of 50%. A total of 1.135 million TEUs were transported, a yearon-year increase of 56%, while 98.4% of container boxes were loaded on average and over 1,000 trips were made on a stable monthly basis (CCTV.com 2021). The number of inbound/outbound China–Europe Railway Express trains at major ports also increased significantly as shown in Table 5.4.

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Table 5.4 Number of China–Europe railway express trains passing through major ports in China in 2020 Port

Number of China–Europe railway express trains

Growth (%)

Alashankou Port

5,027

41.8

Horgos Port

4,722

38.8

Manzhouli Port

3,079

42.1

Erenhot Port

2,379

53.3

218

77.9

Suifenhe Port

Source Related news published by cnr.cn (Cnr.cn 2021) and chinanews.com (Chinanews.com 2021)

China–Europe Railway Express transportation and logistics services continued to innovate, and the level of intelligence continued to improve. First, efforts were made to explore possibilities of China–Europe Railway Express + cross-border ecommerce. In 2020, 28.04 million orders were fulfilled, transporting parcels with a total value of USD 61.7 million across the border via the China–Europe Railway Express (Zhengzhou), a year-on-year increase of 134% and 334%, respectively (Gao 2021). Second, breakthroughs were made in the construction of a cross-border multimodal transport bill of lading (B/L). In October 2020, China International Freight Forwarders Association (CIFA) piloted multimodal transport B/L on the China– Europe Railway Express, increasing the efficiency of railway freight. Third, the levels of intelligence steadily improved. In July 2020, the first automated unmanned railway terminal in China was completed in Xi’an. The China–Europe Railway Express information platforms such as the Chang’an single-window booking information platform were launched.

5.3 Development of Shipping Logistics in China 5.3.1 Continued Increase in Demand for Shipping Logistics with a Slowdown in Growth Rate In 2020, the throughput of ports totaled 15.82 billion tons in China, a year-on-year increase of 4.3%. The throughput of seaports increased by 3.2% year-on-year and that of river ports increased by 6.4% year-on-year. The throughputs of ports and their growth rates from 2016 to 2020 are shown in Fig. 5.1. The number of containers transported by waterway continued to grow. In 2020, a total of 260 million TUEs were shipped. However, there was only a 1.2% year-on-year increase due to the impact of the COVID-19 pandemic. The container throughputs and growth rates of ports from 2016 to 2020 are shown in Fig. 5.2. From 2016 to 2020, the volume of cargo transported via waterway continued to increase, reaching 7.62 billion tons in 2020. From 2016 to 2019, the annual growth

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Fig. 5.1 Nationwide throughputs of ports and growth rates 2016–2020. Source Compiled from the Statistical Bulletin of Transport Development (2016–2020), published by the Ministry of Transport of China

Fig. 5.2 Nationwide container throughputs of ports and growth rates. Source Compiled from the Statistical Bulletin of Transport Development (2016–2020), published by the Ministry of Transport of China

rate increased as well from 3.9 to 6.3%. Due to the COVID-19 pandemic, the growth rate registered −3.3% in 2020, the first negative growth rate for five years. The volume of cargo transported via waterway and the growth rates from 2016 to 2020 are shown in Fig. 5.3.

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Fig. 5.3 Nationwide volume of cargo transported via waterway and growth rates 2016–2020. Source Compiled from the Statistical Bulletin of Transport Development (2016–2020), published by the Ministry of Transport of China

5.3.2 Social Logistic Costs Lowered Due to Tax Reductions and Exemptions; Strong COVID-19 Containment Provided a Guarantee for Foreign Trade In order to ensure smooth industrial and supply chain flows for foreign trade, the Ministry of Transport of China issued the Notice on Temporarily Waiving Port Construction Fees and Reducing Compensation Funds for Vessel-Induced Oil Pollution Damage in March 2020, lowering the port construction fees collected, and reducing cargo dues and port facility security fees by 20% (Maritime Safety Administration of China, Ministry of Transport 2020). In December 2020, the Ministry of Transport of China promulgated the Notice on the Expiration of Port Construction Fee Collection Policy, canceling the practice of collecting port construction fees. In response, port companies in China also rolled out exemption and fee-cut policies for storage charges, driving down the costs for international logistics and optimizing the business environment for companies engaged in international trade and logistics. In order to reduce the spread of COVID-19 while ensuring the normal operation of ports during the pandemic, six Chinese ministries and national commissions— namely, the Ministry of Transport, the Ministry of Foreign Affairs, the National Health Commission, the General Administration of Customs, the National Immigration Administration, and the Civil Aviation Administration of China—promulgated the Notice on Precisely and Effectively Containing COVID-19 among the Crew of Vessels Engaged in International Voyages in April 2020, requiring seaports to implement shift-based work schedules in a safe and orderly manner. In June 2020, the Ministry of Transport issued the Operation Guidelines for the Prevention and Control of COVID-19 among Ship Crews (3rd Edition), providing systematic recommendations on containing COVID-19 and personal protection for crew members. In November 2020, the Operation Guidelines for the Prevention and Control of COVID-19 among Ship Crews (4th Edition) was issued to further strengthen risk

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control over COVID-19 among the crew and port workers. Port companies in China also implemented containment measures in accordance with local conditions. China’s overall COVID-19 containment strategies and the active response of the port companies have provided a sustained impetus to revive the sea freight market in China during the pandemic. Since October 2020, the prices for international sea freight started to rise significantly. The freight rate of the US West route increased nearly threefold in October 2020 compared with the rate in March 2020. The freight rate of the North Europe route also increased rapidly in November 2020. The China Containerized Freight Index broke 1,400 points in December 2020, hitting a record high (Sina Hong Kong Stock 2020).

5.3.3 Major Trends of Automation, Digitization, Green Development, and Greater Safety Accelerated High-Quality Growth in Shipping Logistics In February 2020, seven Chinese ministries and national commissions including the Ministry of Transport issued the Guidance Opinions on Promoting the High-Quality Development of the Maritime Industry, planning to foster a comprehensive system for a high-quality maritime industry by 2035 and achieve a world-leading position by 2050. It also pointed out that port logistics should pursue high-quality development. Automation, digitization, green development, and greater safety have become major development trends in port logistics in China. Automation In July 2020, the construction of a 200,000-ton DWT automated berth in the Xiang’an Terminal of Xiamen Port was approved. In August 2020, automation was completed for the General Cargo Terminal of Mawan Smart Port in Shenzhen. In September 2020, the Beibuwan Port sea-rail automated container terminal started construction. In October 2020, Tianjin Port realized the world’s first automated transformation of traditional container terminals. In November 2020, two automated container berths were put into service at the Qianwan Terminal of Qingdao Port. In December 2020, 47.3 TEUs could be handled per crane per hour at Yangshan Phase IV automated terminal, a record high (Morning Herald 2020a). Digitalization In June 2020, Qingdao Port and COSCO Shipping Lines Co., Ltd. launched a digital, contactless pickup program. In September 2020, the Blockchain-Based Yangtze River Logistics Integrated Platform was launched jointly by Shanghai Port and renowned international maritime solution providers such as COSCO Shipping Lines, Evergreen Marine Corporation, and CMA-CGM (Sohu 2020), further enhancing the global influence of Shanghai. In November 2020, major ports in the Guangdong–Hong Kong–Macau Greater Bay Area jointly developed the Port Logistics and

5.3 Development of Shipping Logistics in China

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Trade Facilitation Service Platform (Nanfang Daily 2020a, b), greatly shortening the waiting time for cargo clearance. Green Development Policy standards have been continuously improved, and clean, low-carbon targets and pollution prevention have become the foci of development. The Ministry of Transport issued the Implementation Plan for the 2020 Global Maritime Fuel Sulfur Limits in 2019 and the Guideline for Green Port Grading in May 2020, setting out higher requirements for green development of port logistics. Different localities have been actively promoting the construction of green ports. In March 2020, Chongqing Port started to implement the Implementation Plan for Dealing with Acute Pollutions Caused by Vessels and Ports to promote the transformation of environmental protection facilities to ensure that all ships’ garbage, residential sewage, and oily sewage are not discharged into rivers. In April 2020, Nanjing Port’s first shore-based highvoltage variable-frequency power project was successfully commissioned (Jiangsu Provincial Department of Transport 2020). Greater Safety In August 2020, the Ministry of Transport of China issued the Notice on Strengthening the Safety Management of Dangerous Goods at Ports, requiring ports to tighten the safety management of dangerous goods and speed up the promotion of port logistics safety. Port companies in China have also raised their safety management and risk control capability to a higher level. In May 2020, Xiamen Port issued the Measures to Incentivize Reporting Illegal Behaviors Concerning Port Safety and Shipping, improving the safety management of ports and shipping logistics. During the same period, Lianyungang established China’s first MSA-Customs dangerous goods joint inspection center, further strengthening the management of dangerous goods. In August 2020, Tianjin Port established a safety monitoring center. Full coverage monitoring of the storage and handling of dangerous goods was achieved through the 3D visualization system.

5.3.4 Increased Integration of Port Resources and Enhanced Regional Cooperation Among Ports Different ports within the same province were consolidated to reduce ports with overlapping businesses and improve the efficiency in the use of port resources. In August 2020, the Liaoning Port Group and the Dandong Port Group in Liaoning Province started to consolidate and restructure their assets. In the same month, the Fujian Provincial Port Group was founded and Xiamen Port joined it as one of its first members. In January 2020, the Jiangxi Port Group was established, integrating the resources of Jiujiang Port, Nanchang Port, and Shangrao Port.

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As port resources in the same province continue to be consolidated, ports within the same region have also engaged in greater cooperation. In April 2020, Hebei Port Group and Tianjin Port Group signed the Framework Agreement of Comprehensive and Strategic Cooperation to Build a World-Class Port Area of Tianjin and Hebei, bringing the Tianjin–Hebei port coordination to new heights. In the Yangtze River Delta, Shanghai proposed the implementation of the Six Action Plans on Promoting the Integration of Ports at the Yangtze River Delta in January 2020 to further the cooperation of ports at the Yangtze River Delta in Shanghai and Jiangsu Province. In the Guangdong–Hong Kong–Macau Greater Bay Area, the joint combined ports initiative was launched in November 2020 by the customs, maritime safety administrations, and transport bureaus of Guangzhou and Shenzhen. This will promote the coordinated development of hub ports and feeder ports by sharing complementary resources.

5.4 Development of Aviation Logistics in China 5.4.1 Cargo and Mail Throughputs of Airports Registered Negative Growth with Significant Decline for Domestic Airlines Due to the adverse impact of COVID-19, the cargo and mail throughputs of airports in China fell from 17.1 million tons in 2019 to 16.075 million tons in 2020, a year-onyear decrease of 6.0%, registering the first downturn after years of positive growth. Figure 5.4 shows the cargo and mail throughputs of civil airports in China from 2016 to 2020.

Fig. 5.4 Nationwide cargo and mail throughputs of civil airports, 2016 to 2020. Source Compiled from the Statistical Bulletin of Civil Aviation Airports (2016–2020), published by the Civil Administration of China

5.4 Development of Aviation Logistics in China

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Fig. 5.5 Growth rates of cargo and mail throughputs of domestic and international airway routes, 2016 to 2020. Source Compiled from the Statistical Bulletin of Civil Aviation Airports (2016–2020), published by the Civil Administration of China

The cargo and mail throughputs of domestic airway routes recorded a sharp decline while those of international airway routes registered growth. In 2020, cargo and mail throughputs of domestic airway routes totaled 9.474 million tons, a decrease of 11.0% compared with that of the previous year, registering negative growth for the first time after years of steady increase. Cargo and mail throughputs of international airway routes reached 6.601 million tons, indicating a year-on-year increase of 2.2%. Growth rates also increased by 1.8% from 2019. Figure 5.5 presents the growth rates of cargo and mail throughputs handled by domestic and international airway routes from 2016 to 2020. In addition, civil aviation freight provided strong support for the prevention and control of the pandemic. As of March 2020, 24,000 flights were involved in the prevention and containment of COVID-19. These flights transported 3.33 million items for the containment of the virus, totaling 32,000 tons of supplies. Among these, 652 flights went to Hubei Province, transporting 85,2000 items totaling 8,599 tons of supplies (Economic Daily 2020a, b).

5.4.2 Accelerated Infrastructure Development of Aviation Logistics and Continuous Improvement in Digitalization In 2020, the number of civil aircraft in China further increased, totaling 3,903 registered aircrafts, an increase of 85 compared with the previous year. Among these, 186 were registered as cargo aircrafts, amounting to 4.8% of all civil aircrafts, which is an increase of 0.3% compared with the previous year. Figure 5.6 shows the number of registered civil aircrafts in China from 2016 to 2020.

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5 The Development of Transport and Logistics in China

Fig. 5.6 Number of registered civil aircrafts in China, 2016–2020. Source Compiled from the Statistical Bulletin of Civil Aviation Airports (2016–2020), published by the Civil Administration of China

To address the shortcomings and weaknesses of air freight, facilitate air freight infrastructure development, and boost the capability of international air freight, the National Development and Reform Commission and the Civil Aviation Administration of China promulgated the Opinions on Promoting the Air Freight Infrastructure Development in September 2020, and committed to (i) enhancing the infrastructure and service quality of comprehensive airport cargo facilities, (ii) advancing the planning and development of specialized cargo hub airport layouts scientifically and orderly, and (iii) fostering an air cargo network with complete functions, optimized layout, and global access. In October 2020, the National Development and Reform Commission and the Ministry of Transport issued the Notice on Advancing the Construction of National Logistics Hubs in 2020. Beijing Airport-Based National Logistics Hub and Shenzhen Airport-Based National Logistics Hub were shortlisted in 2020. The construction of new airports and expansion projects made steady progress. In 2020, the construction of Hubei Ezhou Specialized Cargo Hub Airport and its supporting facilities were continuously advanced as China’s first airport mainly for air freight. After it becomes operational, it will usher in a new stage of China’s airway transport where air freight can be handled by both specialized cargo airport hubs and general aviation airport hubs (CAACNEWS 2021). In September 2020, the construction of the Phase III Expansion Project of Guangzhou Baiyun International Airport began, reinforcing its role as an air hub. In the same month, the Phase III Expansion Project of Lanzhou Zhongchuan International Airport and the Phase II Expansion Project of Fuzhou Changle International Airport were also launched. The total investment amounted to RMB 21.5 billion (FJSEN.com 2020b). In November 2020, the first test flight was conducted at Chengdu Tianfu International Airport, the second airport in Chengdu, making the city the third in China with dual airports after Beijing and Shanghai. The construction of the aviation logistics public information platform continued to advance, and information exchange has become increasingly standardized. With

5.4 Development of Aviation Logistics in China

125

regard to information platform development, “Baggage Travel” was recognized by the Civil Aviation Administration of China in October 2020 as the public information platform for civil aviation baggage tracking, laying a foundation for baggage tracking services across all airway routes. In December 2020, Zhengzhou Airport’s E-Platform for Air Freight Information and Service was officially launched, becoming the first avionics cargo information service platform in China. With regard to standardization of information exchange, in March 2020, the State Administration for Market Regulation issued the national standard—Specification for Information Exchange of Express Items in Air Transport. The specification stipulates the information exchange business process, communication interface, and information exchange security control between courier services and air transportation enterprises in express shipping. In December 2020, China Air Transport Association issued the Specification for Information Exchange of Aviation Logistics, standardizing the technical specifications and methods for information processing, data processing, and data interface, among other features, in the information service platform.

5.4.3 Improvement of the Air Freight Market and the Development of a New Landscape for Economic Activities Around the Airport State-owned air freight enterprises continued to invite diverse actors, resulting in the optimization of the market competition environment. In May 2020, Eastern Air Logistics Co., Ltd. released its IPO prospectus. In addition to the 45% stake owned by China Eastern Airlines, companies such as Legend Holdings and DEPPON Logistics also hold shares in the company (China Securities Regulatory Commission 2020). In November 2020, investors including Shenzhen International, Cainiao Smart Logistics Network, National Reform Double Hundred Development Fund, and Air China Cargo’s employee shareholding platform invested a total of RMB 4.852 billion to increase the capital of Air China Cargo. This accounted for 31% of the company’s shares (Sina Finance 2020). In December 2020, China Southern Air Logistics implemented the mixed-ownership reform, allowing employees to hold shares. With the opening of the air cargo business to international players, airline operating license and airline flight management policies have been issued one after another, and the policy environment for air logistics has been further improved. In May 2020, the Civil Aviation Administration of China issued the Notice on Further Optimizing the Management Policies for Cargo Flight Routes, easing the access to cargo flight route licenses, streamlining the procedures for reviewing flight arrangements to increase efficiency, and optimizing management measures for flights and air routes. In the same month, the Civil Aviation Administration of China and the Ministry of Finance jointly promulgated the Notice on Providing Financial Support Policy for Air Freight

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5 The Development of Transport and Logistics in China

Companies during COVID-19 to Improve the International Air Freight Capability, offering funds to “passenger-to-cargo conversions” projects and international cargo flights. On top of this, the Civil Aviation Administration of China introduced the Policy on Scheduling Cargo and Mail Flights in August 2020. This policy was the first of its kind in China and was promulgated to enhance the uptake rate of cargo flights and airport facilities for transporting cargo and mail. With the continuous improvement of the aviation logistics market environment and the piloting of free trade zones, emerging industries in economic zones around the airport continue to develop and the degree of openness continues to increase. There is a new trend of coordinated development across regions. For emerging industries, Beijing promulgated the Overall Plan for Developing the Demonstrative Economic Zone around Beijing Capital International Airport in February 2020, actively expanding new industries such as sci-tech services, emerging financial services, and culture tourism. In July 2020, the Changchun and Nanning Airport Economic Demonstration Zones were approved by the National Development and Reform Commission and the Civil Aviation Administration (National Development and Reform Commission 2020). In December 2020, the Fuzhou Airport Economic Demonstration Zone was approved, becoming the 17th of its kind in China (FJSEN.com 2020a). In terms of the opening-up efforts, the Overall Plan for Developing China’s (Beijing) Pilot Free Trade Zone promulgated in September 2020 pointed out that it was necessary to improve services for economic activities around the airport and open up further to the world. In November 2020, the Regulations for Zhengzhou AirportCentered Pilot Economic Zone was approved (The Standing Committee of Henan Provincial People’s Congress 2021), further opening up the air logistics market in Zhengzhou. The airport network in Sichuan and Chongqing has begun to take shape with the construction of the Chengdu Shuangliu International Airport, the Chongqing Jiangbei International Airport, and Chengdu’s second airport—Tianfu International Airport where its first test flight was successfully conducted in November 2020. This has promoted the coordinated cross-regional development of the airport economy.

5.4.4 Rapid Increase in Air Freight Capabilities and Accelerated Growth in the Charted Cargo Flights Business The air freight market environment has improved continuously with the development of an efficient aviation logistics infrastructure. State-owned airlines and private logistics companies have begun to accelerate the layout of their freight business and have started to operate new international air routes. In terms of state-owned airlines: As of April 2020, China Eastern Airlines had operated 240 international cargo flights per week, nearly doubling the number of flights in the same period in 2019 (CAACNEWS 2020). As of May 2020, China

5.5 Summary

127

Southern Airlines owns an air cargo fleet of 16 aircrafts after purchasing two new allcargo freighters, operating 56 international cargo flights per week (Morning Herald 2020b). As of December 2020, Air China Cargo has 15 cargo aircrafts and exclusively operates all Air China belly freights, operating in 43 countries and regions and 187 cities around the world (www.cs.com.cn 2020). Private logistics companies have also actively expanded their air freight business. In June 2020, YTO Express announced that it would invest in and build an aviation logistics hub in Jiaxing which will handle 2.4 million tons of cargo and mail with 94 planned cargo aircraft stands. In October 2020, JD.com announced its intentions to invest RMB 9.5 billion to build a super-hub airport to expand its air freight business around the globe. SF Airlines continued to expand its fleet, owning 61 all-cargo aircraft as of December 2020. It now has the largest number of all-cargo aircrafts in China and the fourth largest air cargo fleet in the world. New international cargo flight routes were opened and the cross-border cargo charter flight business witnessed rapid growth. In 2020, the Zhengzhou Airport comprehensive economic experimental zone’s cargo charter flights services started to grow rapidly and, in 2020, there were 158 flights on the Zhengzhou–Bangkok route. Cargo air routes gradually opened to destinations including the Philippines, the US, Europe, and Canada. Cainiao Global launched new cargo charter flights to Moscow, Kuala Lumpur, Tel Aviv, and Liège. Its ran nearly 200 chartered cargo flights between March and April; and 300 between May and June (Huanqiu.com 2020). Hainan Airlines had operated passenger-to-cargo chartered flights in many Chinese cities as of November 2020. SF Airlines also launched a number of new international freight routes with destinations including the US, Japan, Malaysia, India, Thailand, and Vietnam.

5.5 Summary Transport and logistics played a crucial role in the prevention and control of COVID19 in China and provided firm support for socio-economic development. This chapter summarized the development of roadway, railway, waterway, and airway logistics services in China from different perspectives. From the perspective of freight volume, growth slowed down in 2020 for roadway, railway, and waterway freight, and airway cargo throughput experienced negative growth. However, freight structure was further improved and the volume of railway containers increased on a steady basis. From the perspective of infrastructure development, leapfrog advancements have been made in rural road construction. New progress has been made in the construction of the New International Land-Sea Trade Corridor. Infrastructure and services were upgraded for China–Europe Railway Express. Automation, digitization, green development, and greater safety became major trends for port logistics. The construction of aviation logistics infrastructure has accelerated.

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5 The Development of Transport and Logistics in China

From the perspective of industry development, rural logistics and cold chain logistics have begun to develop rapidly. Digitalization continued to advance for various modes of transport. State-owned railway and aviation enterprises continued to introduce diversified participants while service levels across the logistics industry have improved rapidly.

References CAACNEWS (2020) The strongest fleet of passenger-to-cargo freighters! China Eastern Airlines takes the lead of airway logistics. http://www.caacnews.com.cn/1/6/202004/t20200420_129 9179.html. Accessed 20 April 2020 CAACNEWS (2021) 2021 prospects for airway freight in China. http://www.caacnews.com.cn/1/ tbtj_/202103/t20210302_1320206.html. Accessed 2 March 2021 CCTV.com (2021) China–Europe railway express registers 50% more trips in 2020 compared with the previous year and monthly trips maintains above 1,000. http://tradeinservices.mofcom.gov. cn/article/ydyl/yaowen/gnyw/202101/112484.html. Accessed 5 Jan 2021 China Securities Regulatory Commission (2020) Prospectus of Eastern Air Logistics Co., Ltd. http:// www.csrc.gov.cn/pub/zjhpublic/G00306202/202005/t20200511_376172.htm. Accessed 11 May 2020 China State Railway Group (2020a) 95306 digital portal is launched in railway sector in China. http:// www.china-railway.com.cn/xwzx/ywsl/2020a07/t2020a0709_106565.html. Accessed 9 July 2020 China State Railway Group (2020b) Reforms for China state railway group have made new progress in 2020b and the 3 year action plan for carrying out reforms will be implemented in 2021. http:// www.china-railway.com.cn/xwzx/zhxw/202101/t20210104_111506.html. Accessed 4 Jan 2020b Chinanews.com (2021) Number of trips made by China–Europe railway express via Xinjiang Khorgas Port records a new high in 2020. https://baijiahao.baidu.com/s?id=168903323708643 4787&wfr=spider&for=pc. Accessed 16 Jan 2021 Cnr.cn (2020) Mixed-ownership reform is launched with private company for the first time by China Railway Nanning Group. https://baijiahao.baidu.com/s?id=1682420580780255361&wfr= spider&for=pc. Accessed 4 Nov 2020 Cnr.cn (2021) 5,027 trips of China–Europe railway express transporting 456 thousand TEUs via Alashankou Port in 2020, ranking first in China. https://baijiahao.baidu.com/s?id=168922865342 5703129&wfr=spider&for=pc. Accessed 18 Feb 2021 Cui Z (2020) Review of cold chain logistics in 2020 and prospects in 2021. Logistics and Material Handling S2:14–15 Economic Daily (2020a) 24,347 flights for COVID-19 response and work resumption: an airway artery to transport supplies and people. https://baijiahao.baidu.com/s?id=166093289390882 5962&wfr=spider&for=pc. Accessed 12 Mar 2020a EqualOcean (2019) Two sessions on logistics: sectors including transport will have a tax reduction to 9%. http://tradeinservices.mofcom.gov.cn/article/yanjiu/hangyezk/201903/79010.html. Accessed 6 Mar 2019 FJSEN.com (2020a) Demonstrative economic zone approved: Fuzhou will expect major changes. https://baijiahao.baidu.com/s?id=1685505838602282550&wfr=spider&for=pc. Accessed 8 Dec 2020a FJSEN.com (2020b) Phase II expansion project of Fuzhou Changle International Airport was launched on 10 September with a total investment of RMB 21.5 billion. https://baijiahao.baidu. com/s?id=1677493283338172601&wfr=spider&for=pc. Accessed 11 Sept 2020b Gao Y (2021) China–Europe railway express: safe and stable in 2020 with a growing market momentum in 2021. China Economic Herald (7). Accessed 25 Feb 2021

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Huanqiu.com (2020) Passenger-to-cargo conversion: Cainiao adds 300 new chartered flights to transport parcels to the world. https://tech.huanqiu.com/article/3y9XOqoZlvD. Accessed 8 May 2020 Jiangsu Provincial Department of Transport (2020) The first project for onshore high-voltage frequency conversion is ready for use in Nanjing Port. http://jtyst.jiangsu.gov.cn/art/2020/5/13/ art_41987_9114294.html. Accessed 13 May 2020 Jilin Provincial Bureau of Transport (2020) More accessible rural logistics empowers rural revitalization. http://jtyst.jl.gov.cn/ygj/qsjtxx_133526/202009/t20200908_7464345.htm. Accessed 8 Sept 2020 Maritime Safety Administration of China, Ministry of Transport (2020) Notice on temporarily waiving port construction fees and reducing compensation funds for vessel-induced oil pollution damage. https://xxgk.mot.gov.cn/jigou/haishi/202003/t20200316_3345940.html. Accessed 16 Mar 2020 Ministry of Transport of China (2020) A total of 1.1758 million tons of medical and daily necessities have been sent to Hubei Province. https://mp.weixin.qq.com/s?__biz=MzI3MD QwMDQ5NQ==&mid=2247517528&idx=2&sn=c409a791f9152cf69a49e3e75cc18cb0&sce ne=0. Accessed 7 June 2020 Morning Herald (2020a) 3 years on: Yangshan Phase IV automated terminal is expected to handle over 4 million TUEs this year. https://baijiahao.baidu.com/s?id=1686840831954689075&wfr= spider&for=pc. Accessed 23 Dec 2020a Morning Herald (2020b) China Southern Airlines operates 56 weekly international cargo flights with two new B777 all-cargo freighters joining the fleet. https://baijiahao.baidu.com/s?id=166 7576132307713187&wfr=spider&for=pc. Accessed 24 May 2020b Nanfang Daily (2020b) The combined ports initiative has been launched for Guangdong–Hong Kong–Macau Greater Bay Area. A01. http://epaper.southcn.com/nfdaily/html/2020b-11/10/con tent_7913374.htm. Accessed 10 Nov 2020b National Development and Reform Commission (2020) NDRC and CAAC support Changchun and Nanning to develop demonstrative economic zones around the airport. https://www.ndrc.gov.cn/ xxgk/jd/jd/202007/t20200724_1234473.html. Accessed 24 July 2020 Professional Committee of Cold Chain Logistics under China Federation of Logistics and Purchasing (2021) National-level backbone cold chain logistics base is a concrete project. https:// www.sohu.com/a/444783332_608787. Accessed 15 Jan 2021 Sina Finance (2020) Mixed-ownership reform finished: Shenzhen International, Cainiao Smart Logistics Network, National Reform Double Hundred Development Fund invested a total of RMB 4.852 billion to increase the capital of Air China Cargo. https://baijiahao.baidu.com/s?id= 1683031586358563582&wfr=spider&for=pc. Accessed 11 Nov 2020 Sina Hong Kong Stock (2020) COSCO SHIPPING Holdings rises by over 6% and CCFI hits a historical new high. https://baijiahao.baidu.com/s?id=1686108853783916772&wfr=spider& for=pc. Accessed 25 Dec 2020 Sohu (2020) Shanghai port has launched the blockchain based Yangtze River Logistics Integrated Platform, offering end-to-end logistics chain real-time data for transport along the Yangtze River Economic Belt. https://www.sohu.com/a/421484538_120244154. Accessed 28 Sept 2020 State Post Bureau (2021) Statistical bulletin of post industry in 2020. http://www.spb.gov.cn/xw/ dtxx_15079/202105/t20210512_3901027.html. Accessed 12 May 2021 The Standing Committee of Henan Provincial People’s Congress (2021) Regulations for Zhengzhou Airport-Centered Pilot Economic Zone. http://www.zzhkgq.gov.cn/gqtl/4811499. jhtml. Accessed 5 Mar 2021 TUC Research Institute (2020) 2020 top 30 LTL enterprises list is released. https://baijiahao.baidu. com/s?id=1674789256558311392&wfr=spider&for=pc. Accessed 12 Aug 2020 Wang R, Huang M, Li G (2021) Developing railway freight logistics platform based on blockchain technology. China Railway 2021(5):103–107

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www.cs.com.cn (2020) China Southern Airlines finishes mixed-ownership reform with increasing competitiveness in air cargo transport. http://www.cs.com.cn/ssgs/gsxw/202012/t20201223_612 3558.html. Accessed 23 Dec 2020 Xinhuanet (2021) Embarking on a new journey for railway high-quality development—an interview with Lu Dongfu, a Deputy of the National People’s Congress and Chairman of China State Railway Group. http://www.chinarailway.com.cn/xwzx/mtjj/xhs/xinhua_pc/202103/t20210307_ 113554.html. Accessed 11 Mar 2021

Chapter 6

The Development Status of China’s Manufacturing Logistics Zhijuan Chen

The manufacturing industry is the mainstay of the national economy and the main source of total logistics demand of the whole society. In 2020, with the stabilization and security of the industry and supply chains, the reconstruction of the industry chains and construction of new types of infrastructure, China’s manufacturing logistics showed the following characteristics: logistics scale grew slightly throughout the year, manufacturing logistics continued its transformation and upgrading, as the industry moved toward intellectualization, digitalization and supply chain integration. Typical fields of manufacturing logistics, such as automobile logistics and electronic information logistics, were developing well. This chapter consists of three sections. Section 6.1 introduces the development environment of China’s manufacturing logistics, including the scale growth of the manufacturing industry, the stability of the industry and supply chains, the reconstruction of the industry chains, the construction of new infrastructure, and the policy environment of the manufacturing logistics. Section 6.2 elaborates on the development status of China’s manufacturing logistics, including the market scale of manufacturing logistics, the situation of the express delivery industry serving the manufacturing industry, the work-in-progress (WIP) logistics of the production companies, the use of intelligent logistics facilities, and the construction of an industrial logistics ecosystem. Section 6.3 depicts the development status of China’s manufacturing logistics in key areas, using two typical sub-sectors, automobile logistics and electronic manufacturing logistics, as examples.

6.1 The Development Environment of China’s Manufacturing Logistics In 2020, the growth rate of China’s manufacturing industry declined, but the industry still achieved sustained growth on an overall scale, ranked first in the world for the 11th consecutive year. Under the impact of the COVID-19 pandemic, the security © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_6

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and stability of China’s industry and supply chains have become greatly valued, and the pace of both industry chain reconstruction and new infrastructure construction has accelerated. At the same time, many policies were introduced in manufacturing logistics to provide important support and guarantees for the development of China’s manufacturing logistics.

6.1.1 The Scale of China’s Manufacturing Industry Continues to Grow as Its Growth Rate Declines In 2020, China’s manufacturing sector maintained its growth, despite the complex international situation and severe impact of the COVID-19 pandemic. The value added to all industries for the year was 31.31 trillion RMB, up 2.4% from the previous year, a lower growth rate. The value added of industries above designated size grew by 2.8%. Among these, the manufacturing industry grew by 3.4%, chemical raw materials and chemical products manufacturing grew by 3.4%, general equipment manufacturing grew by 5.1%, special equipment manufacturing grew by 6.3%, automobile manufacturing grew by 6.6%, electrical machinery and equipment manufacturing grew by 8.9%, and computer, communications, and other electronic equipment manufacturing grew by 7.7%. Figure 6.1 shows China’s industrial added value and growth rate for 2016–2020.

5.7

29

(Trillion RMB)

China's Industrial Added Value

31

6.1

31.31

31.19

6

30.11

5.5

27.51

5

27 25

6.5

24.54

4.8

4.5

23

4

21

3.5

19

3

17

2.4

Growth Rate (%)

6.2

33

2.5 2

15 2016

2017

2018

2019

2020

Fig. 6.1 China’s industrial added value and its growth rate, 2016–2020. Source Compiled from the 2020 China Statistical Bulletin of National Economic and Social Development, published by the National Bureau of Statistics of China

6.1 The Development Environment of China’s Manufacturing Logistics

133

6.1.2 The Stability and Security of the Industry and Supply Chains Have Become a Top Priority The supply chain system in the manufacturing industry is key to supporting the development of the industry. It is an organic whole formed by the interaction and integration of various interactive and interdependent manufacturing supply chains. A robust supply chain system is an important foundation to ensure the security of a country’s manufacturing industry. Since the COVID-19 outbreak in early 2020, global manufacturing production and circulation have been seriously disrupted, and the risks in China’s industry and supply chains have concentrated and become prominent. For example, major manufacturing industries have been affected to varying degrees. Some of the manufacturing industries “with both resources and markets abroad” have experienced supply tensions, or even “broken chains” with their high dependence on outside markets. The Central Government and the State Council promptly decided to include “ensuring the stability of China’s industry and supply chains” as a “task of maintaining security in six key areas” for 2020. In September 2020, the People’s Bank of China and seven other departments proposed to standardize and develop the supply chain inventory, warehouse receipt, and order financing, to offer financial support, stabilize the industry, enhance employment, and provide precise services to maintain the integrity and stability of the industry and supply chains. In October, the Fifth Plenary Sessions of the 19th Party Central Committee proposed to speed up the construction of “a new development paradigm featuring dual circulation, in which domestic and overseas markets reinforce each other, with the domestic market as the mainstay”. The core of the new development paradigm is to promote the smooth functioning of economic activities, including the flow between every domestic stage, industry, department, and region, as well as ensuring economic linkages between domestic and overseas activities. Against the backdrop of rising anti-globalization and the global spread of COVID-19, the primary task is to avoid the disruption and fragmentation of economic activities. Therefore, maintaining the security of the industry chains and the stability of the supply chains are important foundations in building the new development paradigm. An important way to realize the security and stability of the industry and supply chains is to raise their modernization level. The “14th Five-Year Plan for Economic and Social Development and Long-Range Objectives through to the Year 2035” clearly puts forward the basic requirement of “modernizing the industry and supply chains”. Accelerating the modernization of the industry and supply chains and improving the core competitiveness of China’s industries could help maintain the stability and security of these chains and accelerate the construction of a new development paradigm, with domestic circulation as the mainstay, and domestic and international markets reinforcing each other in dual circulation. This will promote higher quality, and more efficient, equitable, sustainable, and secure development.

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6.1.3 China Speeds Up the Reconstruction of Its Industry Chains In recent years, the established global industry chain pattern has faced massive challenges and is under pressure to reconfigure its organizational structure and geographical layout. China occupies a pivotal position in the global industry chain, and is the only country in the world with a complete industrial system and infrastructure, with all the industrial sectors listed in the UN Industrial Classification. In response to the global trend of industry chain reconstruction, the Chinese government has proposed to build a new development paradigm with domestic circulation as the mainstay, and domestic and international markets reinforcing each other in dual circulation to guide the manufacturing industry in this global industry chain reconstruction. This industry chain reconstruction of China’s manufacturing industry will not be a simple relocation, but a structural reconfiguration of factors of production, such as the infrastructure and business environment of each region, based on the development needs of advanced productivity. An industrial structure will be formed based on the innovation and development of vertically integrated industrial chain clusters. This structural reconfiguration will be reflected both internationally and domestically. Internationally, it will be reflected in the construction of regional industry-chain clusters to lead “the Belt and Road Initiative”, promoting the interplay between the domestic industry chains and the regional industry chain clusters in the abovementioned initiative, deeply embedding them into the global industry chain clusters. Domestically, it can be seen in the fostering of large circulation among domestic industry chain clusters on the eastern coast, in the central and western regions, and on the northeastern economic belt, fully unleashing the roles of the Yangtze River Delta, the Beijing–Tianjin–Hebei region, the Guangdong–Hong Kong–Macao Greater Bay Area, and other regional industry chain clusters in coordinating and interacting within regional economic circles. As it advances its industry chain reconstruction, China’s manufacturing industry is experiencing cooperation between manufacturers and spatial reconstruction. This will have a fundamental impact on the demand formats, spatial and temporal distribution, logistics hub functions, and service organization modes of manufacturing logistics. In the future, the key to building competitive advantages in manufacturing logistics can be found in the following areas: exploring new modes in developing manufacturing logistics, strengthening resource accumulation capacity, organizing and carrying out large-scale operations, and reconstructing the online spatial network and operation patterns of the industry.

6.1 The Development Environment of China’s Manufacturing Logistics

135

6.1.4 New Infrastructure Construction Enters an Accelerated Phase New infrastructure construction refers to infrastructure construction at the technology end, in eight major areas: 5G infrastructure construction, extra-high voltage, inter-city high-speed railway lines, urban rail transportation, electric vehicle batterycharging facilities, big data centers, Artificial Intelligence, and industrial Internet. In the manufacturing industry, new infrastructure construction will create new opportunities for complete transformation and upgrading in every area, prompting the move from labor-intensive to technology-intensive modes of operation, while fostering and cultivating new business forms and models in intelligent manufacturing. Since 2020, the Central Government, the State Council, and other relevant ministries and commissions have been intensively directing new infrastructure construction. In March 2020, the Standing Committee of the Political Bureau of the CPC Central Committee proposed in a meeting to accelerate the construction of new infrastructures, such as 5G networks and data centers. The “Report on the Work of the Government in 2020” made the construction of new infrastructure a key task for that year. In March, the Ministry of Industry and Information Technology conducted a special meeting 5G development to look at the need to accelerate the construction of 5G networks and other new infrastructure. In the same month, the Ministry issued a policy to accelerate the construction of national industrial Internet data centers and data sub-centers around the country. In April, the National Development and Reform Commission clarified the definition of “new infrastructure” for the first time from the top-level design position. This new infrastructure includes three main aspects: (1) Information infrastructure, referring mainly to infrastructure based on the evolution of a new generation of information technology; (2) Convergence infrastructure, referring mainly to the intensive application of the Internet, big data, Artificial Intelligence, and other technologies to support the transformation and upgrading of traditional infrastructure, which will in turn lead to the formation of convergence infrastructure; (3) Innovation infrastructure, referring mainly to support infrastructure in scientific research, technology and product development with public welfare attributes. In August, the Ministry of Transport issued a guideline, specifying 14 major tasks for the construction of new infrastructure in the transportation sector. At the same time, various companies in the industry were competing to construct new infrastructure. For example, in July 2020, Aliyun officially inaugurated three super data centers in Nantong, Hangzhou, and Ulanqab, which added more than one million servers, covering the three major economic belts of the Beijing–Tianjin– Hebei region, the Yangtze River Delta, and the Guangdong–Hong Kong–Macao Greater Bay Area. In August, the first big data center of the China National Nuclear Corporation (CNNC) officially began construction. In September, China Electronics Standardization Institute (CENSI) held a seminar on new infrastructure which was attended by 20 companies, including Intellifusion, Baidu, Aliyun and

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Tencent, proposing to form a “Service Alliance for New Information Infrastructure Construction.” As the new infrastructure accelerates its pace of construction, the traditional Internet is also swiftly upgrading to industrial Internet. The traditional manufacturing industry is speeding up its transformation to digitalized, networked, intelligent manufacturing. Manufacturing logistics, an important support to realize the smooth functioning of the entire production and operation process and the synergy of all factors of production, will usher in a new era of comprehensive digital transformation.

6.1.5 The Policy Environment for Manufacturing Logistics Continues to Improve The Chinese government attaches great importance to the healthy development of manufacturing logistics. In 2020, relevant departments issued many policies to support and promote the development of the industry, as shown in Table 6.1. These policies mainly involve the following aspects: (1) promoting the deep integration of the express delivery industry with the manufacturing industry, deepening industrial cooperation, synergizing industrial layout and its deep integration with overseas operations; (2) deeply integrating the manufacturing logistics industry into the body of enterprises, facilities, business processes, standards and norms, and information resources; (3) promoting the innovative development of service-oriented manufacturing, by supporting manufacturing enterprises in building intelligent logistics and storage facilities, and helping manufacturing enterprises with the right qualifications to carry out centralized procurement, vendor-managed inventory (VMI), lean supply chain, and other modes and services in the industry’s upstream and downstream sections.

6.2 The Development Status of China’s Manufacturing Logistics In 2020, China’s manufacturing logistics maintained an overall trend of stable growth. The scale of manufacturing logistics rebounded quarter by quarter and grew slightly year on year. The integration level of the express delivery industry with the manufacturing industry deepened, and the intellectualized level of line/auxiliary logistics improved. There was wider promotion and application of intelligent logistics solutions, while the pace of industrial logistics ecosphere construction also accelerated.

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Table 6.1 Relevant policies on China’s manufacturing logistics in 2020 Date of issuance Department(s) of issuance

Name of policy document

Main ideas

Feb 2020

The State Post Bureau, the Ministry of Industry and Information Technology

Opinions on promoting the deep integration of the express delivery industry with the manufacturing industry

To further expand the scope of the express delivery industry and the manufacturing industry by 2025, and form supply chain service capabilities covering procurement, production, sales, and after-sales aspects of the relevant manufacturing industries

July 2020

The Ministry of Industry and Information Technology and 14 other departments

Guiding opinions on further promoting the development of service-oriented manufacturing

Support manufacturing enterprises to build intelligent logistics and storage facilities; encourage manufacturing enterprises to open up warehousing logistics, data analysis, and other services

Sep 2020

The national development and reform commission and 13 other departments

Implementation plan to promote the deep integration, innovation and development of the logistics industry with the manufacturing industry

The implementation plan specifies the development goal to deeply integrate the logistics industry with the manufacturing industry by 2025, focusing on five key aspects and six key areas of deployment

6.2.1 The Scale of Manufacturing Logistics Maintains a Trend of Continuous Growth In 2020, China’s manufacturing logistics demand showed a trend of steady recovery after its previous fall. Total industrial logistics declined by 8.4% in the first quarter, and 1.3% in the first half of the year, and grew by 1.2% in the first three quarters. Total industrial logistics for the year was 269.9 trillion RMB, up 2.8% year on year. Figure 6.2 shows the growth of total industrial logistics in the past six years. From the structural point of view, the significant rebound of the manufacturing industry strongly supported the steady recovery of industrial logistics demand. Logistics demand for the equipment manufacturing industry and pharmaceutical manufacturing industry was also improving. Logistics demand from many sub-sectors of the

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equipment manufacturing industry maintained more than 10% growth. The equipment manufacturing industry contributed more than 70% to the growth of industrial logistics demand. Logistics demand relating to new growth drivers continued to grow, and the growth rate of the high-tech manufacturing industry maintained a leading position. Logistics demand from the high-tech manufacturing industry grew by 7.1% in 2020, further accelerating the transformation of old energy to new (China Federation of Logistics and Purchasing, China Logistics Information Centre 2020). Industrial Products Logistics (IPL) is the main source of China’s social logistics demand. From 2015 to 2019, China’s total industrial products logistics in the total social logistics was maintained at more than 90%. In 2020, total industrial products logistics accounted for 89.9% of total social logistics, as shown in Table 6.2.

Total Value of Industrial Products Logistics (Trillion RMB)

270.0

6.1

6.2

6.0

7.0 6.0

5.7

256.8

260.0

269.9

269.6

5.0

250.0 234.5

240.0

4.0

230.0 220.0 210.0

2.8

214.0 204.0

3.0 2.0

200.0

Growth Rate (%)

6.6

280.0

1.0

190.0

0.0

180.0 2015

2016

2017

2018

2019

2020

Fig. 6.2 China’s total value of industrial products logistics and its growth rate, 2015–2020. Source Compiled from related data in the National Logistics Report (2015–2020), published by the National Development and Reform Commission and the China Federation of Logistics and Purchasing (CFLP)

Table 6.2 China’s total value of industrial products logistics and its proportion in total value of social logistics, 2015–2020 Year

Total value of social logistics (trillion RMB)

Total value of industrial products logistics (trillion RMB)

Proportion of total value of industrial products logistics (%)

2015

219.2

204.0

93.1

2016

229.7

214.0

93.2

2017

252.8

234.5

92.8

2018

283.1

256.8

90.7

2019

298.0

269.6

90.5

2020

300.1

269.9

89.9

Source Compiled from related data in the National Logistics Report (2015–2020), published by the National Development and Reform Commission and the CFLP

6.2 The Development Status of China’s Manufacturing Logistics

139

6.2.2 The Field and Scope of the Express Delivery Industry Servicing the Manufacturing Industry Keeps Expanding The express delivery industry is an important part of modern logistics, and provides important services for the development of the manufacturing industry. The traditional service scope of the express industry is mainly focused on the consumer side in the downstream section of the industry chain. In recent years, as promoted by the State Post Bureau and the Ministry of Industry and Information Technology, the express delivery industry continues to expand its services to the upstream part of the industry chain at the manufacturing end. There are many typical cases of the express industry servicing the manufacturing industry. On the one hand, express delivery companies are constructing infrastructure for shared, intelligent, and efficient express logistics in manufacturing-concentrated areas. For example, Deppon has built a well-thought-out, strategically-positioned hub node1 around Xiangyang Auto Base, which can provide auto parts deliveries for auto enterprises in the region. Another example is ZTO Express purchasing 216.6 thousand square meters of land in Changchun International Automobile City in 2020. It plans to invest one billion RMB to build an intelligent e-commerce industrial park in Northeastern China. Also, express enterprises and manufacturing enterprises are cooperating in building an integrated end distribution and warehouse distribution for the express industry servicing the manufacturing industry. For example, since 2018, ZTO Express has synergized its industrial layout centering around the Changchun Fawsn Group Co., Ltd. network, and has successively set up warehouses in Changchun, Beijing, Chengdu, and Guangzhou. The company has incorporated “inbound express” services, opened information channels between the central warehouse and each transit warehouse, and implemented a “multi-point, multi-warehouse, nearby distribution” mode of distribution and stock preparation. SF Express has also launched its “SF—Xtep Cloud” integrated warehouse and distribution project, adopting digital storage management to provide Xtep with highly-informationized, integrated warehouse and distribution services. SF Express has also adopted the integrated model of “storage + distribution” and located Zhejiang View industrial Co., Ltd.’s Hangzhou warehouses in SF Express, using big data technology to design fast delivery stations and transit sites for the online store of its subsidiary company, Chiushui Apparel. On top of that, express companies continue to optimize and upgrade their product packaging structure to better meet the packaging needs of manufacturers. For example, ZTO Express has customized more than 30 kinds of packaging boxes for different product volumes of the Changchun Fawsn Group Co., Ltd. Another example is SF Express cooperating with Foshan’s ceramics companies, constantly upgrading their packaging—from the initial nail wooden frames to perforated splints, and then to honeycomb cartons. Another example is Deppon Xiangyang Branch, which 1

Node here refers to the network node of the express delivery business.

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purchases special cartons, wooden strips, and cutting machines, opening specialized areas in their nodes, and arranging dedicated staff to make reinforced wooden boxes according to the weight and size of different auto parts, to meet the individual and particular needs of customers.

6.2.3 The Line/Auxiliary Logistics of Manufacturing Enterprises Quickens the Pace of Intellectualization In recent years, “intelligent manufacturing” has been identified as a key industry in the transformation and upgrading of logistics driven by manufacturing innovation. Consumer demand has become diversified, and the manufacturing industry is moving toward producing multiple varieties in small batches. Creating highly flexible intelligent production lines has become an important part of the transformation and upgrading of manufacturing enterprises. To guarantee the smooth operation of intelligent production lines, the improvement and upgrading of WIP logistics has become a focus of the industry. Advanced information systems and a large amount of automated and intelligent technology equipment is now widely used in the storage, arrangement, sorting, and distribution of WIP materials. In WIP logistics, the demand for mobile robots is rising. These robots are seen as integrated systems combining multiple functions such as environment sensing, dynamic decision-making and planning, and behavior control and execution. According to statistics, 41,000 new mobile robots for industrial applications (AGV/AMR) were added to the Chinese market in 2020, up 22.75% from 2019 (xzlrobot.com 2021). In addition to the widespread use of industrial robots, manufacturing companies are also actively strategizing their layout and constructing automated and intelligent WIP logistics systems. In the construction of whole production process automation systems, Hsu Fu Chi has successfully integrated automated equipment operation and digital management by introducing AGV (Automatic Guided Vehicle) intelligent handling robots, an intelligent logistics operating system “Hetu,” and other hard-and-soft-integrated smart logistics solutions. It has successfully integrated automated equipment operation and digital management into all its processes, from upstream supply to delivery of the finished products, thereby achieving complete automation of handling operations at production sites, and significantly improving the timeliness and accuracy of material handling. In the creation of intelligent conveyancing systems, the intelligent factory of Zhejiang Asd Co., Ltd., located in Wenling, Zhejiang Province, uses nearly three kilometers of pallet-conveying belts, more than 40 hoists, two large stereoscopic warehouses, multiple WIP warehouses, and AGV handling to ensure the orderly flow of raw materials, production lines, and finished products in its conveyance system.

6.2 The Development Status of China’s Manufacturing Logistics

141

FAW-Volkswagen applied VSLAM independent vision navigation technology2 in WIP handling, temporary storage, and loading/unloading to achieve collaborative, multi-machine operations and to solve the problem of dense storage and single-lane conflict. In the construction of intelligent material replenishment systems, Unilever Hefei Industrial Park has built a smart digital system for material replenishment with the help of AGVs. One-touch vision recognition robots and sensors are installed in the production lines in tandem operation, realizing the timely, accurate, and efficient delivery of required materials to the corresponding production lines. Tianjin Chase Sun Pharmaceutical Co., Ltd. has built an intelligent production line system integrating smart medicinal formulation, conveyance, storage, palletizing, ingredient mixing, cleaning, dust removal, inspection and review, achieving coverage of the entire process, from medicinal formulation, storage and the addition of a single ingredient, to the storage and mixing of multiple medicinal ingredients. This has greatly enhanced the automation level of its production and raw material distribution. An example of parts picking efficiency of WIP warehouses, the Chery Jaguar Land Rover Automotive Co., Ltd. plant in Changshu has implemented an AMR (Autonomous Mobile Robot) cargo-to-person pick-up project for the entire vehicle plant. The project uses nearly 300 AMRs and support workstations, shelves, and other equipment to realize automated parts picking and sorting operations in its SPS (Set Parts Supply) WIP warehouses, using functions like task relay, dynamic inventory management, and flexible zonal implementation. Since the implementation of the project, the area utilization rate of WIP warehouses has reduced by 25%, picking efficiency has increased by 250%, and the number of laborers has been reduced by 40%.

6.2.4 Intelligent Logistics Equipment is Widely Used In recent years, along with the rise of intelligent manufacturing, the integration of logistics technology with the manufacturing industry has become a key direction in manufacturing logistics development. Automated and intelligent logistics technology and logistics solutions have become widely used and accepted in the manufacturing industry, signifying a future trend. In the use of intelligent equipment in flexible manufacturing, Standard Robots Co., Ltd. provides customized logistics solutions in flexible industrial logistics to their customers in various industries. As of March 2021, the company had delivered over 1,500 AMRs, which are widely used in hundreds of manufacturing companies in the 3C electronics, automotive auto parts, new energy, semiconductor, medical and pharmaceutical industries. 2

VSLAM visual navigation is a navigation technology that uses a camera to acquire images of its surrounding environment. After filtering and computing the images, it determines its own position and makes path recognition and navigation decisions.

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Regarding the use of intelligent logistics facilities in manufacturing warehousing, many Kiva-like automated solution providers focusing on e-commerce warehousing have also entered the manufacturing warehousing sector. Hikrobot Technology Co., Ltd. has been expanding its product configurations with mobile robots, industrial vision-sensing technology, algorithm platform, AGV and SLAM laser-guided composite robots, using these technologies to enter the automobile, tobacco, and medical industries. Geek+ has launched new handling and smart factory solutions using the SLAM laser navigation technology. Its flexible logistics solutions have been used in SIEMENS, Dell, Foxconn, Toyota Motor Corporation, Foton Daimler, Beijing Foton Daimler Automotive Co., and many other leaders of industries. Quicktron Intelligent Technology Co., Ltd. has launched smart warehouse handling solutions in many fields, such as automobiles, aviation, and medicine. SpeedBot Robotics Ltd. takes AI + 3D vision technology and product innovation as its core competitive element, and has launched the industry’s first multi-SKU, hybrid unordered palletizing robot in the warehouse logistics industry. An automatic sorting system for thousands of steel plate cutting and blanking operations was implemented, and a number of core products, such as a mobile picking and replenishing robot based on 3D vision guidance were implemented in the express logistics industry.

6.2.5 The Accelerated Creation of an Industrial Logistics Ecosphere From the perspective of the current development status of manufacturing logistics, the intellectualization of manufacturing enterprises faces many opportunities and challenges, such as wider application scenarios, multi-form manufacturing equipment, and diversified innovative technologies integration (IM Robotic 2020). In order to fully leverage the advantages of all parties and improve the allocation efficiency of each resource element, the industry has accelerated its pace in constructing an industrial logistics ecosystem. A number of enterprises have started to work together and build a smart industrial logistics ecosystem. For example, in November 2020, Guangzhou Iplus Technology Co., Ltd., Pengxiang Motor mobile, Quicktron Intelligent Technology Co. Ltd., Visionnav Robot Technology Co., Ltd., and Jaka Robot Technology Co., Ltd. signed a contract to jointly build a “Smart Industrial Logistics Ecosphere” to promote the use of mobile logistics robots. In the future, all parties will work together on the product, service, quality, solution and market levels to build omni-channel logistics for industrial manufacturing, and help end-users to solve the practical application problems of batch and multi-scenario implementation, and the efficient merging and coordination of multi-source logistics facilities with a one-stop solution. The various parties are also actively committed to offering a one-stop, intelligent factory logistics solution for end-product users facing the problem of usage under different scenarios,

6.3 The Development Status of Two Typical …

143

and of rapid assemblage and extension of applications, assisting one another for the entire life cycle of the cooperative ecology project. Core logistics hubs in the manufacturing ecosystem are also being built at a faster pace. For example, in December 2020, the Wuhan Industrial Port project, which is developed, constructed, and operated by Wuhan Steel Group Logistics Co., began construction. With a total planned area of about 3,269 acres and a total investment of about 5.7 billion RMB, the project will be built in three phases and is scheduled to be completed within five years. “Five zones and two centers” are planned for the project, including a port terminal operation zone, an intelligent warehousing and distribution zone, a green bulk storage zone, a port industry zone, a port-city integration zone, a commodity trading center, and a logistics trading center. Once the project is completed, it will become the core logistics hub of the Baowu steel ecosystem on the Yangtze Economic Belt, serving steel mills and steel trading customers such as Wuhan Iron and Steel Company, Ezhou Iron and Steel Company, MASTEEL, and providing them with comprehensive services in trade, finance, logistics, and processing.

6.3 The Development Status of Two Typical Manufacturing Logistics Industries in China Automobile logistics and electronics manufacturing logistics are important manufacturing logistics industries. In recent years, China’s automotive logistics industry has been moving toward economic restructuring and service transformation and upgrading, as industry cooperation continues to deepen, with further improvements in the intellectualization and standardization system. The size of logistics in the electronics manufacturing industry is expanding, as its industry chain quickens its transformation toward the industrial Internet, with increasing and accelerating applications of intelligent and flexible logistics systems and technologies.

6.3.1 Development Status of the Automobile Logistics Industry In 2020, China’s automobile production and sales were still showing a downward trend, but the rate of decline had slowed. According to CFLP, China’s automobile production and sales reached 25.2 million units and 25.3 million units, respectively in 2020, down 2.0% and 1.9% year on year, contracting by 5.5% and 6.3%, respectively from the previous year (China Automotive Logistics Association of CFLP 2021). In the face of such a severe market environment, China’s automotive logistics industry is moving toward economic restructuring, and service transformation and upgrading.

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Increasing Cooperation Between Logistics Enterprises and Automobile Manufacturing Companies

China’s automobile logistics industry has a large number of enterprises and a high degree of market concentration. In 2020, four automobile logistics enterprises were selected as the “Top 50 Chinese Logistics Enterprises in 2020”, many other enterprises being graded as “5A” logistics enterprises. Led by the dominant firms, there has been increased cooperation between automobile logistics enterprises and automobile manufacturing enterprises. For example, in November 2020, SAIC Anji Logistics Co., Ltd. and the MINTH Group reached a strategic cooperation, in which the two companies would engage in intensive cooperation in the fields of production logistics, intelligent facilities and services, packaging, IT development and application, as well as import and export-related services, to create a competitive global logistics management system. Another example is Zhaochi Supply Chain Management Co., Ltd. It has focused on “automobile supply-chain services”, constantly optimizing solutions, upgrading support technologies and unblocking the entire informationization chain, providing one-stop supply chain services for the automobile logistics industry. In November 2020, Zhaochi Supply Chain Management Co., Ltd. and CHEP Logistics Equipment Co., Ltd. entered into cooperation in the automobile sector to build a secure and efficient supply service bridging automobile OEMs with their parts manufacturers. In April 2021, Zhaochi Supply Chain Management Co., Ltd. also entered into cooperation with ContiTech Rubber and Plastic Technology Co. to provide auto parts logistics services for ContiTech’s six major factories in Changchun, Qingdao, Changzhou, Changshu, Ninghai and Zhangjiagang. Its services cover more than 100 cities in 22 provinces, and involve a variety of transport vehicles such as flying wings, refrigeration, and air cushions.

6.3.1.2

The Intellectualization Level of Automobile Logistics is Constantly Improving

In recent years, the automobile industry has continued to promote the development of intelligent manufacturing. By bringing in more automated logistics systems in the construction of smart factories, and applying intelligent products (such as AGV, automatic 3-D warehousing, and the IoT) to enhance production automation and optimize procedures, it has improved quality and efficiency, and lowered costs for in-factory logistics. The pace of upgrading and constructing smart factories for automobiles has also accelerated. For example, the Tianjin branch of FAW-Volkswagen Platform Parts Co., Ltd. embarked on its project of upgrading to smart factories in 2020. The project covers production workshops and finished goods warehouses in Tianjin, realizing logistics handling automation and intelligent storage management of finished goods in the front production line, the side cache area, the finished goods storage area, and the outbound sorting area. Another example is the Huishan plant of Faw

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Jiefang Automotive Company. This has created a “three-in-one” integrated intelligent manufacturing system, integrating smart production scheduling, intelligent production assurance and intelligent logistics system by applying RFID, DNC and other IoT technologies to achieve real-time production data collection, algorithmic decision-making, and automatic feedback. The smart logistics system of auto parts manufacturing enterprises continues to be applied on the ground. For example, in March 2020, BOSCH Steering System Co., Ltd.3 launched its first full-process smart logistics system, Smart Log. The project covers production workshops, raw material warehouses, and finished product warehouses of its Nanjing plant, overseeing the entire logistics process of raw material storage, quality control, bale turning, sorting, delivery, and finished product distribution and storage. In addition, logistics facilities for automobile manufacturing have been improving their intellectualization and automation levels. For example, in November 2020, the Shanghai and Guangzhou production bases of Evergrande New Energy Vehicle Co., Ltd. started full-line trial operation. The two bases were built in accordance with Industry 4.0 standards, with a total of 2,545 robots operating unmanned production lines, using AI and IoT technologies in stamping, body assembling and painting. Shanghai Automobile Works Co., Ltd. has implemented an in-factory logistics automation project at its Yantai site, automating and informatizing the entire factory logistics process, including material handling, conveying, storage, sorting, placing on production belts, post-production loading and unloading, and the returning of empty containers.

6.3.1.3

An Increased Proportion of Automobiles Transported by International Logistics Railroads

In 2020, due to the COVID-19 pandemic, international sea freight schedules were reduced. Freight rates went up, loading and unloading efficiency was low, and traditional sea shipping became greatly restricted. The railroad transportation represented by “China–Europe Railway Express” became the main service mode of international logistics for automobiles, characterized by stability, high efficiency, low cost, and less operating manpower. In 2020, the logistics import and export of vehicles and automobiles via the “China–Europe Railway Express” became more widespread. Take Xi’an land port as an example: the China–Europe Railway “Chang’an Line” dispatched 3,720 trains carrying 37,000 import and export vehicles, an increase of 160% compared with 2019 (China Automotive Logistics Association of CFLP 2021). In addition to container transportation, railroad JSQ6-type cars4 are also used 3

As China’s passenger automobile industry moves toward systemization, Bosch China is its largest auto parts company, with the highest market share, integrating development and manufacturing. Its customers include more than 40 OEMs such as Volkswagen, General Motors, Geely, SAIC Passenger Cars, Mercedes-Benz, and Honda. 4 JSQ6-type cars are the main vehicles used to transport whole vehicles on China’s railway lines.

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in cross-border transport, laying the foundation for Russian, and even European markets being serviced by dedicated Chinese railway freight lines.

6.3.1.4

The Standardization of Automobile Logistics Continues to Improve

In 2020, the automobile logistics industry continued to improve its standardization. The national “Configuration requirements for multimodal transport facilities and equipment of finished vehicle logistics” (GB/T 39448-2020) and two other industry standards “Specifications for automotive knocked-down packaging and containerloading process operations” (WB/T 1101-2020) and “Specifications for automotive spare parts storage operations” (WB/T 1102-2020) were officially released. Three industry standards—“Specifications for automotive manufacturing parts logistics transport labeling,” “Quality testing specifications for automotive parts export knocked-down packaging,” and “Specifications for automotive spare parts packaging operations”—were also completed. With the formulation and release of these industry standards, China’s automobile industry has continued to perfect its standardization system, promoting the healthy and orderly development of China’s automobile logistics.

6.3.2 Development of Logistics in the Electronics Manufacturing Industry The electronics manufacturing industry is an important strategic industry of China’s national economy. In recent years, thanks to increasing national policy support and an active influx of domestic and foreign capital, the computer, communications and other electronic equipment manufacturing industries have developed rapidly. According to national statistics, the added value of the electronic information manufacturing industry above designated size increased by 7.7% year on year in 2020 (Ministry of Industry and Information Technology 2021). The electronics manufacturing logistics industry also made significant progress in the same year.

6.3.2.1

The Electronics Manufacturing Industry Chain Transforms and Upgrades, Moving Toward Industrial Internet

Large electronics manufacturing enterprises have accelerated the creation of Industrial Internet platforms. For example, Huawei, using mobile IoT, cloud computing, big data, and other innovative ICT technologies, continues to apply the new model of agile manufacturing to the entire manufacturing life cycle, creating the Huawei Industrial Internet platform, Fusion Plant. Fusion Plant is made up of three different

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platforms: a connection management platform, an industrial intelligent platform, and an industrial application platform. It uses data connectivity to ensure the flow of supply information in production, transportation, warehousing, and distribution. Another example can be seen in the Midea Group, which created an industrial Internet platform, Midea M.IoT, in its industrial Internet transformation, integrating equipment, production lines, factories, suppliers, products, and customers to achieve full integration of the entire industry chain. The applications of the industrial Internet in electronic manufacturing enterprises are also expanding. For example, Foxconn has developed its own industrial Internet platform, many self-developed facilities, and intelligent software, connecting its equipment, workshop and enterprise segments with the supply chain, to intelligently assist producers, managers, and decision-makers. Another example is the Midea Group. With the help of industrial Internet technologies, the Midea Group has integrated Midea’s factories, raw material suppliers, and each of their logistics service providers onto a single platform, realizing the horizontal business synergy of all parties through unified reception and unified logistics task arrangements for its raw material suppliers.

6.3.2.2

Intelligent Production Logistics in Electronics Manufacturing Picks Up Pace in Its Upgrading

In recent years, the electronics manufacturing industry has been actively addressing the problem of over-reliance on manual labor for raw material storage and feeding processes. By introducing intelligent equipment and innovative solutions, the electronics manufacturing industry has made the transition from manual labor to management using robotics. Intelligent manufacturing plants of several electronics manufacturing companies have been completed and put into operation. For example, in August 2020, Inspur Co., Ltd., a new-generation intelligent manufacturing production base, was officially put into operation in Jinan. The base covers an area of 7,000 square meters, mainly used for manufacturing servers and personal computers, and is a new-generation intelligent manufacturing base integrating R&D, production, and operation. In October, Inspur’s Suzhou Intelligent Manufacturing Base was completed and put into operation. The base integrates a new generation of information technologies, such as cloud computing, big data, and the IoT, and many information systems such as ERP (Enterprise Resource Planning), MES (Manufacturing Execution System), and WMS (warehouse management system), connecting production facilities, personnel and materials, realizing automation and the perceptible monitoring of the whole process of logistics, storage and production. The pace of intelligent upgrading of factories in electronics manufacturing enterprises has also accelerated. At the end of 2020, Shenzhen SUN & Lynn Circuits Co., Ltd. completed the upgrade of its Ganzhou factory’s PCB intelligent manufacturing plant, developing unmanned material handling and automated production

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logistics for the entire factory. Another example is Foxconn’s Precision Tool Manufacturing Factory building an automation system with independent intellectual property rights. Its production logistics have achieved automation in feeding, cutting, grinding, labeling and conveying for inspection. Yet another example is Konica Minolta Holdings, Inc, which upgraded its “raw material warehouse + production line logistics” to realize the tandem operation of “goods-to-person” outbound sorting and robotic WIP feeding, with the entire process intelligently managed.

6.3.2.3

The Pace of Flexible Factory Construction Quickens, with More Applications of Flexible Logistics Solutions

In recent years, with the growing demand for customization and personalization, electronic products are moving toward small-batch and diversified multi-variety production. In order to adapt to the frequent line changes during production, flexible factory construction and flexible logistics solutions are increasingly used in the electronics manufacturing industry. In flexible factory construction, the Shanghai Siemens Switch Co., Ltd. constructed an all-process flexible automation factory in November 2020, utilizing all-scenario tandem operations by robots and the full-chain road-material information management of discrete manufacturing logistics, from reception, quality control inspection, warehousing, to warehouse management, outbound assemblage, and production line delivery. In the promotion and application of flexible logistics solutions, Standard Robots Co., Ltd. has provided customized flexible logistics solutions for the lithium battery manufacturers in specific applications such as jelly roll handling, loading/unloading, and battery cell handling, realizing real-time product and material data management.

6.4 Summary This chapter introduces the development status of China’s manufacturing logistics industry from the perspectives of the development environment, development situation, and the main sectors. From the perspective of the development environment, the growth rate of China’s manufacturing industry has slowed down, but it has still achieved overall sustained growth, being ranked first in the world for the 11th consecutive year. Due to the COVID-19 pandemic, the security and stability of industry and supply chains are highly valued. The pace of industry chain reconstruction has accelerated, and new infrastructure construction is also being promoted. Meanwhile, many policies in manufacturing logistics have been introduced, providing important support and guaranteeing the development of China’s manufacturing logistics. From the perspective of development status, China’s manufacturing logistics has maintained a trend of stable growth. The scale of manufacturing logistics rebounded

References

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quarter by quarter, and grew slightly year on year. The express delivery industry has further integrated with the manufacturing industry, the intellectualization of WIP logistics has improved, and there is increased promotion and use of intelligent logistics solutions. The pace of the industrial ecosystem construction has also accelerated. Finally, from the perspective of the two typical industries, China’s automobile logistics industry is undergoing economic restructuring and service transformation and upgrading. Industry cooperation continues to deepen, the intellectualization level and standardization system also continuing to improve. The scale of electronic manufacturing logistics continues to expand. The industry chain of electronics manufacturing has quickened the pace of its transformation toward the industrial Internet, while intelligent and flexible logistics systems and technologies are increasingly being promoted and applied.

References China Automotive Logistics Association of CFLP (2021) Automobile logistics development review in 2020 and outlook for 2021. https://www.sohu.com/a/453651199_751010. Accessed 2 Mar 2021 China Federation of Logistics and Purchasing, China Logistics Information Centre (2020) National logistics report. http://www.chinawuliu.com.cn/lhhzq/202102/23/541764.shtml. Accessed 23 Feb 2021 IM Robotic (2020) Hangzhou Iplus Technology Co., Ltd and Shanghai JAKA Robot Technology Co., Ltd. Start strategic cooperation to accelerate the construction of industrial logistics ecosphere. https://mp.weixin.qq.com/s?src=11×tamp=1619923925&ver=3043&signature=Jhj tO7ou*e1r4GIXIXQIUTum6iu0xN9aUQohYluD4QquCDTZWIa2w4KY9Lsrz4Sx7niVPXU3 6*o*K4r-aArvjn9LUpxVYOnOdRLxUvK9coo1barmDr5nRPsnatTlQLYT&new=1. Accessed 12 Nov 2020 Ministry of Industry and Information Technology (2021) Operation analysis of electronic information manufacturing industry in 2019. https://www.miit.gov.cn/gxsj/tjfx/dzxx/art/2021/art_631 562ee6c09471cace10b0f8379284c.html. Accessed 28 Jan 2021 xzlrobot.com (2021) Research report on industrial application mobile robot industry development in China (2020–2021). https://www.sohu.com/a/459734041_218783. Accessed 19 Apr 2021

Chapter 7

Development of Commerce Logistics in China Xiaofan Wu

In 2020, the development of China’s commerce logistics remained stable on the whole, despite disruptions from the COVID-19 pandemic. Retail sales of consumer goods and the market of means of production recovered rapidly, and import and export trade achieved counter-trend growth. Online and offline trade distribution channels continued to integrate. Relevant policies also continued to offer incentives. New commerce logistics is flourishing, with a further increase in market concentration. The market size for commerce logistics continued to grow rapidly, while logistics infrastructure construction advanced steadily. In addition, China’s commerce logistics made significant contributions in the fight against COVID-19 in 2020, in protecting people’s livelihoods and in global anti-pandemic cooperation. Pharmaceutical logistics and e-commerce logistics were prominent highlights in commerce logistics development. This chapter consists of three sections. Section 7.1 describes the development environment of China’s commerce logistics, including changes in market demand, distribution channels, and policy regulations. Section 7.2 discusses the current development situation of China’s commerce logistics, including market size, infrastructure construction, enterprise operations, and performance in combating COVID-19. Section 7.3 presents the current development situation in key sectors of China’s commerce logistics, including pharmaceutical logistics and e-commerce logistics.

7.1 Development Environment of Commerce Logistics in China In 2020, the total retail sales of consumer goods in China fell slightly, while the market for means of production continued to expand. Total foreign trade achieved countertrend growth, and the pace of the integration of distribution channels into commerce

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_7

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circulation accelerated. In addition, the State Council and other departments issued a series of policies and measures on commerce logistics, creating a favorable policy environment for its recovery and development.

7.1.1 Total Retail Sales of Consumer Goods Declined Slightly After Rising Due to the COVID-19 outbreak at the beginning of the year, China’s total retail sales value of consumer goods was 39.2 trillion RMB in 2020, down 3.9% year on year, showing negative growth for the first time, as shown in Fig. 7.1. Total retail sales value of urban consumer goods was 33.9 trillion RMB, down 4.0% year on year, while total retail sales value of rural consumer goods was 0.5 billion RMB, down 3.2% year on year. Seen by consumption type, revenue from food and beverages was 4.0 trillion RMB, down 16.6% year on year, while retail sales value of goods was 35.2 trillion RMB, down 2.3% year on year. Seen by types of consumer goods, the retail sales of certain foods, oil, beverages, and daily necessities attained increased revenue; while the upgrading of household consumer goods, such as communication equipment, cosmetics, and Chinese and Western medicines maintained relatively rapid growth, up 12.9%, 9.5%, and 7.8%, respectively (National Bureau of Statistics of PRC 2021b). At the start of the COVID-19 outbreak, the retail sales of consumer goods fell sharply. However, once the outbreak was effectively controlled, and work and production quickly resumed, the total national retail sales of consumer goods rebounded 10.7

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Fig. 7.2 Monthly growth rate of total retail sales of consumer goods, 2019–2020 (year-on-year). Source Compiled from “Total retail sales of consumer goods increased by 4.6% in December 2020,” published by the National Bureau of Statistics of China

rapidly. By August 2020, the total national retail sales of consumer goods began to show a rebounding trend. The growth rate of national retail sales of consumer goods reached 4.6% in the fourth quarter, 3.7 percentage points faster than that in the third quarter. Figure 7.2 shows the growth rate of China’s total retail sales of consumer goods in late 2019 and 2020. From a regional perspective, China’s rural consumer market recovered better than the urban regions in 2020. Urban retail sales of consumer goods fell by 4.0% over the previous year, contracting by 3.3 percentage points over the previous three quarters. Urban retail sales of consumer goods registered positive growth year-on-year for two consecutive quarters, including a 4.5% year-on-year increase in the fourth quarter, up by 3.6 percentage points over the third quarter. Rural retail sales of consumer goods fell 3.2% from the previous year, contracting by 3.5 percentage points compared with the previous three quarters. Rural retail sales of consumer goods grew 5.6% year on year in the fourth quarter, with a growth rate that was 1.1 percentage points higher than that of the urban areas (National Bureau of Statistics of the PRC 2021b).

7.1.2 The Market for Means of Production Continued to Expand, While Growth Rate Slowed Down In 2020, China’s means of production continued to rise, and its market size continued to expand, although the growth rate slowed down. The annual output of raw coal, cement, and coke was stable, at 3.8 billion tons, 2.4 billion tons and 0.5 billion tons, respectively, with year-on-year growth of 0.9, 1.6, and 0%, contracting by 3.3 percentage points, 3.6 percentage points, and 6.1 percentage points compared to 2019’s growth rates. The output of pig iron, steel, non-ferrous metals, and chemical

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Fig. 7.3 Monthly China commodity price index, 2019–2020. Source Compiled from the Total retail sales of consumer goods increased by 4.6% in December 2020, published by the National Bureau of Statistics of China

fiber materials grew at a quicker pace, with year-over-year growth of 4.3%, 7.7%, 5.5%, and 3.4%, respectively, which was slightly lower than the growth rates for the same period in 2019 (National Bureau of Statistics of the PRC 2021a). Due to the impact of COVID-19, prices in China’s commodity market fluctuated significantly in 2020. The Commodity Price Index (CCPI) fell from 967 to 856 from January to April 2020, and climbed to 986 from May to December, as shown in Fig. 7.3. The largest increases in commodity prices were seen in the bulk minerals category; the price indices for agricultural products, oil, ferrous and non-ferrous metal, and rubber all grew by more than double digits. The volatility in commodity market prices was partly due to the rapid recovery of market demand and the corresponding surge in related demand after the COVID-19 outbreak was brought under control in China. It also came from the tightening of global supply. In addition, production and shipment of international commodities were seriously disrupted by the pandemic.

7.1.3 Total Foreign Trade Showed Counter-Trend Growth In 2020, the total import and export value of China was 32.2 trillion RMB, up 1.9% year on year, as shown in Fig. 7.4. Export value was 17.9 trillion RMB, up 4.0% year on year, and import value was 14.2 trillion RMB, down 0.7% year on year. Looking at the data for the whole year, China’s share in global trade increased by 1 percentage point on average from that in 2019, with exports and imports reaching 14.7% and 11.5% of the international market respectively, making it the world’s largest exporter and second-largest importer of goods (People.com 2021).

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As can be seen from monthly data shown in Fig. 7.5, China’s foreign trade in 2020 achieved counter-trend growth under the impact of COVID-19. From December 2019, total import and export trade continued to decline, falling to a low of 1.54 trillion RMB in February 2020. As China progressed significantly in its fight against COVID-19 and achieved significant results in its economic and social development, the policy of stabilizing foreign trade continued to show its effects, and total import and export trade began to rebound. In December 2020, total trade reached 3.20 trillion RMB, up 5.9% year on year. Overall, in 2020, China’s foreign trade experienced fluctuations, first declining and then increasing, with overall trade volume hitting a record high. From the perspective of trade product structure, China’s exports continue to climb up the value chain. The rise of the “stay-at-home economy” during the COVID-19 outbreak and the shortage of protective, anti-pandemic materials have driven the rapid growth of exports of electromechanical products, masks, and other related goods. In 2020, the value of China’s industrial products exports reached 2.5 trillion USD, up 4.6% year on year; exports of mechanical and electrical products reached 10.7 trillion RMB, up 6% year on year, accounting for 59.4% of the total export value. Export value of textiles, including masks, reached 1.07 trillion RMB, up 30.4% year on year. From March to the end of December 2020, China’s customs cleared a total of 438.5 billion RMB worth of major anti-pandemic products for export, making an important contribution to the global fight against COVID-19. From the perspective of trade goods flow, the ASEAN (the Association of Southeast Asian Nations) became China’s largest trading partner for the first time. In 2020, the total import and export trade with ASEAN countries reached 4.7 trillion RMB, up 7.0% year on year. The European Union and the United States ranked second and third, respectively, with total import and export value of 4.5 trillion RMB and 4.1

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trillion RMB, up 5.3 and 8.8% year on year. The total import and export value of goods with the countries in the Belt and Road Initiative reached 9.4 trillion RMB, up 1.0% year on year (General Administration of Customs 2021).

7.1.4 Trade Circulation Channels Quickened Their Pace of Integration In 2020, China’s trade distribution industry continued to innovate, as omnichannel online and offline integration and development accelerated, promoting the transformation and upgrading of household consumption. On the one hand, online retail activities continued to grow vigorously, penetrating offline distribution channels, and driving consumer demand. In 2020, the total value of China’s online retail sales reached 11.8 trillion RMB, up 10.9% over the previous year. The total online sales value of physical goods increased by 14.8%, significantly better than the total retail sales of consumer goods in the same period (National Bureau of Statistics of China 2021b). Online consumption penetration rate1 also showed significant growth. Take fresh produce as an example: fresh food e-commerce transactions reached 18.21 billion RMB in the first half of 2020, an increase of 137.6% year-on-year, and already more than that for the whole of 2019. The e-commerce penetration rate for fresh produce is conservatively estimated to have exceeded 13% in 2020, an increase of 5 percentage points compared to 2019 (Cndsw.com.cn 2020). Online retailers can

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reduce linkages in offline distribution channels such as farmers’ markets and supermarkets, and promote the upgrading of commodity consumption, further enhancing consumer demand. On the other hand, digital intelligence technology promoted the integration of offline enterprises with online trade and distribution channels. Retail superstores are actively exploring online business models to broaden their traditional trade and distribution channels. In February 2020, Carrefour’s “1 h delivery” was launched on Sunning.com and WeChat mini-program. In just one year, its total number of registered users exceeded 20 million, leading to a 127% year-on-year increase in sales. The online sales of Yonghui Superstores reached 10.5 billion RMB in 2020, up 198% year on year, which constituted 10% of their main revenue. In addition, cloud computing, artificial intelligence, big data, IoT, and blockchain are gradually being applied to all aspects of retail superstores, enabling traditional superstores to grasp the changes in market demand. By integrating further with online platforms, they can realize product personalization under all kinds of consumption scenarios, providing a strong impetus for the growth of the consumer market.

7.1.5 Policy Environment for the Development of Commerce Logistics In 2020, the State Council of the P.R.C. and various other ministries continued to issue a number of policies, plans, and opinions on the development of commerce logistics, as shown in Table 7.1. Their policy content focuses on four areas: consumer logistics, bulk commodity logistics, international logistics, and green logistics. Moreover, faced with the COVID-19 outbreak in early 2020, the State Council and various ministries and commissions actively responded by introducing many policies to ensure the smooth circulation of emergency materials and daily necessities, safeguarding the capital needs of key trade enterprises, and coordinating work and production resumption in commerce logistics.

7.2 Current Development of Commerce Logistics in China In 2020, the size of China’s commerce logistics market continued to grow rapidly, and the construction of commerce logistics infrastructure advanced steadily. The growth of online consumption led to the vigorous development of the express delivery and new logistics industries, with their market concentration further enhanced. Meanwhile, in the battle against COVID-19, commerce logistics performed well in materials circulation organization, ensuring social and economic development, and fostering global anti-pandemic cooperation.

(continued)

Propose to actively construct comprehensive pilot zones for cross-border e-commerce, and expand pilot projects on cross-border e-commerce retail imports. Strongly safeguard international maritime transport, enhance international air cargo capacity, and facilitate international highway freight. Encourage operating companies to improve overseas logistics networks, enhance the intermodal transport, transshipment and distribution capabilities of overseas logistics nodes, expand backhaul cargo capacity, and improve the competitiveness of international operations

Implementation opinions on promoting the innovative development of foreign trade

The General Office of the State Council of the People’s Republic of China

November 2020

Content related to commerce logistics

Name of policy document

Opinions on new business forms and new Further support the development of new models leading the accelerated development business models such as Internet-based food of new consumption delivery and instant delivery. Promote new modes of services for agricultural products, such as “fresh food e-commerce + cold-chain home delivery” and “centralized kitchen + cold-chain distribution of ingredients.” Accelerate the construction of an international shipping logistics service system. Perfect the trade circulation infrastructure network

Department(s) of issuance

The General Office of the State Council of the People’s Republic of China

Date of issuance

September 2020

Table 7.1 China’s commerce logistics-related policies in 2020

158 7 Development of Commerce Logistics in China

Department(s) of issuance

The State Administration for Market Regulation and five other departments

The National Development and Reform Commission and 22 other departments

Date of issuance

February 2020

March 2020

Table 7.1 (continued)

Implementation opinions on expanding quality consumer demand to accelerate the formation of a strong domestic market

Guiding opinions on responding to COVID-19 and increasing support to individual enterprises

Name of policy document

(continued)

Take special actions to enhance efficient distribution in urban and rural areas. Increase e-commerce logistics nodes and promote the integrated development and expansion of railway, highway, waterway and air transport networks. Construct integrated logistics centers; improve parking for urban logistics and distribution vehicles, loading/unloading, and other operational facilities. Optimize traffic management of urban distribution transport

Promote work and production resumption in industries such as express delivery, stabilize the express terminal network, and ensure smooth flow of logistics. Act as an e-commerce platform for enterprises, providing supply-and-demand information matching services for online and offline businesses, especially fresh produce operators

Content related to commerce logistics

7.2 Current Development of Commerce Logistics in China 159

Notice on supporting business circulation enterprises to resume operations

The General Offices of the Ministry of Commerce of China, the National Development and Reform Commission, and the National Health Commission

The Ministry of Commerce of China and seven other departments

April 2020 Notice on furthering pilot work on supply chain innovation and applications

Name of policy document

Department(s) of issuance

Date of issuance

March 2020

Table 7.1 (continued)

(continued)

Accelerate the scientific planning and strategic layout of smart logistics parks, smart warehousing, smart containers, and technology innovation platforms for supply chains. Support foreign trade, foreign investment, trade circulation, and e-commerce enterprises to ensure an open, stable, and secure global supply chain. Promote online procurement, vehicle-cargo matching, cloud warehousing, and other new business forms. Explore the construction of safe, efficient logistics hubs and channels

Allow the operations of smart self-service cabinets and pick-up outlets. Direct e-commerce enterprises and express logistics enterprises to increase business cooperation. Promote front warehouses and intelligent warehousing, the integration services of warehousing and distribution, and other services. Strengthen supply chain synergy of essential goods; enhance open sharing among logistics distribution centers

Content related to commerce logistics

160 7 Development of Commerce Logistics in China

Department(s) of issuance

The General Offices of the Ministry of Finance and the Ministry of Commerce of China, the State Council Leading Group Office of Poverty Alleviation and Development

The State Administration for Market Regulation and seven other departments

Date of issuance

May 2020

August 2020

Table 7.1 (continued) Content related to commerce logistics

Guiding opinions on strengthening the standardization of green express packaging

(continued)

Enhance the standardization of green express packaging, accelerate the development of such standards. Improve standards for reducing express packaging; expedite and develop supporting standards for express packaging recycling; promote the effective implementation of green express packaging standards. Improve green express packaging to reach international standards

Notice on the comprehensive demonstration Focus on improving county and rural work of introducing e-commerce into rural logistics and distribution systems, areas in 2020 constructing and upgrading county-level public service centers for e-commerce, and building a modern rural circulation system. Develop a training system for rural e-commerce, to achieve the transformation and upgrading of key trade circulation enterprises dependent on e-commerce

Name of policy document

7.2 Current Development of Commerce Logistics in China 161

Name of policy document Opinions on promoting the development of air cargo facilities

Department(s) of issuance

The National Development and Reform Commission, the Civil Aviation Administration of China

Date of issuance

September 2020

Table 7.1 (continued) Improve the capacity and utilization rate of existing cargo facilities at comprehensive airports. Optimize the organization of cargo transport at airports, and synergize facilities inside and outside airports; adhere fully to the current air cargo development trend; conform to the layout plan of civil transport airports. Introduce specialized air transport enterprises; promote the construction of specialized cargo hub airports in a steady and orderly manner. Nurture air cargo enterprises; improve the management level of airports; comprehensively enhance the efficiency of air cargo facilities

Content related to commerce logistics

162 7 Development of Commerce Logistics in China

7.2 Current Development of Commerce Logistics in China 25

163

22.8

Growth rate (%)

20 16.1 15

13.2

10 6.4

5.9 3.5

5 0 2018 Total amount of social logistics

2019

2020

Goods-related logistics for units and residents

Fig. 7.6 The growth rate of total amount of social logistics and goods-related logistics for units and residents in China from 2018 to 2020. Source Data from the National Logistics Report (2018–2020), published by the National Development and Reform Commission, the National Bureau of Statistics of China, and the China Federation of Logistics and Purchasing

7.2.1 The Market Size of Commerce Logistics Continues to Grow Rapidly 7.2.1.1

Rapid Growth in Goods-Related Logistics for Units and Residents

In 2020, due to the COVID-19 pandemic, China’s goods-related logistics for units and residents was valued at 9.8 trillion RMB, an increase of 13.2% year on year, a growth rate that was slightly lower than that of 2019. As market demand gradually recovered, and with the counter-trend growth of new consumption patterns such as e-tailing, the goods-related logistics for units and residents maintained growth rates of more than 10% for seven consecutive months from June onwards, achieving an annual growth rate 9.7 percentage points higher than the growth rate of total social logistics (CFLP 2021), as shown in Fig. 7.6.

7.2.1.2

The Rapid Recovery of Market Segments

In 2020, China’s commerce logistics for bulk commodities recovered rapidly following the COVID-19 outbreak. After experiencing the highest point of 123.1 in the first half of the year, the commodity inventory index quickly stabilized in the third and fourth quarters, and closed at 98.3 by the year end, down 3.9 compared with the start of the year. The pressure on commodity inventories continued to ease; the comprehensive coastal (bulk) freight index closed at 1,324.44 points, up 11.0% compared with early 2020, showing a “V” shaped reversal in the second half of the year.

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development index rate of express delivery industry

400

364.2 327.3

350 300 250

208

150

221.4

212.6 217.6 208.2

176.8

200

302.4 298.7

157.3

119.8

100 50 Dec 2020

Oct 2020

Nov 2020

Sep 2020

Jul 2020

Aug 2020

Jun 2020

Apr 2020

May 2020

Mar 2020

Jan 2020

Feb 2020

Dec 2019

Oct 2019

Nov 2019

Sep 2019

Jul 2019

Aug 2019

Jun 2019

Apr 2019

May 2019

Mar 2019

Jan 2019

Feb 2019

0

Fig. 7.7 The monthly development index rate of express delivery industry in China, 2019–2020. Source Compiled from China’s Express Sector Development Report (2019–2020), published by the State Post Bureau of the PRC

Consumer retailing and other related commerce logistics maintained high growth throughout the year. In 2020, the national business volume of express deliveries reached 83.36 billion units, an increase of 31.2% year on year. Business revenue totaled 879.54 billion RMB, an increase of 17.3% year on year (The State Post Bureau 2021). The express delivery industry development index has essentially remained above 300 since May 2020, a significant improvement compared with the same period in 2019, as shown in Fig. 7.7. The total value of cold-chain logistics in China in 2020 was 4.8 trillion RMB, while the total revenue of cold-chain logistics reached 288.6 billion RMB, showing a year-on-year growth of more than 20% (China Cold China Public Information Service Platform 2021).

7.2.1.3

Import and Export Logistics Rebounded in All Segments

In 2020, although global trade was severely hit by COVID-19, China’s economy showed strong resilience and achieved rapid stabilization in its import and export logistics. In 2020, total import goods logistics amounted to 14.2 trillion RMB, up 8.9% year on year, with a growth rate of 4.7 percentage points higher than the previous year. The growth rate reached 10% in the second half of 2020. Imports of resource-based products, such as crude oil and iron ore increased by 7.3% and 9.5%, respectively, year on year. Imports of agricultural products, such as grain and meat increased by 28% and 60.4%, respectively, year on year. Imports of jewellery and cosmetics rose by more than 30%, while imports of bags and watches rose by more than 20% (Jrj.com.cn 2021).

7.2 Current Development of Commerce Logistics in China

165

Due to demand changes in Europe, the United States and other major economies under the pandemic, and because China’s manufacturing system is relatively complete and recovering more rapidly, export volume maintained a steady and rapid growth in 2020, with annual growth rate increasing to nearly 5%. The exports of “three highs” (high quality, high-tech, high added-value) products grew relatively fast. Export volumes of computers, integrated circuits, electronic components, household appliances, and electric vehicles were up 10.5%, 14.3%, 11.1%, 19.1%, and 162.3%, respectively, year on year (Qianzhan.com 2021a).

7.2.2 Steady Progress Made in the Construction of Commerce Logistics Infrastructure In 2020, the construction of China’s commerce logistics infrastructure continued to advance steadily. The country’s 25 provinces, autonomous regions and municipalities launched 362 commerce logistics projects, laying the foundation to achieve dual circulation by ensuring the smooth interplay of domestic and international markets through the “channel + hub + network” modern logistics system. In channel construction, the construction of China’s major international commerce logistics corridors, regional commerce logistics corridors based on large urban clusters, as well as logistics corridors linking urban and rural areas were accelerated in 2020. International trade logistics corridors are being built along the core cities of the Belt and Road Initiative, in Lanzhou, Urumchi, Guangzhou, and Beihai. By synergizing multiple modes of transport, China will jointly construct the new Eurasian Land Bridge, and economic corridors along China–Mongolia–Russia, China–Central Asia–West Asia, and the China–Indochina Peninsula. The regional commerce logistics corridors of large urban clusters mainly depend on those in the Beijing– Tianjin–Hebei region, the Guangdong–Hong Kong–Macao Greater Bay Area, and the Yangtze River Delta to help assemble logistics elements and foster innovation, forming more rational spatial patterns for logistics and industrial development, so as to achieve the coordinated development of regional commerce logistics. Meanwhile, China’s rural logistics and two-way urban-and-rural circulation channels opened up further, as service density increased significantly. Postal express service outlets now covered more than 30,000 rural villages and towns, helping consumer goods move into the countryside, and agricultural products into the cities. The output value of agricultural products delivered into cities was nearly 1 trillion RMB in 2020. In logistics hub construction, China started planning or constructing 45 national logistics hubs in 2019 and 2020, covering 27 provinces, cities and districts, with eight commerce service national logistics hubs in Jinan, Kunming, Qingdao, Shanghai, Yiwu, Ganzhou, Linyi, and Shenzhen. These hubs function as goods dispersion, storage, de-consolidation, and distribution centers. In 2020, commercial serviceoriented national logistics hubs were approved in Jinan, Kunming, and Qingdao. These will function as key nodes, important platforms, and crucial hubs in the

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national commerce logistics network. With integrated transport networks largely established, these commercial service-oriented national logistics hubs will concentrate the commercial enterprises brought about by rising domestic demand, applying smart logistics technologies to efficiently coordinate resource circulation, and integrating more deeply into the Belt and Road Initiative, forming comprehensive transport and logistics centers with global competitiveness. In the construction of circulation networks, China carried out the intelligent digital transformation of urban trade circulation facilities and further integrated multiple industries into the urban commercial circulation networks in 2020. It also developed a rational layout for its rural commercial circulation facilities, encouraging urban commerce circulation enterprises to enter the rural markets, and quickly integrating rural areas into modern trade circulation networks. Take fresh food cold-chain logistics as an example: China’s cold-chain logistics network developed rapidly in 2020. Demand for cold-chain food products in the Guangdong–Hong Kong–Macao Greater Bay Area alone reached 26 million tons, with the market size exceeding 40 billion RMB. Technologies like 5G, artificial intelligence, and big data have helped promote the whole chain in cold-chain logistics, enhancing traceability, strict standards, and high efficiency. New business models integrating fresh food e-commerce, cross-border fresh food commerce, and new fresh food retailing have emerged. At the same time, China’s rural areas are also actively developing their fresh food coldchain logistics, with 1,400 new cold-chain logistics facilities for fresh food logistics having been built or reconstructed in 2020. This involved more than 6 million tons, effectively ensuring the efficiency of agricultural products on the market. In addition, community group buying and other fresh food retail businesses are taking root in the countryside, fostering the upgrading of household consumption in rural areas, and strongly promoting the construction of efficient urban and rural commerce circulation networks.

7.2.3 The Rise in Online Consumption Drives the Vigorous Growth of the Express Delivery Industry and New Commerce Logistics In 2020, due to COVID-19, the growth of China’s overall trade logistics demand slowed slightly, but with mounting online consumer retail and the “stay-at-home economy” driving the rapid growth of consumer end-distribution, express delivery logistics and new business formats such as fresh food e-commerce and community group buying have flourished.

7.2 Current Development of Commerce Logistics in China

7.2.3.1

167

Express Delivery Logistics Continues to Develop at a Rapid Pace

In 2020, China’s express logistics industry continued to grow at a rapid pace, supporting the total online sales value of physical goods. The total sales value of online physical goods reached 9.8 trillion RMB, accounting for 24.9% of the total retail sales of consumer goods. With the increasing improvement of the express infrastructure network, the accelerated use of smart express logistics technologies and the optimization of the express service organization, the express logistics industry has played an important role in upgrading the structure of consumption, unleashing the consumption potential of both urban and rural residents, and expanding the size of the consumer market. In 2020, every segment of China’s express logistics industry showed rapid growth. Local delivery business volume reached 12.17 billion units, an increase of 10.2%, accounting for 14.6% of the total express business volume. Business volume for non-local deliveries reached 69.36 billion units, an increase of 35.9% year on year, accounting for 83.2% of the total express business volume. Business volume for international, Hong Kong, Macao, and Taiwan deliveries totaled 1.84 billion units, an increase of 27.7% year on year, accounting for 2.2% of the total express business volume. Compared with 2019, the proportion of local delivery business volume decreased by 2.8 percentage points, the proportion of non-local delivery volume increased by 2.8 percentage points, and the proportion for international, Hong Kong, Macao, and Taiwan delivery volume remained relatively the same (Qianzhan.com 2021b). In recent years, as China’s express logistics further explored the market potential of the central and western regions, regional development has gradually balanced. In 2020, the proportion of express business volume in the east, central, and western regions was 79.4%, 13.3%, and 7.3%, respectively. Compared with 2019, the proportion of express business volume in the eastern region decreased by 0.3 percentage points, the proportion of express business volume in the central region increased by 0.4 percentage points, and the proportion of express business volume in the western region decreased by 0.1 percentage points. According to China’s e-commerce logistics operation index in 2020, the total e-commerce logistics in the central region had recovered to above the national average by June, at a significantly faster rate than the eastern and western regions. It maintained this rate of recovery until the year end.

7.2.3.2

The Rapid Diversification of New Commerce Logistics

New commerce logistics refers to innovations in traditional business logistics models and operations to meet different consumer demands. In 2020, by developing new logistics, China’s commerce logistics industry had fully grasped consumer demand, using new models, new technologies, and new services to enhance industrial specialization and intensification, reduce costs, promote efficiency in commerce circulation, and cultivate new dynamics for commerce logistics. The fresh food e-commerce distribution industry achieved rapid growth in 2020, while the industry scale rose

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to 0.46 trillion RMB, a year-on-year growth reaching 62.98%. According to China Federation of Logistics & Purchasing (CFLP) Cold Chain Logistics Committee, the market scale value of cold-chain logistics, which is closely related to fresh produce e-commerce, was about 0.38 trillion RMB in 2020. It has become a strong engine, driving the growth of the express logistics industry. In addition, with less conventional access to medical care during the pandemic, instant medical logistics became an important choice for many people. In 2020, Alihealth.cn, the platform with the most pharmaceutical e-commerce users, had a usage rate of 46.8%. Meituan.com and Jdhealth.com, in second and third place, respectively, had usage rates of 38.3 and 37.9% (Sina.com 2021). The instant logistics industry is also moving toward contactless delivery, community e-commerce logistics, and other instant logistics models, as well as integrated “instant logistics + other logistics services” solutions, having restructured its industry chains in 2020.

7.2.4 Commerce Logistics Performed Brightly in the Fight Against COVID-19 7.2.4.1

Ensuring the Timely Supply of Anti-pandemic Materials and Daily Necessities

During the COVID-19 outbreak in early 2020, the State Post Bureau organized China Post and 12 other major express delivery companies to open up “green channels” for the timely transport and express delivery of anti-pandemic materials and daily necessities. On February 7, the State Post Bureau resumed full work and operations for postal express. On March 26, all distribution centers above the municipal level of major delivery companies, and 99.7% of their business outlets resumed work. In the first half of 2020, the postal industry made a total of 489,800 deliveries of antipandemic materials, including 398 million parcels, and dispatched 875,000 vehicles and 779 cargo flights (The State Post Bureau 2021).

7.2.4.2

Balancing Anti-pandemic Measures with Social and Livelihood Development

Due to the demands of pandemic control, China’s commerce logistics enterprises have innovated service models, promoted contactless delivery, and actively explored new business models, such as instant delivery, direct-from-warehouse distribution and “supermarket + express” deliveries, in an effort to reduce the negative impact of COVID-19 on the distribution industry. Domestic postal and express enterprises made 14.39 billion deliveries of daily necessities. Using “big data + grid,” JD.com, G7 IoT and many other enterprises made use of information resource platforms to achieve the rapid matching of materials and transport capacity, prioritizing supplies to core locations such as hospitals and supermarkets.

7.3 Development Situation of the Key Sectors …

7.2.4.3

169

Actively Fostering Solidarity and Cooperation Among Nations

As the COVID-19 pandemic worsened, with a shortage of medical and anti-pandemic materials, China upheld the concept of a Community of Common Destiny, and took measures to meet the demand for international air freight. It has reduced the cost of international air cargo, approved and established “green channels,” and provided “point-to-point” cargo charter flights. In 2020, the volume of cargo and mail transported by international airlines was 2.23 billion tons, having recovered to 92.2% of the same period the previous year (Cnair.com 2021). This has helped to contain the pandemic in countries around the world. In addition, when sea and air transport were disrupted during the pandemic, the China–Europe Railway Express took over the responsibility for transporting anti-pandemic materials from sea and aviation freight. Both the number of train departures and the volume of train freight achieved counter-trend growth. In 2020, the China–Europe Railway Express operated 12,400 trains, exceeding 10,000 trains in a single year for the first time, a year-on-year increase of 50%. They transported 1.13 million TEUs of containers, a year-on-year increase of 56%; 98% of round-trip trains were fully loaded. These railway lines transported 9.39 billion units of medical supplies, totaling 76,000 tons, during the pandemic.

7.3 Development Situation of the Key Sectors of China’s Commerce Logistics Industry In 2020, China’s commerce logistics grew rapidly. Pharmaceutical logistics and ecommerce logistics, as the key representatives of the industry, not only strongly supported the circulation of anti-pandemic materials and protected the needs of people during the outbreak, but also effectively promoted the industry’s high-quality development through technology and model innovation. China’s pharmaceutical logistics capacity has been significantly enhanced, while its circulation supervisory and informatization levels have improved as it moves toward intensive and efficient development. E-commerce logistics focuses on community group buying, expanding distribution channels and achieving new growth.

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7.3.1 Improvements in Pharmaceutical Logistics Supervision and Informatization Help Maintain Intensive and Efficient Development 7.3.1.1

The Service Capacity of Pharmaceutical Logistics Has Been Significantly Enhanced

Affected by China’s centralized procurement policy and COVID-19, the growth rate of China’s pharmaceutical distribution market declined in 2020. The Health Logistics Association of China Federation of Logistics & Purchasing (CFLP) estimated that the national circulation market size grew by about 4% year on year in 2020, an annual growth rate of 3 percentage points lower than that in 2019, as shown in Fig. 7.8. In 2020, the market size of China’s cold-chain pharmaceutical logistics services grew by 17% and was estimated to have reached 350 billion RMB, significantly higher than the growth rate of 6.12% in 2019. The total pharmaceutical cold-storage area grew by about 10%, mainly concentrated in Sinopharm Holdings, China Resources Pharmaceutical Group Co., Ltd., and Shanghai Pharmaceuticals (Holding Co., Ltd.), the three leading pharmaceutical logistics companies. Due to the increased demand for drugs, blood products, and vaccines during the pandemic, the number of refrigerated trucks in pharmaceutical logistics exceeded 10,000, an increase of about 30% compared with 2019. The increase in pharmaceutical logistics reserves and capacity has helped China’s pharmaceutical industry to actively respond to COVID-19 and fulfill its social responsibility of safeguarding people’s health.

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2020E

Fig. 7.8 The market size and growth rate of Chinese pharmaceutical logistics, 2015–2020. Source Compiled from The development report of pharmaceutical logistics in China (2021), published by Logclub. https://www.logclub.com/m/articleInfo/MzQwNTc=, 18 Apr, 2021

7.3 Development Situation of the Key Sectors …

7.3.1.2

171

Circulation Supervision Continues to Strengthen, as Pharmaceutical Logistics Moves Toward High-Quality Intensive Development

China’s centralized procurement program, piloted since 2018, has significantly reduced the cost of drug distribution, greatly reduced the burden on the public, and transformed pharmaceutical logistics enterprises from distributors to integrated logistics service providers. The new procurement system has compressed the gray space in the drug distribution process, enabling enterprises to change their business models and enhance cost control, hence promoting the high-quality development of the pharmaceutical logistics industry. At the same time, the centralized procurement program requires faster distribution and broader channel coverage from the pharmaceutical logistics enterprises, helping pharmaceutical logistics to achieve intensive development. For example, in 2020, Shanghai issued the “Supplementary Document for National Drug Centralized Procurement in the Shanghai Region” (GY-YD2020-1), stipulating that specific pharmaceutical distribution enterprises cover all designated areas, and have the ability to deliver selected drugs within 24 h to all designated medical institutions under the health insurance program. National procurement and provincial procurement are essentially distributed by the three major pharmaceutical commercial companies and large local commercial pharmaceutical enterprises. In 2020, among the three major pharmaceutical logistics giants, Sinopharm’s pharmaceutical distribution revenue was 348.3 billion RMB, accounting for 74.28% of total revenue. Its proportion of total revenue was 74.28%, up 7.3% year on year. China Resources Pharmaceutical distribution business achieved a revenue of 168.8 billion HKD, down 0.5% from 2019, but gross margin grew by 7.1%. The revenue for Shanghai Pharmaceuticals distribution business was 168.2 billion RMB, up 3.12% year on year. Those three firms achieved market share and revenue far ahead of other pharmaceutical logistics companies. In the future, all three pharmaceutical logistics giants plan to merge their resources, expanding distribution by integrating pharmaceutical logistics technologies, and extending their networks into rural regions, to further strengthen their position as industry leaders.

7.3.1.3

The Pace of Informatization Quickens, as Pharmaceutical Logistics Develops Toward Intelligent Logistics

Intelligent logistics technology helps to efficiently match pharmaceutical logistics resources and elements, reduce costs, enhance the efficiency of pharmaceutical circulation and traceability of the whole drug circulation chain, and innovate pharmaceutical e-commerce models. For example, traditional pharmaceutical logistics services face problems in massive volume unpacking and fragmentation of orders,

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but Jointown now uses intelligent scheduling, packing, route planning, and integrated warehouse-and-distribution operations through an intelligent logistics platform, www.56jzt.com, providing comprehensive logistics services for more than 70,000 downstream customers. SF Express, through a service network covering 237 prefectures and 2,046 counties, relies on the technical advantages of SF’s cold-chain logistics to solve the “last kilometer” problem of pharmaceutical logistics outlets, reducing distribution costs from 7 to 4–4.5% and effectively improving the timeliness and efficiency of pharmaceutical logistics. AliHealth.cn and Cainiao.com have jointly launched the “Global Logistics Services for Pharmaceutical Traceability”. A collaborative platform for full pharmaceutical traceability has been established by many countries and regions around the world, realizing source traceability, destination traceability and temperature controllability of medication, and offering real-time assurance in China’s export pharmaceutical products.

7.3.2 E-commerce Logistics Focuses on Community Group Buying, as E-commerce Distribution Channels Continue to Expand 7.3.2.1

The Explosive Growth of Community Group Buying

In 2020, the overall operation of China’s e-commerce logistics industry remained stable, but with the gradual erosion of profits from Internet traffic, its total business volume index declined. At the same time, community group buying has brought to e-commerce merchants more sales from the rural regions, becoming a hotspot in e-commerce logistics. Community group buying is a community retail model which focuses on fresh products and relies on the community and its leaders for goods circulation, resulting in “pre-sale + next-day delivery + self-pickup”. Community group buying reduces the multiple wholesale layers, and tries to achieve direct procurement and delivery, leading to reduced costs and higher efficiency. Community group buying emerged in 2016, and grew rapidly in the second half of 2018. During the COVID-19 pandemic, China’s consumption habits changed, and many e-commerce platforms and Internet giants entered the community group buying business, ushering in its explosive growth. In June 2020, Didi’s community group buying platform, chengxinyouxuan.com, was launched. In July, Meituan announced the establishment of its “Preferred Work Department”. In August, Pinduoduo’s community group buying project “Buy Duoduo Vegetables and Groceries” was launched. In October, Sunning.com launched its Beijing community group buying platform for farm vegetables. In December, JD.com invested 700 million USD in Hunan Xingsheng’s Preferred E-commerce Co., Ltd. In 2020, the market size value of community group buying was about 8.9 billion RMB, up 78% year on year, as shown in Fig. 7.9.

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The market size of community goroup buying (billion RMB)

7.3 Development Situation of the Key Sectors …

20.0 10.0 0.0

2018

2019

2020E

2021E

Fig. 7.9 The market size and growth rate of community group buying in China, 2018–2021.2 Source Compiled from The White Book of Community Group Buying in China (2020), published by kantar. https://www.shangyexinzhi.com/article/1973966.html, 9 June, 2020

7.3.2.2

Community Group Buying Promotes the Continuous Expansion of E-commerce Distribution Channels

The aim of community group buying logistics is to improve fulfillment efficiency and reduce fulfillment costs. In community group buying, more than half of consumers purchase fresh fruit and vegetables at least three times a week. Timeliness is an important factor for them to make repeated and frequent purchases. Community group buying also unleashes the potential of the rural market, where consumers are more sensitive to price because of their lower disposable income. According to surveys, community group buying of fresh products is 25–30% cheaper than buying from supermarkets on the whole. Hence, time efficiency and cost control have become the focus of community group buying logistics services. As more and more e-commerce platforms join the community group buying market, the community group buying model has broken the traditional product circulation chain, restructuring the original multi-layer distribution channels of e-commerce logistics into a “platform supplier—leader pick-up—end consumer” chain, and forming a three-section “central warehouse—grid warehouse—group leader” logistics system. Most of the community group procurement takes place in the front “central warehouse”, and collective procurement has led to economies of scale. The “grid warehouses” sort goods, merge deliveries, and extend the distribution network down to the street, district, rural township, town, and village levels. The “group leader” provides distribution or pick-up for the end consumers, solving the “last kilometer” problem of e-commerce logistics. Compared with traditional e-commerce logistics services, the logistics chain for community group buying is shorter, with faster turnaround and lower fulfilment costs. According to Essence 2

“2020E” in the figure represents projected data for 2020.

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Securities Co., Ltd.’s research center, the cost of fulfilling a single community group-buying order is about 0.97 RMB, which is much lower than the 4.9 RMB for e-commerce logistics.

7.4 Summary This chapter introduces the development situation of China’s commerce logistics industry, from the perspectives of development environment, development situation, and the key sectors. From the perspective of the development environment, China’s total retail sales of consumer goods declined slightly due to COVID-19, while the market for means of production continued to expand. Import and export trade achieved counter-trend growth. The trend of omnichannel trade distribution accelerated. In addition, the State Council and various ministries and commissions continued to issue a series of plans, guidelines, and supporting policies to help develop commerce logistics, creating a favorable external policy environment for its development. From the perspective of development situation, the market size of China’s commerce logistics has continued to grow rapidly, with all sub-sectors maintaining good growth. The construction of commerce logistics infrastructure is steadily being advanced. The new commerce logistics industry is developing vigorously, with a further increase in market concentration. China’s commerce logistics has played an important role in the fight against COVID-19. From the perspective of key sectors, in 2020, China’s pharmaceutical logistics significantly enhanced its service capacity. Supervisory and informatization levels continued to improve, moving toward intensive and efficient development. Community group buying in e-commerce logistics grew rapidly, broadening the distribution channels of e-commerce, reducing costs, and improving the timeliness of deliveries. It has become an important highlight in the development of China’s commerce logistics.

References China Cold China Public Information Service Platform (2021) Total revenue of China’s cold-chain logistics reaches 288.6 billion RMB, with rapid market development in recent years. http://www. ccccmc.org.cn/hangyedongtai/2027.html. Accessed 22 Mar 2021 China Federation of Logistics & Purchasing (CFLP) (2021) Analysis of logistics operation in 2020. http://www.chinawuliu.com.cn/lhhzq/202102/23/541764.shtml. Accessed 23 Feb 2021 Cnair.com (2021) From adversity to progress! Review of the development of China’s civil aviation transportation market in 2020. http://www.cannews.com.cn/2021/02/26/99321288.html. Accessed 26 Feb 2021

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Cndsw.com.cn (2020) The first half of 2020 has exceeded last year’s annual turnover. Fresh food e-commerce is earning windfalls in the industry. https://www.cndsw.com.cn/shengxian/10269. htm. Accessed 19 Nov 2020 General Administration of Customs (2021) The 2020 annual import and export press conference of general administration of customs. http://fangtan.customs.gov.cn/tabid/1106/Default. aspx. Accessed 14 Jan 2021 Jrj.com.cn (2021) 1.17 billion tons! China’s iron ore imports hit a record high last year! Imports of crude oil, metal ores, grain, meat, and other products all rose. http://futures.jrj.com.cn/2021/01/ 15093031696669.shtml. Accessed 15 Jan 2021 National Bureau of Statistics (2021a) Du Xishuang: the service economy has made a good start. http://www.stats.gov.cn/tjsj/zxfb/2021a04/t20210416_1816451.html. Accessed 16 April 2021 National Bureau of Statistics (2021b) Value added of industries above designated size grew by 7.3% in December 2020. http://www.stats.gov.cn/tjsj/zxfb/2021b01/t20210118_1812427.html. Accessed 18 Jan 2021 People’s Daily Online (2021) China’s strong economic recovery attracts global attention. http:// world.people.com.cn/n1/2021/0419/c1002-32080988.html. Accessed 19 April 2021 Qianzhan.com (2021a) Analysis of the current development of China’s foreign trade industry in autumn 2020, with further optimization of trade patterns. https://www.qianzhan.com/analyst/det ail/220/210114-e0d6a172.html. Accessed 14 Jan 2021a Qianzhan.com (2021b) Analysis of the current market situation and competitive landscape of China’s postal industry in 2020. Declining share of express business in the local city and eastern regions. https://www.qianzhan.com/analyst/detail/220/210122-9feb4663.html. Accessed 18 Feb 2021b Sina.com (2021) The transaction value of the pharmaceutical e-commerce market will exceed 200 billion RMB, Usage rates of Alihealth.cn, Meituan.com, Jdhealth.com in the top three. http://k. sina.com.cn/article_1496814565_593793e5020010lok.html. Accessed 23 April 2021 The State Post Bureau (2021) The State Post Bureau Announces the Status of Postal Industry Operations in 2020. http://www.spb.gov.cn/xw/dtxx_15079/202101/t20210114_3760170.html. Accessed 14 Jan 2021

Chapter 8

Development of Agricultural Products Logistics in China Xiang Li

A well-developed logistics industry is an important guarantee in realizing agricultural modernization. Accelerating the development of agricultural logistics is an important way to enhance the efficiency of agricultural products circulation and promote the coordinated development of urban and rural areas. At present, the development environment of China’s agricultural products logistics continues to improve, and the scale of logistics has maintained a steady growth. The construction of logistics networks is constantly being perfected, while e-commerce logistics has achieved innovative development. At the same time, China’s agricultural products logistics has withstood the major test of the COVID-19 pandemic, ensuring a steady supply of daily necessities and contributing to pandemic prevention and control. In addition, grain logistics and fresh agri-product logistics are developing well and have become hotspots for the development of China’s agricultural logistics. This chapter is divided into three sections. Section 8.1 introduces the development environment of China’s agricultural logistics, including the market environment and policy environment. Section 8.2 describes the development status of China’s agricultural logistics in 2020, including the scale of agricultural logistics, the agricultural logistics network, innovations in the agricultural e-commerce logistics model, and the progress made in agricultural logistics, ensuring a steady supply of daily necessities and helping pandemic prevention and control. Section 8.3 summarizes the development status of the key sectors of China’s agricultural logistics, including grain logistics and fresh agri-products logistics.

8.1 Development Environment of China’s Agricultural Products Logistics In 2020, China’s agricultural market environment continued to optimize, with the overall production and import scale of agricultural products maintaining stable growth. Rural e-tailing and agricultural e-commerce continued to develop rapidly, © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_8

177

178

8 Development of Agricultural Products Logistics in China

and complete poverty alleviation has been achieved in rural areas. Faced with the COVID-19 outbreak in early 2020, the strong connection of agricultural products production and sales was ensured, helping the fight against COVID-19, and safeguarding people’s livelihood. At the same time, the Chinese government also introduced many policies related to agricultural products logistics, creating a favorable policy environment for its development.

8.1.1 Agricultural Production Volume and Import Volume Continue to Expand 8.1.1.1

Agricultural Output Value and Agricultural Production Volume Remained Stable

China is a major agricultural country with huge agricultural output value and production. In 2020, the value added of the primary industry in China was 7.78 trillion RMB, up 3.0% year on year, the same growth level as in 2019. The annual grain output was 669.49 million tons, up 0.9% from the previous year. The output of bulk agricultural products, such as cotton and oilseed, and major agricultural products such as meat, eggs, and aquatic products continued to rank first in the world. Table 8.1 shows China’s major agricultural products output for 2016–2020.

8.1.1.2

The Scale of Agricultural Imports Continues to Expand

The scale of China’s agricultural imports continued to increase in 2016–2020. In 2020, agricultural imports reached 170.80 billion USD, an increase of 14.0% year on Table 8.1 China’s main agricultural products output, 2016–2020 (million tons) Index

2016

2017

2018

2019

2020

Grain

660.44

661.61

657.89

663.84

669.49

Oil

34.00

34.75

34.39

34.95

35.85

Tea

2.31

2.46

2.61

2.80

2.97

86.28

86.54

85.17

76.49

76.39a

Meat Eggs

31.61

30.96

31.28

33.09

34.68

Milk

30.64

30.39

30.75

32.01

34.40

Aquatic products

63.79

64.45

64.69

64.50

65.45

a

Note The year-on-year decline in meat production in 2019–2020 was due to the combined effects of the pig cycle, the African swine fever epidemic, and other factors, leading to a relatively greater fall in pig production Source Compiled from the China Statistical Bulletin of National Economic and Social Development (2016–2020), published by the National Bureau of Statistics of China

180.0

170.8 151.0

160.0 12.8 125.9

140.0 120.0

179

137.1 8.9

111.6

15.0

14.0 10.0

10.0 5.0

100.0 80.0

0.0

60.0 40.0 20.0

Growth Rate (%)

China's Imported Value of Agricultural Products (Billion USD)

8.1 Development Environment of China’s Agricultural Products …

-5.0 -4.5 -10.0

0.0

2016

2017

2018

2019

2020

Fig. 8.1 China’s imported value and growth rate of agricultural products, 2016–2020. Source Compiled from the Import and Export of Agricultural Products in China (2016–2020), published by the Ministry of Agriculture and Rural Affairs of China

year. Figure 8.1 shows China’s import value and growth rate of agricultural products for 2016–2020. Seen in terms of specific categories, grain import volume in 2020 was 35.791 million tons, up as much as 99.8% year on year; livestock import value was 47.57 billion USD, up 31.3% year on year; vegetable import value was 1.04 billion USD, up 8.2% year on year; and fruit import value was 11.04 billion USD, up 6.5%, as shown in Table 8.2. In addition, in December 2019, the Ministry of Finance and other departments expanded the list of goods for cross-border e-commerce retail imports, adding 92 categories of imported goods, including various types of shrimp and crab. The growth of cross-border fresh agri-products logistics was further driven by the strong demand for high-end fresh agricultural imports from Chinese residents.

8.1.2 Rural E-tailing and Agricultural Products E-commerce Continue to Develop Well 8.1.2.1

The Expansion of the E-tailing Market Has Driven the Sales of Agricultural Products

China’s rural e-tailing market continues to improve, as reflected in the key indicators and a new record market size. In 2020, national rural e-tailing sales reached 1.79 trillion RMB, up 8.9% year on year (CCTV Report 2021). The online retail sales of agricultural products in 832 poverty-stricken counties reached 40.66 billion RMB, up 43.5% year on year, an increase of 14.6% points compared with 2019, indicating that more farmers have turned to online sales of agricultural products under COVID19. By the end of 2020, the total number of online businesses in poverty-stricken

180

8 Development of Agricultural Products Logistics in China

Table 8.2 China’s imported quantity and volume of main agricultural products, 2018–2020 Index

Imported volume (million tons)

Imported volume (billion USD)

2018

2019

2018

2019

2020

Grain

20.502

17.918a

35.791

5.94

5.26

9.52

Cotton

1.627

1.937

2.232

13.20

3.60

3.59

2.796

3.390

5.273

1.03

1.12

1.80

94.489

93.308

110.000

41.75

38.40

43.27

8.087

11.527

11.695

5.86

7.41

8.72

Sugar Edible oilseeds Edible vegetable oil Vegetable

0.491 5.527

Fruit Livestock products Aquatic products

2020

–

0.502

–

0.83

0.96

1.04

–

–

8.42

10.36

11.04

–

28.52

36.22

47.57

14.86

18.70

15.56

– 5.222

–

–

a

Note The continued decline in grain imports in 2019 was mainly due to reduced grain production due to bad weather in some countries and China-U.S. trade frictions that constrained Chinese import demand Source Compiled from the Import and Export of Agricultural Products in China (2016–2020), published by the Ministry of Agriculture and Rural Affairs of China

counties reached 3.065 million, an increase of 366,000, or 13.7%, compared with 2019 (Ministry of Commerce 2021). In the first half of 2020, domestic online retail sales of agricultural products reached 193.77 billion RMB, an increase of 39.7% year on year. During the critical period of pandemic control in 2020, e-commerce, through its unique online aggregation capability and distribution advantages, played an important role in alleviating stagnating agricultural products and ensuring a steady market supply. Departments like the Ministry of Commerce, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, and the Poverty Alleviation Office of the State Council have coordinated with local governments and major e-commerce enterprises to establish public welfare e-commerce channels for poverty alleviation. Alibaba, JD.com and other e-commerce enterprises have given traffic support and fee reductions for online sales of agricultural and sideline products in areas of poverty. In the first half of 2020, the number of e-tailing companies opening up ecommerce channels to help poverty alleviation increased to 21. These were connected to more than 600 poverty-stricken counties, selling about 20 billion RMB worth of agricultural products.

8.1.2.2

Innovative Development of E-commerce Models for Agricultural Products

The e-commerce models of China’s agricultural products continue to innovate and upgrade. In 2020, in response to the sudden COVID-19 outbreak and the need for

8.1 Development Environment of China’s Agricultural Products …

181

pandemic control, e-commerce demonstrated its fast innovation and quick response abilities, launching live sales, online “mobile food baskets”, “contactless food delivery” and other new models. In particular, live e-commerce has played a powerful role in driving consumer demand during the pandemic, and has become the new online marketing model for agricultural products. Alibaba, JD.com, Pinduoduo, and other major platforms have launched live broadcast channels to help farmers, while Tiktok and Kuaishou have also entered agricultural products e-commerce through live broadcasts, short videos and streaming, diversifying the ways and channels of online sales. Meanwhile, in order to reduce the risk of COVID-19 infection during logistics delivery, “contactless delivery” has been widely adopted as the main delivery method for agricultural products and food e-tailing. The COVID-19 pandemic, coupled with the improvement in e-commerce service capacity, has seen consumer demand for a large number of agricultural products move from offline to online. “Mobile food baskets” became a major consumption highlight during the Spring Festival of 2020, with around three times the number of agricultural products sold on major ecommerce platforms such as JD.com, Pinduoduo and Meituan than during the same period in 2019. Furthermore, the new business model of agricultural products e-commerce represented by community group buying has quickly penetrated the market, offering new channels for agricultural products online retail. In 2020, the major e-commerce platforms all entered the community group-buying business. In June 2020, Didi launched chengxinyouxuan.com, while in July, Meituan launched bi-mall.meituan.com. In August, Pinduoduo launched “Buy Duoduo Vegetables and Groceries.“ Alibaba and JD.com also launched freshhema.com and “Pinpin Delight”, respectively. As of March 2021, bi-mall.meituan.com, “Buy Duoduo Vegetables and Groceries” and chengxinyouxuan.com were launched in more than 300 cities nationwide and further penetrated to the rural regions (Yu and Li 2021). Vertical e-commerce for community group-buying agricultural products, such as xsyxsc.com and So50.com, is also flourishing.

8.1.3 The Rural Regions Have Achieved Complete Victory in the Battle Against Poverty In perfecting its policies and strengthening coordination, the Chinese government has laid the foundation for a decisive victory in the fight against rural poverty. In January 2020, Document No. 1 of the Central Government, “Opinions on Fully Understanding Key Work in Agriculture, Rural Areas and Farmers, so as to Attain a Moderately Affluent Society as Scheduled”, put 2020 as the final year to achieve victory in the battle against poverty. In March 2020, the National Development and Reform Commission issued the “2020 Action Plan for Consumer Poverty Alleviation to Decisively Win the Fight against Poverty”, requesting further opening up of the bottlenecks in the circulation and sales of agricultural products in poverty-stricken

182

8 Development of Agricultural Products Logistics in China

areas, and organizing the connection between production and marketing. In February 2020, the General Office of the Ministry of Transport released the main work plans for the year, which included guiding and supervising the construction of surfaced roads from established villages and rural townships, and speeding up the construction of transport to help with poverty alleviation. In April 2020, the Ministry of Commerce and the State Council Poverty Alleviation Office of the State Council jointly issued the “Notice on Responding to the Stagnant Sale of Agricultural and Livestock Products for Poverty Alleviation”, aimed at resolving stagnant agricultural and livestock products sales by procurement docking, smoothing logistics operations, resuming work and production, and other measures. In 2020, China achieved its target of poverty alleviation in the new era as scheduled, winning the battle against rural poverty comprehensively. All 98.99 million poor people in rural regions were lifted out of poverty, with 832 poor counties and 128,000 poor villages all “removed” from the poverty list, achieving overall poverty alleviation on a regional level. The arduous task of absolute poverty alleviation had been accomplished.

8.1.4 Ensuring a Steady Supply of Agricultural Products has Withstood the COVID-19 Test When COVID-19 broke out in early 2020, local governments adopted traffic control measures to effectively cut off the source of infection and transmission routes. Most agricultural products distribution companies shut down work and production. This led to logistics restrictions and a shortage of capacity, which temporarily disrupted the transport of agricultural products and other daily necessities. Sales of fresh produce such as fruit and vegetables stagnated. There were interim and regional imbalances in the supply of and demand for vegetables, fruit, and other products in certain regions, and the effective supply of essential agricultural products was tested. These circumstances led to many initiatives implemented from central government down to the local level to help fight COVID-19 and safeguard the supply of livelihood products. In February 2020, the State Council issued a circular on prevention and control under COVID-19, requiring all localities to stabilize agricultural production and ensure supply. The Ministry of Finance and the Ministry of Agriculture and Rural Affairs jointly issued specific financial support and management policies. With pandemic prevention and control measures in place, local governments promoted the resumption of work and production of agricultural enterprises in an orderly manner. Their role was to help the coordination work, and resolve any problems the enterprises encountered in resuming work and production, especially those involved in the processing and circulation of agricultural and other livelihood products. These measures strongly ensured the supply of agricultural logistics, laying a foundation for the recovery of agricultural logistics demand after the pandemic showed signs of slowing down and subsiding.

8.2 Development Status of China’s Agricultural Products Logistics

183

Related enterprises also played an important role in ensuring a sufficient supply of agricultural products while matching production and sales at the same time. For example, after the COVID-19 outbreak, the Beijing Capital Agribusiness Foods Group quickly set up a working group to ensure supply and coordinate the production, processing, reserve storage and transport of rice, flour, oil, meat, eggs, milk, and other products, doing their best to ensure a steady supply of food in the capital. The Zhengbang Group in Jiangxi directed its companies to produce at full capacity, carrying out emergency plans in more than 200 pig farms nationwide to ensure the smooth transport, adequate supply and stable price of pork. Major e-commerce platforms launched programs such as “Help Farmers With Love” and “Green Channel” to match the production and sales of agricultural products. Alibaba Group’s Tmall, Taobao, and Freshippo formed an all-region network for the sale of agricultural products both online and offline, and increased centralized procurement from core production areas, investing in special agricultural logistics lines to help open up sales channels for stagnant agricultural products. JD.com fully opened up its core resources of the supply chain, logistics, operation and marketing, solving the problem of stagnant fresh agricultural products through multiple channels and forms. Pinduoduo launched an anti-pandemic campaign to help farmers, covering nearly 400 agricultural regions and more than 230 poverty-stricken counties. It also developed a feedback system for stalled agricultural products to help connect domestic farmers experiencing stagnant sales with platform consumers.

8.1.5 The Progressive Implementation of Support Policies for Agricultural Products Logistics In 2020, many departments of the Chinese government issued support policies related to agricultural products logistics, as shown in Table 8.3. In terms of policy content, these mainly involve: developing agricultural products e-commerce logistics and cold-chain logistics, improving the construction of the rural distribution system, and promoting financial support for enterprises involved in agricultural products logistics.

8.2 Development Status of China’s Agricultural Products Logistics With a positive market and policy environment, China’s agricultural logistics has maintained good developmental momentum. Logistics volume maintains a steady growth, while logistics network construction continues to improve. The agricultural products e-commerce logistics model is innovating and developing. Especially during the COVID-19 pandemic, agricultural products logistics has implemented “green channels” to ensure smooth transport. Enterprises actively participated in

The Ministry of Agriculture and Rural Affairs

The Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Commerce

January 2020

Main content Focus on “the first kilometer” problem in fresh agricultural products in the place of production. Strengthen the construction of cold-chain preservation facilities for fresh agricultural products in the main production areas and advantageous areas of villages and rural townships, to further reduce agricultural products loss and logistics costs

(continued)

Guiding opinions on implementing the Create a supply chain for high-quality “internet+” agricultural products entering the specialty agricultural products. Coordinate cities from villages and organize production, processing, storage, logistics and other services. Strengthen supply chain management and quality control. Make full use of the online advantages of rural e-commerce, postal service, supply and marketing, and other village-level nodes, to establish a sales service network for agricultural products at the county, rural township and village levels

Name of policy document Notice on construction projects to eliminate shortcomings in agriculture, rural areas and farmers

Date of issuance Department(s) of issuance

January 2020

Table 8.3 Policies related to agricultural logistics in China in 2020

184 8 Development of Agricultural Products Logistics in China

Opinions on fully understanding key work in agriculture, rural areas and farmers, so as to attain a moderately affluent society as scheduled

The CPC Central Committee, The State Council

The Ministry of Commerce

The General Office of the Ministry of Notice on the development work of Commerce, The State Post Bureau of China intensively synergizing e-commerce and express delivery logistics

February 2020

April 2020

April 2020

Guiding opinions on the key work of coordinating and promoting business systems to enhance consumption

Name of policy document

Date of issuance Department(s) of issuance

Table 8.3 (continued)

(continued)

Coordinate the rural resource network of e-merchants, postal services, express delivery, transportation and other enterprises. Improve the logistics and distribution system at the county, rural township, and village levels. Promote efficient urban and rural distribution

Perfect the key networks in agricultural products circulation. Build a new agricultural products supply chain, and promote the construction of agricultural products sorting, processing, packaging, pre-cooling and storage facilities

Launch the project of constructing cold-chain logistics facilities for the storage and preservation of agricultural products. Strengthen overall planning, grade and expand layout, and develop standards for agricultural products cold-chain logistics. Help construct sorting, packaging, cold storage, preservation, warehouse, transport and primary processing facilities at the place of production. Support supply-and-marketing cooperatives, postal and express enterprises to extend their rural logistics service networks

Main content

8.2 Development Status of China’s Agricultural Products Logistics 185

Implementation opinions on accelerating the construction of cold-chain facilities for the storage and preservation of agricultural products

The Ministry of Agriculture and Rural Affairs

The Ministry of Agriculture and Rural Affairs

The General Office of the Ministry of Notice on the comprehensive demonstration Finance, The General Office of the Ministry work of introducing e-commerce into rural of Commerce, The Poverty Alleviation areas in 2020 Office of the State Council

April 2020

April 2020

May 2020

Guidelines on social capital investment in agriculture and rural areas

Name of policy document

Date of issuance Department(s) of issuance

Table 8.3 (continued)

(continued)

Improve the county, rural township and village logistics and distribution systems. Rapidly develop joint distribution. Integrate postal, supply, marketing, trade, express delivery, transport and other logistics resources, and gradually promote integrated warehouse-and-distribution in commerce logistics. Encourage the construction of warehousing and logistics distribution centers in regional nodes with the right conditions. Develop intelligent logistics

Construct facilities for storage, preservation, grading, packaging, and cold-chain distribution, to improve the efficiency and quality of cold-chain logistics services and create agricultural logistics nodes. Encourage social capital to participate in a traceability system for agricultural products, providing services such as product grading and logistics transportation turnover

Focus on Hebei and 15 other provinces, autonomous regions and municipalities, to construct cold-chain facilities for storage and preservation of fruits, vegetables and other fresh agricultural products. Encourage other regions to construct cold-chain facilities for storage and preservation according to local conditions

Main content

186 8 Development of Agricultural Products Logistics in China

Implementation opinions on further optimizing the development environment to help the circulation of fresh agricultural products

The National Development and Reform Commission and 11 other Departments

The National Development and Reform Commission, The Ministry of Transport

The Ministry of Agriculture and Rural Affairs

May 2020

June 2020

June 2020

Offer specific advice on reducing business operating costs, increasing financial support, increasing the supply of land and housing, and creating a good business environment. Solve the outstanding problems in the circulation of fresh agricultural products that restrict the development of enterprises, and promote the healthy development of fresh agri-products logistics

Main content

Notice on further constructing cold-chain logistics facilities for the storage and preservation of agricultural products

(continued)

Focus on the main production areas, characteristic advantageous areas and areas of poverty for fresh and live agricultural products. Synchronously deploy and promote the construction of cold-chain logistics facilities for the storage and preservation of agricultural products, and the automated collection of information

Implementation opinions on further reducing Implement the “green channel” policy for logistics costs the transport of fresh and live agricultural products. Reduce the cost of transporting fresh and live agricultural products, such as cold pork that is related to people’s livelihood and consumption. Deploy and construct key national cold-chain logistics bases

Name of policy document

Date of issuance Department(s) of issuance

Table 8.3 (continued)

8.2 Development Status of China’s Agricultural Products Logistics 187

Name of policy document Opinions on new business forms and new models leading the accelerated development of new consumption

Date of issuance Department(s) of issuance

September 2020 The General Office of the State Council

Table 8.3 (continued) Eliminate shortcomings of cold-chain logistics facilities in agricultural products, accelerate the construction of facilities for agricultural products distribution, packaging, pre-cooling and storage. Further promote new models of cold-chain distribution services for agricultural products. Construct agricultural business interconnectivity within the agricultural products supply chain

Main content

188 8 Development of Agricultural Products Logistics in China

8.2 Development Status of China’s Agricultural Products Logistics

189

emergency logistics, while the whole chain in cold-chain logistics of agricultural products was strengthened to help control the pandemic, fully unleashing its crucial role in safeguarding people’s livelihood.

8.2.1 The Scale of Agricultural Products Logistics Continues to Grow Steadily The overall scale of China’s agricultural products logistics has shown steady growth. In 2020, the total logistics value of agricultural products nationwide reached 4.6 trillion RMB, a year-on-year increase of 3.0%, 0.1% points lower than the previous year. Figure 8.2 shows the total value and growth rate of agricultural products logistics in China for 2016–2020. In 2020, the proportion of total value of agricultural products logistics to total social logistics value in China remained stable on the whole, at 1.5%, 0.1% points higher than the previous year, as shown in Table 8.4. 4.5 4.0

4.6

3.9 4.5

3.5

3.5 4.2

3.1

3.6

3.0

3.1

3.9

4.0

3.0 2.5

3.7

2.0

3.5

Growth Rate (%)

Total Value of Agricultural Products Logistics (trillion RMB)

5.0

1.5 1.0

3.0

0.5 0.0

2.5

2016

2017

2018

2019

2020

Fig. 8.2 Total value and growth rate of agricultural products logistics in China, 2016–2020. Source Compiled from the National Logistics Operation Report (2016–2020), published by the National Development and Reform Commission and the China Federation of Logistics and Purchasing

190

8 Development of Agricultural Products Logistics in China

Table 8.4 Total logistics value and the proportion of agricultural products in China for 2016–2020 Year

Total value of social logistics (trillion RMB)

Total value of agricultural products logistics (trillion RMB)

Proportion of total value of agricultural products logistics (%)

2016

229.7

3.6

1.56

2017

252.8

3.7

1.46

2018

283.1

3.9

1.38

2019

298.0

4.2

1.41

2020

300.1

4.6

1.53

Source Compiled from the National Logistics Operation Report (2016–2020), published by the National Development and Reform Commission and the China Federation of Logistics and Purchasing

8.2.2 Agricultural Products Logistics Ensures Essential Supply and Pandemic Control Under COVID-19 8.2.2.1

Ensuring Smooth Operation of Green Channels for Agricultural Products

After the COVID-19 outbreak, the Ministry of Commerce, Ministry of Transport and other departments issued a series of policies to ensure the orderly circulation and supply of agricultural products related to people’s livelihoods. For key agricultural products and daily necessities, the document advises strict enforcement of “green channels” for agricultural products and their transport vehicles, so as to ensure an effective supply of fresh and live agricultural products, and other key production and livelihood materials. The local governments enforced local responsibilities, smoothing the flow of agricultural products, and making every effort to ensure the normal transport and distribution of agricultural products and other materials. For example, Gansu Province brought transport vehicles of livestock, poultry, eggs, and fresh milk into the “green channel”, prioritizing their rapid passage, hence improving the transport efficiency of fresh and live agricultural products. Shaanxi Province required villages to keep broken roads open to ensure that livestock and poultry farms, slaughterhouses, and processing and trading markets remained accessible. Meanwhile, pandemic control checkpoints are required for cross-regional transport vehicles carrying agricultural products. Other than the mandatory rapid body temperature test, priority measures such as “no stop”, “no inspection”, “no charge” have ensured the convenient and rapid conveyance of materials across regions.

8.2 Development Status of China’s Agricultural Products Logistics

8.2.2.2

191

Enterprises Actively Participate in Emergency Logistics for Agricultural Products

During the COVID-19 pandemic, Chinese logistics companies actively fulfilled their social responsibility by participating in the emergency logistics of agricultural products and other materials, making every effort to ensure the ready supply of necessities in all regions, especially in areas with severe outbreaks. For example, less than 40 days after the outbreak, JD.com offered delivery services to nearly 300 domestic cities, making 220 million deliveries of more than 290,000 tons of rice, flour, grain, oil, meat, eggs, vegetables, milk, and other daily necessities to consumers nationwide (Haiwainet.cn 2020). Cainiao immediately called for more than 30 domestic and foreign logistics companies to open up a green channel for the free transport of relief supplies. Relying on an intelligent supply chain consisting of more than 150 large scale e-commerce storage parks, they delivered various types of necessity items to Hubei. SF Express quickly launched a transport supply channel to help the outbreak areas, at the same time forming a special logistics network with China Post and Pinduoduo to supply agricultural products and food to medical personnel and the general public.

8.2.2.3

Strengthening Cold-Chain Control to Strictly Reduce the Transmission Risks of COVID-19

By mid-2020, the spread of COVID-19 in China was largely contained, and foreign trade operations had stabilized, but were still under pressure due to the rebound of the pandemic. In particular, after an outbreak in Beijing’s Xinfadi agricultural wholesale market, concerns were raised about the viral contamination of agricultural products, food and packaging, and the survival and spread of the virus in cold-chain transport. The relevant Chinese authorities responded by strengthening pandemic control for cold-chain agricultural products to reduce the spread of the virus. In August 2020, the Ministry of Transport issued the “Notice on Further Strengthening COVID-19 Prevention and Control in Cold-Chain Logistics Channels”, proposing to establish a whole-chain, traceable and integrated management system for the cold-chain logistics supply chain. In October, the State Council issued the “Disinfection Guidelines for COVID-19 Control and Prevention in Cold-Chain Food Production and Operations”, which stipulates disinfection measures for cold-chain food production, loading/unloading, transport, and storage. In November, the State Council issued the “Work Plan for the Preventative Disinfection of Imported ColdChain Food Products”, which requires local preventive and comprehensive disinfection to reduce the risk of COVID-19 infection through cold-chain food imports. In the same month, the Ministry of Transport issued the “Technical Guidelines for COVID19 Prevention, Control and Disinfection in Imported Cold-Chain Food Logistics on Highways and Waterways”, which stipulates specific requirements for reducing COVID-19 contamination in all aspects of imported cold-chain food logistics. Meanwhile, the National Health Commission issued the “Notice on Further Improving

192

8 Development of Agricultural Products Logistics in China

Cold-Chain Food Traceability Management”, proposing to establish and perfect the management of cold-chain food traceability through a national platform, a provincial platform, and an enterprise-level platform. Local governments strictly enforced the relevant policies to strengthen the whole chain of pandemic prevention and control in agricultural products logistics. For example, Shanxi Province made detailed provisions to control the pandemic through port inspections and quarantine, cold-chain logistics prevention and control, market circulation traceability, environmental disinfection, and health management of employees. Another example is Shenzhen. The city has established a “centralized supervision warehouse for imported frozen products” outside its 5490 cold storage units, carrying out centralized supervision of cold-chain agricultural imports, centralized testing, disinfection, and traceability in the quickest possible time. It relies on intelligent systems to manage all its business online, not only reducing risk, but also saving operating costs.

8.2.3 Further Construction and Improvement of the Agricultural Products Logistics Network 8.2.3.1

Accelerating the Pace of Constructing Agricultural Logistics Park Infrastructure

In December 2018, the National Development and Reform Commission and the Ministry of Transport released the “National Logistics Hub Layout and Construction Plan”. In 2020, they announced the construction of a second list of 22 national logistics hubs: eight in the eastern region, four in the central region, nine in the western region, and one in the northeast region, covering six types of national logistics hubs: land port type, port type, airport type, production service type, business service type, and land border port type. Along with the new batch of national logistics hubs being constructed, the infrastructure construction of agricultural products logistics parks is also steadily being advanced, providing strong support for a modern agricultural logistics network. For example, the China CO-OP Yan’an Agricultural Products Logistics Park is one of the core projects of the Yan’an Land Port National Logistics Hub in Shaanxi Province, aiming to build the largest “one-stop” agricultural and sideline products distribution center in Northern Shaanxi. The first phase of the project was completed and put into official operation in May 2019, and the second phase began construction in September 2020. Another example is the Qingdao Laixi International Agriculture Products Intelligent Logistics Park project, which is being built at an accelerated pace, using Qingdao as a national logistics hub for trade services. With a total investment of 2.8 billion RMB, the project aims to construct an international agricultural products exhibition center, a centralized procurement-and-distribution center, a cold-chain storage center, and an experiential commercial complex. The project was

8.2 Development Status of China’s Agricultural Products Logistics

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expected to be in operation in 2021, and, once opened, would be the largest agricultural products logistics center covering the whole industry chain in the Jiaodong Peninsula.

8.2.3.2

Rural Express Network Construction to Broaden the Channels of Agricultural Products Selling to the Rest of China

China’s rural express network has expanded further into the rural regions, with rapidly rising Internet coverage for villages, opening up channels for the movement of agricultural products from counties, townships, and villages to the rest of China. According to statistics, the coverage rate of China’s express delivery outlets in townships increased from 50% in 2014, to more than 97% in the first half of 2020. Express delivery outlets covered more than 30,000 townships across the country, with 27 provinces, autonomous regions, and municipalities achieving full express delivery outlets coverage in their townships. There were 538,000 Ule.com e-commerce sites nationwide, of which 310,000 were based in established villages. The comprehensive demonstration work of introducing e-commerce to the rural areas has achieved full coverage in 832 poverty-stricken counties. Rural express delivery outlets and the end-distribution network continue to improve, with significant enhanced support of agricultural products selling to the rest of China. In May 2020, the Ministry of Agriculture and Rural Affairs, together with relevant departments, organized the “Internet+” project, distributing agricultural products from villages into cities, carrying out pilot projects in 110 counties and cities to establish and improve the supply chain, service operation, and support systems to help farmers adapt to the online sales of agricultural products. In 2020, the number of express parcels posted from and delivered to rural areas exceeded 30 billion, with more than 1.5 trillion RMB of agricultural products moving into the cities. Postal enterprises around the country fully exploited the delivery network to broaden the upstream channels of agricultural products with local characteristics and the corresponding industry belt. Since the launch of the “one city, one special product” project which helps bring agricultural products into cities, as of November 2020, the total transaction value of unique local agricultural products from rural areas delivered through postal express was 19.17 billion RMB, generating 640 million such parcels. In the first half of 2020, there were 23 “one city, one special product” projects generating an express business volume of tens of millions of parcels. Hence, the role of express delivery in introducing agricultural specialties into cities was further enhanced.

8.2.3.3

Continuous Expansion of Cross-Border Logistics Channels for Agricultural Products

Tested by COVID-19 and the “anti-globalization” wave, the strategic cooperation between China and the countries in the “Belt and Road Initiative” has shown strong

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resilience and vigor. The Belt and Road Initiative continues to be intensively implemented, rapidly enhancing China’s international logistics service capacity. Crossborder logistics channels for agricultural products have been extending constantly, offering an important guarantee for agricultural trade cooperation between countries within the Belt and Road Initiative. For example, since 2020, the Customs at Shandong Weifang has led more than 80 enterprises to incorporate foreign regulations into more than 400 operational specifications, to leverage the regional industrial advantages of agricultural products. It has facilitated the certification process at the place of production, introducing entirely paperless applications and “zero waiting”. From January to November 2020, the “Belt and Road” agricultural export enterprises issued 35,690 certificates of origin, amounting to 1.62 billion USD. Inspections can be booked by appointment, with bulk agricultural products released immediately upon reporting. In the same period, customs clearance time has been reduced by 80%, achieving “zero delay” in the export of agricultural products. Also in that same period, Weifang City exported 2.43 billion RMB of agricultural products to countries in the “Belt and Road Initiative”, a 3% counter-trend growth. Another example is Sichuan’s Chengdu Customs opening a green channel to facilitate tea customs clearance, implementing “7 × 24” hours booking for clearance appointments, realizing “advance declaration + priority inspection” to meet the demand for all-weather customs clearance. On April 9, 2021, a special train loaded with 1250 tons of Sichuan tea departed from Chengdu Qingbaijiang International Railway Port for Uzbekistan. This was not only the first trip made by a special agricultural products train from Sichuan to Central Asia, but also the first special train transporting Sichuan tea out of the country.

8.2.4 Model Innovation and Development in Agricultural Products E-commerce Logistics 8.2.4.1

Models Like Production Area Warehouse and Direct Delivery from the Place of Origin Help Sell Agricultural Products to the Rest of China

The pace of innovation and development of China’s agricultural products ecommerce logistics has accelerated. Innovative models, such as production area warehousing, direct harvesting, and direct delivery of agricultural products from the place of origin have effectively opened the upstream channels for such products, and improved their “first kilometer” logistics efficiency and quality, becoming a popular trend for developing agricultural products logistics at the place of origin. For example, in November 2020, Alibaba’s Xi’an Digital Origin Warehouse was officially put into operation. This warehouse integrates the storage, preservation, sorting, packaging, shipping, and collection of agricultural products, adopting smart central control big

8.2 Development Status of China’s Agricultural Products Logistics

195

data for supply and demand, food-safety testing, and other modular functions, and is capable of processing 150,000 orders a day (Chen 2020). The warehouse is Alibaba’s fifth digital warehouse in 2020 for agricultural products at the place of origin. The other four are in Kunming (Yunnan), Nanning (Guangxi), Chengdu (Sichuan) and Zibo (Shandong). By constructing five digital origin warehouses, Alibaba has built a supply chain network for agricultural products covering 18 provinces across China. Another example can be seen in Pinduoduo adopting direct delivery from the place of origin to replace the distribution layers of agricultural products. It has streamlined the traditional six to eight links of agricultural products circulation to two to three links. This “ultra-short supply chain” rapidly expands the circulation radius of agricultural products on the industry belt, achieving batched deliveries in a shorter time, while reducing the cost of intermediate circulation links. On Chinese New Year Eve 2021, Pinduoduo launched the “direct delivery from the place of origin” project for agricultural products, connecting more than 1100 agricultural regions to provide consumers with stable and affordable agricultural products supply services, delivering food directly to their Reunion Dinner tables (Sh.chinanews.com 2021). JD Express is yet another example, launching its flagship store for fresh agricultural products, JD Fresh, in January 2020. JD Express implements “direct harvesting from the place of origin + one-item delivery” with full monitoring of “harvesting, storage, transport and marketing”. All the products of their flagship store are directly picked from the place of origin, moving supply chain links to places closest to the place of origin. Collection points and pre-sorting centers are set up in rural areas to ensure fresh picking and grading of agricultural products in the fastest possible time. They are then delivered to the rest of China on the same day. JD Express has also fully unleashed its integrated freight advantage, ensuring timely and quality delivery through its professional cold-chain transport network, and air and high-speed rail resources.

8.2.4.2

Front Warehouse Center (FDC) Improves the “Last Kilometer” Service Quality of Agricultural Products

Agricultural products e-commerce continues to explore home distribution, and the front distribution center (FDC) model has emerged as a key representative of innovative warehouse distribution. Compared with a traditional central warehouse, the FDC, as a small storage unit closer to the customer, offers many advantages, such as closer proximity between the final logistics outlet and the consumer, smaller distribution radius, faster delivery, and higher flexibility. It has become a popular model for “last kilometer” logistics in agricultural products. Early adopters of FDC include vertical e-commerce companies like Missfresh, 100.me and Dmall. Missfresh adopted the FDC model of a two-stage distribution storage system of “city sorting center + micro-community warehouse”, with more than 1500 FDCs and over 3500 SKUs. Its average front warehouse turnover cycle is 1.5 days. At present, Missfresh is promoting the 3.0 version of its FDC model to realize automated, unmanned operation and further improve picking and delivery

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efficiency. 100.me uses the “city batch procurement + community FDC” model for its self-developed logistics system, with about 1000 FDCs and 10,000 SKUs covering every category including fruit, vegetables, eggs, seafood, and milk. An order can be delivered in as fast a time as 30 min. By the end of 2020, 100.me was in operation in more than 30 cities, including Beijing, Shanghai, Shenzhen, and Hangzhou, with more than 800,000 daily orders (Ye 2021). Most new fresh food e-commerce platforms have adopted the FDC model. Meituan launched “Buy Meituan Vegetables and Groceries” in 2019, which adopted the “FDC + home delivery” model. This model provides instant delivery to communities within a 1.5 km radius, setting up convenient service outlets that integrate warehousing, sorting, and distribution. Another example is the new fresh-food eretail commerce company, “Xianxiaochu,” founded by the Grass Green Group at the end of 2019, which operates on a refined micro-FDC model for different market segments. At the initial stage, each micro-warehouse had only about 350 SKUs, serving one-three communities, and offering efficient 30-min home deliveries within a radius of 2 km. Due to its micro front-end business units, the micro-FDC model of “Xianxiaochu” expanded rapidly, with over 200 community micro-warehouses in Chengdu just one month after its launch (Yang 2020).

8.3 Development Status of Some Key Sectors of China’s Agricultural Products Logistics Industry China’s grain logistics, fresh agri-products logistics and other sub-sectors are developing rapidly, and have become hot areas of agricultural products logistics. In recent years, food reserves and circulation capacity have been significantly enhanced, the grain transportation structure has been continuously optimized, while grain logistics informatization projects have achieved remarkable results. At the same time, the construction of cold-chain infrastructure for fresh agricultural products has increased, while the standardization system for operation and management has improved, with increasingly active capital operation, investment, and financing activities.

8.3.1 Development Status of Grain Logistics 8.3.1.1

Food Reserve Capacity Has Been Significantly Enhanced, While Circulation Capacity Continues to Improve

China has high grain production, with a stable supply and sufficient reserves. Food reserve capacity has been comprehensively improved. During the 13th Five-Year Plan period, the reform of China’s grain reserve management and mechanism continued to advance, with positive progress made in establishing a central reserve supervision

8.3 Development Status of Some Key Sectors of China’s Agricultural …

197

system, and optimizing the reserve structure. The scale of the central grain reserves has remained stable, with local reserves able to meet market supply for three months in production areas, six months in marketing areas, and 4.5 months in areas with equal production and marketing. A certain number of finished grain and oil reserve warehouses have been built in 36 large and medium-sized cities and areas prone to market fluctuations. In addition, many storage facilities have been constructed, renovated, or upgraded. The standard national warehouse capacity for grain reached 680 million tons, an increase of 120 million tons compared with the end of the 12th Five-Year Plan period, with overall storage conditions at a more advanced global level (Wang 2021). Grain circulation capacity has been significantly enhanced. During the 13th FiveYear Plan period, a national grain trading center and 30 provincial trading centers were established nationwide. A grain trading system, coordinating and developing wholesale and retail, futures and spot, and online and offline was also developed, with a cumulative turnover of 450 billion kilograms of grain (Liu 2021). Since the implementation of the High Quality Grain Project in 2017, China has built more than 4000 post-production grain service centers, and constructed, renovated, or upgraded more than 1500 grain institutions for quality inspection. The emergency network facilities for grain circulation have been gradually improved. An emergency grain reserve, processing, and distribution network consisting of 5448 emergency grain and oil processing enterprises, 2777 emergency distribution centers, 3741 emergency storage and transportation enterprises, and 43,570 emergency supply outlets has been built, playing an important role in major natural disasters and public emergencies, such as blizzards, typhoons, and epidemics (Hebei Province Bureau of Grain Reserves 2021).

8.3.1.2

Equal Use of Waterway and Rail Transport, as Transport Structure Continues to Optimize

There are three main modes of grain transportation in China, namely, rail, waterway, and highway transport. Among these, rail and waterways are the main modes of transport and have steadily developed in recent years. Apart from 2019, when rail volume decreased compared with the previous year, China’s rail freight volume and port throughput for grain has generally displayed upward growth, as shown in Table 8.5. In 2019, the rail freight volume for grain was 78.36 million tons, down 7.3% year on year. The rail cargo turnover for grain was 155.204 billion ton-kilometers, down 3.5% year on year. The port throughput for grain was 300.77 million tons, a significant increase of 42.3%, of which the grain outbound volume was 93.50 million tons, an increase of 31.9%, and inbound volume was 207.28 million tons, an increase of nearly 50%. There were 43 bulk grain berths of 10,000 tons and above, two more than the previous year. The “bulk cargo converted to container” model for grain logistics is steadily being promoted, while multimodal transport continues to develop. For example, Wuhan International Container Co., Ltd. implemented its pilot project aimed at

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Table 8.5 China’s railway and waterway transport for grain, 2015–2019 Year

Railway Freight volume (million tons)

Port Freight turnover (billion ton-kilometers)

Throughput (million tons)

Outbound volume (million tons)

Inbound volume (million tons)

Bulk grain berths of 10,000 tons and above (per unit)

2015

55.90

101.254

173.36

46.51

126.86

38

2016

59.81

107.086

171.90

50.16

121.74

39

2017

77.95

153.890

213.93

71.03

142.89

41

2018

84.51

160.810

211.38

70.90

140.48

41

2019

78.36

155.204

300.77

93.50

207.28

43

Source Compiled from the China Statistical Yearbook (2016–2020), published by the National Bureau of Statistics of China

converting bulk grain cargo into containers, creating an integrated “highway transport—port unloading—loose grain converted to container—ship transport” system. In September 2020, the first 1500-ton batch of rice was shipped in 80 TEUs using the “bulk cargo converted to container” system, to Zhanjiang, Shantou, and Jieyang in Guangdong, marking the first time that Wuhan Port had implemented this system for grain. Compared with the previous high-bulk truck highway system, implementing intermodal transport by highways and waterways has reduced logistics cost from 330 RMB/ton to about 250 RMB/ton, and has also ensured efficient, pollution-free, and low grain loss during transport (The State Grain Storage Administration 2020). Another example is Guangzhou Port Logistics Co., Ltd. developing the “bulk grain cargo converted to container” model in 2020. Relying on the inland port resource advantages of Guangzhou Port, the company established 13 multimodal transport channels, such as the “Guangzhou Port—Ganzhou (Jiangxi)” and “Guangzhou Port—Chenzhou (Hunan)”, forming a basic, green and efficient grain transportation network. In addition, the company has used this new multimodal transport to open up a new bonded transport channel for international grain trade, and further improve its logistics chain services. The specific business procedure is as follows: the imported grain is purchased by enterprises in the Ganzhou Comprehensive Bonded Zone, transported by sea to the Xingang Port Area of Guangzhou Port, placed into containers in the Qiaoyi Mingzhu bonded warehouse, and then transported to enterprises in the Jiangxi Ganzhou Comprehensive Bonded Zone by a special port-rail train from the Guangdong Port zone. Hence, the bonded processed grain is conveyed, in stages, between these special supervision customs zones.

8.3 Development Status of Some Key Sectors of China’s Agricultural …

8.3.1.3

199

Informatization Projects Continue to Advance, as Data Interconnectivity Continues to Improve

The central, provincial and municipal reserve systems continue to attach great importance to grain logistics informatization. Since 2019, the National Food and Strategic Reserves Administration (NFSRA), through its granary informatization and intellectualization project, has connected 30 provincial platforms, and promoted integrated informatization at the central, provincial, city, and county levels. As from 2020, the platform resources of the NFSRA and the existing informatized resources of China Grain Reserve Group Ltd. aimed to provide digital access to data and video, creating a relatively complete database on the central grain reserves. To date, the national grain informatization has essentially been completed, and informatization management for government reserve grain is in full operation. Grain logistics informatization and intellectualization have achieved positive results in various regions. For example, Shandong Province launched a comprehensive intelligent upgrade of its grain depot systems. More than 400 state-owned grain depots have now been intelligently upgraded with business management information systems. The “Cloud Grain Depot” built by Shandong Food and Strategic Reserves Administration has realized national and interprovincial interconnectivity, as well as data connection, testing, and management, with the hundreds of intelligent grain depots within the province. In 2020, the smart access module of the “Cloud Grain Depot” successfully connected with the platform’s raw grain procurement module, realizing full informatized visualization of grain and oil products from the production stage to the consumption stage. Another example is Anhui Province investing nearly 400 million RMB to achieve informatization, essentially realizing full information centralization and complete online supervision of grain circulation at the provincial level. In October 2020, the intelligent informatization project for Anhui Province’s grain depots successfully passed examination and was accepted.

8.3.2 Development Status of Fresh Agri-Products Logistics 8.3.2.1

Eliminating Infrastructure Shortcomings as National Cold-Chain Logistics Bases Began Construction

In 2020, Document No.1 of the Central Government proposed to construct coldchain logistics facilities for the storage and preservation of agricultural products, to support storage and preservation, sorting and packaging, and post-production primary processing in the fields. In January 2020, the Ministry of Agriculture and Rural Affairs proposed constructing 100 key cold-chain logistics bases in important agricultural products distribution cities, as well as 300 regional cold-chain logistics facilities in agricultural production areas and large counties in China. Cold-chain logistics facilities in the fields will be built in another 2000 townships with good industrial foundations, excellent market conditions, and high construction zeal. Based around

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8 Development of Agricultural Products Logistics in China

these 2000 townships, village-level storage and preservation facilities will be built in another 100,000 villages. In February 2020, the National Development and Reform Commission issued the “Notice on the Construction of the First Batch of National Key Cold-Chain Logistics Bases”. In July 2020, the first batch of 17 national key cold-chain logistics bases, such as those in Beijing’s Pinggu and Fujian’s Fuzhou, was announced, and key cold-chain logistics infrastructure began construction at a national level. Thanks to this project, local governments began to actively promote the construction of coldchain logistics facilities for the storage and preservation of agricultural products. For example, Fuzhou National Key Cold-Chain Logistics Base relies on the Yuanhong International Food Exhibition and Trade Center and the reserve cold-chain logistics infrastructure cluster in Fuzhou’s Mawei District to integrate and gather cold-chain logistics market supply and demand, reserve facilities, and industrial resources in the upstream and downstream sections of agricultural products circulation and production processing. 8 billion RMB was invested in Yuanhong International Food Exhibition and Trading Center to help make it the country’s largest cold-chain storage base, once completed in 2021. The Mawei cold-chain logistics base had set aside 1.34 km2 of land to increase its annual cold-storage turnover to 4 million tons by 2023. It aims to become a commercial aquatic products and international cold-chain logistics hub linked to the “Belt and Road Initiative”.

8.3.2.2

Cold-Chain Logistics Standards are Being Introduced Intensively, Accelerating the Pace of Operation and Supervision Standardization

In recent years, standardized operation and management has been implemented in the cold-chain transport and storage of fresh agricultural products, while cold-chain logistics standards have also been intensively introduced. Seven such national and industry standards were released and implemented in 2020, as shown in Table 8.6. It is worth noting that, to ensure more stringent COVID-19 prevention and control, the government has further regulated cold-chain logistics for agricultural products. In September 2020, the first mandatory national standard for cold-chain logistics, “National food safety standard—Hygienic specification for food cold chain logistics” (GB 31605–2020), was officially released. The standard has been implemented since March 11, 2021. Under this standard, operational management of agricultural logistics is mutually complementary with pandemic prevention and control measures. In December 2020, the national traceability platform for cold-chain food imports was put into operation, marking the initial completion of a supervision platform for coldchain agricultural imports and food traceability. “From field to fork”—the formation of a whole-process, omni-channel cold-chain agricultural information chain is accelerating, helping cold-chain logistics of fresh agricultural products move to a new stage of development.

Specify the basic requirements of the cold-chain food logistics process. Requirements and management guidelines on handover, transport, distribution, storage, personnel and management systems, traceability and recall, document management, etc Specify procurement and supply of edible agricultural products in e-commerce. The quality management requirements in primary processing, packaging, storage, transportation, sales, distribution, etc.

National standard September 2020 March 2021

National food safety standards; Hygiene standards for food cold-chain logistics (GB 31605–2020)

The specification of quality management for National standard September 2020 April 2021 supply chain on electronic commerce of agricultural products (GB/T 39058–2020)

(continued)

Regulate packaging, labeling, transport, storage and traceability requirements for chilled and frozen food products in logistics. Applicable to the logistics operations and management of such products

Date of implementation Content of standard March 2020

Level of standard Date of release National standard August 2019

Name of standard

Packaging, labeling, transport and storage for chilled and frozen foods in logistics (GB/T 24616–2019)

Table 8.6 Cold-chain logistics standards related to fresh agricultural products in 2020

8.3 Development Status of Some Key Sectors of China’s Agricultural … 201

Industry standard November 2019 March 2020

Industry standard October 2019

Technical regulation of cold-chain circulation for loquats (GH/T 1272–2019)

Frozen edible wild potherbs (LY/T 3096–2019) April 2020

July 2021

National standard December 2020

Specification of e-commerce cold-chain distribution service management (GB/T 39664–2020)

(continued)

Specify the regulations for frozen wild potherbs: their test methods, inspection regulations, signage, labeling, packaging, transport and storage. Applicable to frozen wild potherbs products processed from the bleaching and flash-freezing of wild fresh potherbs

Specify the technical regulations of the cold-chain circulation for loquats, from harvesting, pre-cooling, grading, packaging, storage, transport to sales. Applicable to the cold-chain circulation of fresh loquats

Specify the requirements of basic e-commerce cold-chain logistics distribution and management, its operational processes and requirements, and review improvement. Not applicable to pharmaceutical cold-chain logistics

Date of implementation Content of standard

Level of standard Date of release

Name of standard

Table 8.6 (continued)

202 8 Development of Agricultural Products Logistics in China

Level of standard Date of release Industry standard May 2020

Name of standard

Code of practice for the end distribution of food cold chain (WB/T 1104–2020)

Table 8.6 (continued) June 2020

Specify basic and operational requirements for cold-chain food end distribution. Applicable to the operation and management of food cold-chain end distribution

Date of implementation Content of standard

8.3 Development Status of Some Key Sectors of China’s Agricultural … 203

204

8.3.2.3

8 Development of Agricultural Products Logistics in China

Increasingly Active Investment and Financing in Fresh Food E-commerce Logistics, Enhancing Industry Resource Integration and Service Improvement

With growing demand in China’s fresh agricultural products market, new circulation models are emerging, and social capital is looking at fresh agricultural e-commerce logistics with great interest. Especially in 2020, the COVID-19 pandemic has driven household consumption from offline to online, with fresh food e-commerce logistics further stimulated. The amount of corporate investment and financing has grown significantly compared with 2019. According to incomplete statistics, there were more than 30 investment and financing events for fresh food logistics and its enterprises in 2020. Among such projects with public investment and financing, nearly 10 involved 100 million RMB or more. Enterprise financing is mainly used to expand warehouse and distribution networks, upgrade cold-chain facilities, optimize supplychain operations, build intelligent management platforms, improve product quality and safety traceability, and increase technology and talent investment. Active capital operation can promote the integration of industry resources, upgrade cold-chain facilities, increase R&D investment, improve the technology and service level of logistics, and further extend the industry chain and value chain for fresh agricultural products.

8.4 Summary This chapter introduces the overall development environment and development status of China’s agricultural products logistics in 2020, as well as the development status of grain logistics and fresh agricultural products logistics. Contents on the development environment include: (1) the production and import scale of agricultural products have maintained stable growth; (2) agricultural products e-commerce is developing rapidly; (3) the production and sales matching of agricultural products has been strongly guaranteed during the COVID-19 pandemic; (4) complete victory has been achieved in the poverty alleviation battle in rural regions; (5) a number of policies related to agricultural logistics have been intensively introduced by the government. Contents on the current development status include: (1) the scale of agricultural logistics has maintained stable growth; (2) agricultural logistics has expanded its construction network; (3) there is increasing innovation and development of agricultural e-commerce logistics models; (4) agricultural logistics under COVID-19 has ensured a steady supply of daily necessities, and contributed to pandemic prevention and control.

References

205

Contents on key sectors include: (1) China’s food reserve and circulation capacity have been significantly enhanced, with the grain transportation structure continuously optimized. Its grain logistics informatization projects have achieved remarkable results; (2) the construction of cold-chain infrastructure for fresh agricultural products has been further perfected, standardization in operation and management has been accelerated, and capital operation, investment, and financing activities have become increasingly active.

References CCTV Report (2021) Ministry of commerce: national rural network retail sales rose by 8.9% in 2020. http://m.news.cctv.com/2021/01/22/ARTIVlkpfxuxeasiK52x7yqP210122.shtml. Accessed 22 Jan 2021 Chen K (2020) Visiting Alibaba’s warehouses in Xi’an: how to realize digital circulation of agricultural products. http://finance.sina.com.cn/chanjing/gsnews/2020-11-17/doc-iiznezxs2206 676.shtml. Accessed 16 Nov 2020 Haiwainet.cn (2020) World retail congress: China’s supply chain experience in the wake of the pandemic. http://www.xinhuanet.com/tech/2020-04/26/c_1125908537.htm. Accessed 26 Apr 2020 Hebei Province Bureau of Grain Reserves (2021) The State Information Office held a press conference on the development status of food and material reserves during the 14th Five-Year Plan period. http://lswz.hebei.gov.cn/lysc/hyxw/202104/t20210402_51234.html. Accessed 2 Apr 2021 Liu H (2021) The 14th Five-year Plan period will improve the key food logistics network. https:// news.sina.com.cn/c/2021-04-03/doc-ikmyaawa4785351.shtml. Accessed 3 Apr 2021 Ministry of Commerce (2021) The Ministry of Commerce’s 2020 report: Q&A session on ecommerce in state poverty counties, ensuring online consumption during the Spring Festival, and others. http://www.gov.cn/xinwen/2021-01/28/content_5583367.htm. Accessed 28 Jan 2021 Sh.chinanews.com (2021) Pinduoduo connects 1100 farming areas to sell agricultural products nationwide. Direct delivery from the place of origin ensures a ‘local Chinese New Year’ http:// www.sh.chinanews.com/swzx/2021-01-27/84667.shtml. Accessed 27 Jan 2021 The State Grain Storage Administration (2020) 4750 emergency grain and oil processing and supply enterprises have resumed production. https://www.sohu.com/a/458602639_260616jj/202010/t20 201020_2963817.shtml. Accessed 20 Oct 2020 The State Post Bureau (2020). Reply to recommendation no. 7991 of the third session of the 13th National People’s Congress. http://xxgk.spb.gov.cn/extranet/detail.html?yc_id=dce54639-17fc415b-a80c-28088cb4fecb. Accessed 3 Nov 2020 Wang Y (2021) During the 13th Five-Year Plan period, China’s grain reserves and circulation capacity continued to improve. http://china.cnr.cn/NewsFeeds/20210112/t20210112_525 389361.shtml. Accessed 12 Jan 2021 Yang Y (2020) The micro-warehouse model has cracked the community fresh food market. ‘Xianxiaochu’ hopes to seize the family table. https://new.qq.com/omn/20200226/20200226A0D87O00. html. Accessed 26 Feb 2020 Ye X (2021) The first battle: MissFresh, 100.me and Meicai.cn, who will win out in the end? https:// finance.sina.com.cn/china/2021-04-10/doc-ikmxzfmk6082887.shtml. Accessed 10 Apr 2021 Yu Z, Li M (2021) ‘Fulfillment war’ for community group buying: central warehouse and grid warehouse to meet the big challenge. https://www.ebrun.com/20210329/427354.shtml. Accessed 29 Mar 2021

Chapter 9

Response and Development of China’s Logistics Under COVID-19 Zhilun Jiao

In early 2020, the outbreak of COVID-19 gradually developed into a major public health emergency. It has become the fastest-spreading infectious disease, with the widest infection range since the founding of the People’s Republic of China, posing the greatest challenge in prevention and control (Gov.cn 2020). COVID-19 has had a significant effect on the Chinese economy and society, and also a profound, longterm impact on the country’s logistics industry and supply chains. While responding to COVID-19, China’s logistics industry has also made important contributions to the national effort to combat the pandemic. This chapter consists of four sections. Section 9.1 discusses the process of the outbreak, the overall prevention and control measures taken, and the macroeconomic impact COVID-19 has had on China’s fixed-asset investments, total social consumption, and import and exports. Section 9.2 summarizes the overall impact COVID-19 has had on the Chinese logistics market, mainly in terms of supply chain disruption and deployment plans, as well as on the transport market, consumer logistics and cold-chain logistics. Section 9.3 summarizes the specific practices and experiences of the Chinese government and enterprises in combating the pandemic, including: (1) the government’s prompt response policies; (2) the measures taken by logistics enterprises to cope with the emergency; (3) the participation of large logistics enterprises in the national emergency rescue system; (4) the accelerated use of new technologies and new facilities across the industry; and (5) enhanced innovation in operational methods and business models by logistics enterprises. Section 9.4 presents an overview of the likely development of China’s logistics industry in the post-COVID-19 era.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_9

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9 Response and Development of China’s Logistics Under COVID-19

9.1 The COVID-19 Outbreak and Its Impact on China’s Macroeconomy The COVID-19 outbreak has had a lasting impact on the global economy. It resulted in a rare, short-term negative growth in China’s economy in the first quarter of 2020. Thanks to the effective anti-pandemic measures and national efforts, China quickly recovered across all sectors, and eventually became the only major economy in the world to achieve positive growth in 2020. In the long run, the prospect of China’s economy and society remains positive.

9.1.1 The Outbreak and Spread of COVID-19 COVID-19 is a pandemic with the widest dissemination range experienced by humankind in nearly 100 years, posing a severe crisis and test to the whole world. COVID-19 developed in China in four major phases: latent spread, full-blown outbreak, suppression and mitigation, and sporadic dissemination, as shown in Fig. 9.1. (a) The latent spread phase (December 27, 2019 to January 19, 2020). Due to the suddenness of the outbreak and the relative lag in detection technology, there were few early diagnosed cases reported in Wuhan, Hubei Province, when the outbreak was first detected. However, the central government opted decisively to step up detection and screening efforts, and immediately notified the whole country and the WHO of the outbreak. (b) The full-blown outbreak phase (January 20, 2020 to February 20, 2020). Due to the highly infectious nature of the virus, and other factors, there was a sharp increase in newly diagnosed cases in provinces, cities, and regions nationwide, peaking at 15,152 new cases in a single day on February 12. During this phase, Wuhan imposed a city lockdown, with other provinces adopting major public emergency measures at the provincial level, effectively containing the spread of the virus. (c) The suppression and mitigation phase (February 21, 2020 to April 28, 2020). During this phase, China effectively suppressed and contained the spread of the virus, with new daily cases gradually decreasing to single digits, and with zero cases in many places. Subsequently, the provinces gradually lowered their emergency response levels for pandemic prevention and control, many enterprises slowly resuming work and production. (d) Stable and normalized phase (April 29, 2020 to the end of 2020). During this phase, there were still sporadic cases in localized areas, but they were swiftly brought under control. Effective detection and quarantine measures have been developed, and standard operating procedures implemented at airports and ports. Import cases have been effectively controlled. On the whole, China has successfully brought the outbreak under control and established an effective long-term mechanism to manage the pandemic. Although the domestic outbreak had been effectively controlled, the global COVID-19 situation was not optimistic. On February 26, 2020, new cases reported outside China exceeded new cases within China for the first time. On March 16,

9.1 The COVID-19 Outbreak and Its Impact on China’s Macroeconomy

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Fig. 9.1 The number of newly diagnosed cases and existing diagnosed cases of COVID-19 in China, 2020. Note All data are obtained from the National Health Commission of China, the various provincial and municipal health commissions, the provincial and municipal governments, and official ministries of Hong Kong, Macau and Taiwan. Existing diagnosed cases = cumulative diagnosed cases − cumulative recovered cases − cumulative deaths. Source News.sina.cn. Real-time tracking of the COVID-19 outbreak. https://news.sina.cn/zt_d/yiqing0121?wm=6122_1240. 15 Apr 2021

the cumulative cases outside China exceeded those within China (People.cn 2020). The global COVID-19 situation became more complex and severe as the epidemic continued to spread and intensify in most countries. In particular, the pandemic has rebounded in most countries since the winter of 2020. From late 2020 to early 2021, COVID-19 mutant variants have been found in many parts of the world, including the Americas, Asia, and Europe, spreading globally. Several countries have imposed stricter prevention and control measures, and accelerated the development and administration of vaccines.

9.1.2 Overall Situation of COVID-19 Prevention and Control in China Since the COVID-19 outbreak, the Chinese government has taken decisive measures advocating home quarantining and the wearing of masks. As a result, China was the first country in the world to contain the pandemic, resume work and production, and achieve positive economic growth. By late March 2020, the spread of COVID-19 in

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China was largely contained. By mid-April, the work and production resumption rate of enterprises above designated size1 exceeded 90%. In the second quarter of 2020, China’s GDP turned from negative to positive, and the economy eventually grew by 2.3%, with economic output reaching a record 100 trillion RMB. On the whole, China achieved a milestone victory in combating and controlling COVID-19 in 2020, accumulating important experience to help the rest of the world in its prevention and control. Wuhan was the city worst hit by the virus. In January 2020, the city imposed the most stringent lockdown measures: (1) All its buses, subways, ferries and longdistance passenger transport were suspended; (2) residents were not allowed to leave Wuhan without special reasons; (3) the airport and railway station were temporarily shut down to prevent anyone from leaving Wuhan. Public rescue and treatment services were implemented at the same time. These included: (1) completing the massive screening of 4.21 million residents in three days; (2) building Huoshenshan Hospital in three days, Leishenshan Hospital in 12 days, and renovating 87 designated hospitals and 32 makeshift hospitals on a large scale in the city; (3) adding another 66,000 treatment beds and 74,000 isolation beds in one month (Wuhan.gov.cn 2021). With the easing of the COVID-19 outbreak, the lockdown on the city was lifted, Wuhan quickly resumed work and production, and gradually restored its economic and social order. First, enterprises were encouraged to quickly resume work and production. After little more than a month, more than 10,000 enterprises in the “four categories of enterprises above designated size”2 resumed work and production, and 1326 major projects worth over 100 million RMB fully resumed construction. Second, tax reduction and financial support policies were implemented, with tax and fee cuts of 51.37 billion RMB given to enterprises. 101.8 billion RMB of special loans were offered to enterprises to cope with the pandemic. Third, consumption was stimulated. The government distributed 0.5 billion RMB worth of consumption vouchers, opened all A-class tourist attractions for free, and vigorously developed the 1

This refers to industrial enterprises and commercial enterprises of relatively large size. The specific criteria were: industrial enterprises above designated scale including all state-owned industrial enterprises and non-state-owned industrial legal entities with annual main business revenue of 20 million RMB or more; commercial enterprises above designated size including all state-owned enterprises and non-state-owned commercial enterprises with annual business product revenue of 2 million RMB or more. 2 The “four categories of enterprises” refers to four types of enterprises above designated size, namely, industrial enterprises; construction enterprises of qualification level; wholesale, retail, accommodation and food enterprises; and national key service enterprises. Industrial enterprises above designated size refers to industrial legal entities with annual business revenue of 20 million RMB or more. Construction enterprises of qualification level refers to legal entities in the construction industry with general contracting, professional contracting and labor subcontracting qualifications. Wholesale, retail, accommodation and food enterprises refers to the wholesale legal entities with annual business revenue of 20 million RMB or more, retail legal entities with annual revenue of 5 million RMB or more, and accommodation, food and beverage legal entities with annual revenue of 2 million RMB or more. National key service industry enterprises are those with annual revenue of 10 million RMB or more (for some service industries, such as residential services, repair work, culture, sports and entertainment, the requirement is 5 million RMB or more), or service industry legal entities with 50 or more employees at the end of the year.

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digital and online economy. Fourth, there was enhanced development of high-tech enterprises, with a net increase of 1842 in 2020. By the end of 2020, there were 6259 such enterprises in Wuhan, up 41.7% year on year. On the whole, Wuhan not only set a model for pandemic prevention and control, but also turned this crisis into an opportunity for the city to accelerate its development.

9.1.3 Impact of COVID-19 on China’s Macroeconomy COVID-19 has had a major impact on China’s industrial development in the short term, especially in the industrial and service sectors, and macroeconomic growth declined significantly. On the whole, however, as the outbreak was effectively contained and the country gradually resumed full work and production, the country’s economy resumed a steady growth, with investment, consumption, import and export generally showing a “V” shaped reversal. In 2020, China’s GDP exceeded 100 trillion RMB for the first time, becoming the only major economy in the world to achieve positive economic growth. Specifically, investment, consumption, and exports were the “trident” driving GDP growth. During the outbreak, China experienced an overall slowdown in investment, a decline in consumer demand, and a contraction in import and export trade.

9.1.3.1

Impact of COVID-19 on Fixed-Asset Investment

Fixed-asset investment is an important component of aggregate demand and a crucial engine directly driving macroeconomic aggregate demand and GDP output (Chen et al. 2020). In February 2020, the domestic COVID-19 outbreak was at its peak, and most economic activities were temporarily suspended. During this period, domestic fixed-asset investment showed a significant decline, with total fixed-asset investment falling 24.5% year on year, and all three industries showing negative growth of over 20%. After March 2020, once the outbreak had stabilized, the decline in fixed-asset investment in China gradually contracted. In September, the growth rate turned from negative to positive, and investment level rebounded gradually and steadily. The total investment in fixed assets of the whole society was 52.7 trillion RMB, up 2.7% year on year. Seen by specific industries, investment in the secondary industry was the slowest to rebound, turning from negative to positive only in December, with a year-on-year growth rate of 0.1%, as shown in Fig. 9.2.

9.1.3.2

Impact of COVID-19 on Total Social Consumption

The COVID-19 control measures restricted consumption activities with reduced social gathering and contact, for instance in travel, social dining, business trips, accommodation and entertainment. The food, entertainment, tourism, and exhibition

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Cumulative Growth of Total Investment in Fixed Assets (%) Cumulative Growth of Total Investment in Fixed Assets in the Primary Industry (%) Cumulative Growth of Total Investment in Fixed Assets in the Secondary Industry (%) Cumulative Growth of Total Investment in Fixed Assets in the Tertiary Industry (%)

Fig. 9.2 Cumulative growth of total investment in fixed assets of the whole society and subindustry investment for China 2020. Source Compiled from the China Statistical Data (2008–2021), published by the National Bureau of Statistics of China. https://data.stats.gov.cn/easyquery.htm? cn=A01. 5 Mar 2021

industries were most badly affected; while non-gathering and non-contact industries, such as e-tailing, were relatively less affected and recovered faster. The COVID-19 pandemic also gave rise to digital commerce and contactless consumption, with the rapid development of industries such as telemedicine, livestream sales, online takeout delivery, run errands, and online education. In terms of total consumption level, during the full outbreak phase in February 2020, China’s total retail sales of consumer goods fell by 20.5% cumulatively, as shown in Fig. 9.3. The food industry was most badly hit, with a cumulative decline of 43.1% in restaurant revenue, while merchandise retail and online retail sales fell by a cumulative 17.6% and 3.0%, respectively. After March 2020, the domestic consumer market gradually recovered, and the cumulative growth of both total retail sales of consumer goods and merchandise retail sales showed a slight recovery. The revenue of the country’s food and beverage industry also started to pick up in April, achieving an annual total retail sales amounting to 39.2 trillion RMB for the whole year.

9.1.3.3

Impact of COVID-19 on Import and Export

Under the impact of COVID-19, the global industry chain and supply chain were disrupted, and world trade was severely impacted. The scale of China’s foreign

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Fig. 9.3 Cumulative growth of total retail sales of social consumer goods and sub-type retail sales of social consumer goods for China 2020. Source Compiled from the China Statistical Data (2008– 2021), published by the National Bureau of Statistics of China. https://data.stats.gov.cn/easyquery. htm?cn=A01. 5 Mar 2021

trade import and exports gradually recovered after experiencing a short-term contraction. The overall scale of foreign trade import and exports for 2020 was better than expected, and reached a record high. As shown in Fig. 9.4, in February 2020, the cumulative total value of China’s import and exports dropped sharply by 11.0% due to the impact of COVID-19. The cumulative total export value fell sharply by 17.2% and the cumulative total import value fell slightly by 4.0%. After March 2020, following a brief fluctuation, there was less decline in the total value of imports and exports, which gradually achieved positive growth. Export growth has seen the fastest recovery, mainly in pandemic prevention materials and “stay-at-home economy”3 products, which helped achieve faster export growth (The State Council Information Office 2021). The total export value recovered in April after a decline and continued to grow until the end of 2020. Although the total import value fell slightly due to the severe impact of COVID-19, China’s import demand remained relatively stable. The import of crude oil and other bulk commodities in particular increased significantly. For the year as a whole, although COVID-19 severely hampered global trade, China’s import and exports recovered 3

The “stay-at-home economy” is mainly about staying home to complete business and consumption activities, such as full-time and part-time work, handling business affairs, shopping, and entertainment. As the Internet economy continues to develop rapidly, especially during the outbreak, many around the world have been forced or voluntarily choose to live and work at home, which has resulted in more online food orders and online shopping, leading to the rapid development of the “stay-at-home economy.”

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Fig. 9.4 Cumulative growth of total import and export for China 2020. Source Compiled from the China Statistical Data (2008–2021), published by the National Bureau of Statistics of China. https://data.stats.gov.cn/easyquery.htm?cn=A01. 5 Mar 2021

well, reaching a record high of 32.2 trillion RMB. It achieved its best-ever share in the international market, making it the only major economy in the world to achieve positive growth in merchandise trade (Gov.cn 2021).

9.2 Impact of COVID-19 on China’s Logistics Market COVID-19 presented great challenges to the development of China’s logistics industry, but also stimulated demand changes, promoted technology applications, and accelerated operational innovations, which in turn contributed to the transformation and upgrading of the industry to a certain extent. This section specifically discusses the impact of COVID-19 on China’s logistics in terms of global supply chains, transport logistics, consumer logistics, and cold-chain logistics.

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9.2.1 Frequent Disruptions to the Global Supply Chains, as the World Adjusts Toward Regionalization and Localization 9.2.1.1

Frequent Supply Chain Disruptions, as Companies Look to Building Flexible and Resilient Systems

COVID-19 led to massive shutdowns and halted production in 2020, with port controls and shipping embargoes in several countries, resulting in shrinkage in international trade and recurrent disruptions in the global supply chains. According to the latest estimates of the WTO, global merchandise trade declined by 5.3% in 2020 (Xinhuanet.com 2021). The instability of global trade and supply chain has led to large enterprises re-examining and restructuring their supply chain systems, focusing on supply chain flexibility and resilience in response to the crisis. Traditional supply chains are generally built around the cost-oriented “lean concept” and time-oriented “agile concept”, with insufficient attention paid to flexibility, robustness, and resilience when responding to unforeseen crises. Supply chain disruptions caused by COVID-19 have forced many companies to restructure their supply chains based on a flexible concept, focusing on the ability to respond to emergencies while being cost-oriented. Its main components include: (1) Spatial diversity of suppliers and backup reserves; (2) rationally allocating the proportion of the suppliers’ stock; (3) forming cross-functional and cross-border procurement teams; (4) forming reserve, contingency and quick response plans when faced with disruptions in the demand forecast process; (5) supply chain visualization and transparency of the information system in the supply chain. For example, in February 2020, the COVID-19 outbreak resulted in constant shutdowns of auto parts plants in China, and disrupted sections of the global auto supply chain. Hyundai Motor and Nissan Motor announced the shutdown of their plants outside China. As COVID-19 subsided in China from March to April, the pandemic broke out in full force globally at around the same time, with Europe and the United States the new global epicenters. European automakers such as Peugeot Citroen Automobile and Volkswagen shut down production, while American automakers such as General Motors, Ford Motor, and Tesla also shut down some of their factories, further destabilizing the global auto supply chain. The emergency response capability of the supply chain became a key concern for auto manufacturers.

9.2.1.2

Supply Chains are Shifting Toward Regionalization and Localization, Requiring Logistics Companies to Rationally Adjust Their Business Focus

Under the impact of COVID-19, the global supply chain has begun to adjust, gradually shifting toward localization and regional alliances. The Chinese government proposed building a new development paradigm featuring dual circulation, in which

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domestic and overseas markets reinforce each other, with the domestic market as the mainstay. The focus of Chinese logistics companies also began to shift in 2020, moving toward domestic circulation and highlighting “localization” capabilities. For example, Schneider Electric (China) Group Ltd. adopted four strategic logistics and supply chain policies during the prevention and control period: (1) localize manufacturing to quickly respond to changes in demand; (2) localize the upstream supply chain, select domestic suppliers to meet most of the procurement needs, and further increase the rate of localized parts procurement; (3) localize decision-making, with Chinese companies having full autonomy in matters such as lean manufacturing, quality control, system assurance, and production planning; (4) intensify the localization of facilities, reducing import reliance by building a dedicated manufacturing facilities center within China. In order to meet the changes in the company’s supply chain strategy, Schneider Electric’s eight logistics centers in China and their logistics providers such as CEVA Logistics and Air China Cargo also adjusted their service strategies in tandem, focusing on enhancing localized logistics capabilities in China. In terms of regional alliances in the supply chain, China’s traditional trade channels with Europe and the United States have been blocked, and the supply chain in the Atlantic Rim, dominated by Europe and the U.S., is now less friendly to Chinese suppliers. At the same time, China also started strengthening its supply chain cooperation with ASEAN, Asia, Africa, and other countries in the “Belt and Road Initiative”. Chinese logistics enterprises are also adjusting their global logistics strategic plans, cooperating with customer enterprises to reconfigure their logistics resources and capacity layout.

9.2.2 Restructuring in the Freight Industry’s Demand and Supply Markets, as Highway Freight Logistics Rapidly Develops 9.2.2.1

COVID-19 Triggered a Reduction in Air Logistics Capacity, and the Bellyhold Cargo Model is Now a Liability

Due to the impact of COVID-19, civil aviation passenger demand plummeted sharply, but air cargo capacity remained in short supply. First, during the outbreak period and its spread in China, the global procurement demand and domestic rationing of medical supplies increased sharply. Air cargo was the primary means of meeting this demand. Second, after the full resumption of domestic production as COVID19 spread globally, domestic and international logistics’ demand for medical and “stay-at-home” materials also rose rapidly. Hence there was still a sustained high demand for air freight. Third, the belly cargo model of passenger aircraft is the main method of air cargo transport in China at present, accounting for 70% of total air cargo (Sohu.com 2020a). The grounding of passenger airlines and the reduction in flights have meant reduced availability in air capacity.

Passenger turnover (100 million passenger-kilometers)

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Fig. 9.5 Passenger turnover of China’s civil aviation for 2020. Source Ministry of Transport of the People’s Republic of China (2020). “Major production indicators of China’s civil aviation by month.” http://www.mot.gov.cn/tongjishuju/minhang. 21 Dec 2020

As can be seen in Fig. 9.5, in January 2020, China’s civil aviation passenger turnover fell sharply due to COVID-19, hitting a post-outbreak low in February. With reduced passenger demand and heightened prevention and control measures, major airlines reduced their flight frequency and suspended their routes, resulting in a significant reduction in the cargo capacity of passenger aircraft bellyhold. With the constant reduction in air cargo supply, major air logistics companies also raised their tariffs. For example, from April 10, 2020, China Post temporarily increased transport surcharges for its e-Postal, international air parcel and e-Express businesses.

9.2.2.2

COVID-19 Resulted in a Fall and Subsequent Rise in Maritime Freight Demand, as Cargoes Stagnated on International Routes

Sea freight is the primary form of delivery for the global import and export trade. After the initial COVID-19 outbreak, there was a significant contraction in global trade and a subsequent sharp drop in demand for maritime logistics. According to the Ministry of Transport, cargo throughput and container throughput at ports within China fell by 4.6% and 8.5%, respectively, in the first quarter of 2020 (CCTV.com 2020). In addition, due to pandemic control and the Spring Festival, certain ports experienced serious staff shortages and cargo backlogs, with retained reefers seriously affecting the normal operation of ports. With COVID-19 being effectively controlled in China, enterprises quickly resumed work and production, and the import and export trade of goods quickly rebounded. Logistics demand at most major ports, such as Ningbo Zhoushan Port, Shanghai Yangshan Port, and Xiamen Port quickly returned to normal. However, during this period, COVID-19 started breaking out in full force abroad, resulting in many uncertainties for Chinese cargo ships setting off to sea. These included: (1) a decline in the operational efficiency of foreign ports; (2) frequent delays, cancellations, and even suspensions of international routes; (3) a sharp decline in

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international container liner departures. The Sino-U.S. route was the most badly affected, with a departure rate of only 26.4% at its lowest. The berth waiting time was extended to 1–2 weeks, with a large number of ships and containers stranded in the terminal. The decreased efficiency in foreign port operations resulted in unfavorable container turnover. China’s export containers were thus in extreme shortage, with many routes affected. Cargo owners needed an average of 3–4 weeks to book cargo space, seriously affecting the overall efficiency of China’s international maritime logistics. Take the Port of Los Angeles, the largest port in the U.S., as an example. It had 35 ships waiting for berths in L.A. and Long Beach as of January 8, 2021 (Sohu.com 2021). The large number of ships entering the port, and unscheduled calls led to extreme congestion. At the same time, a surge in container imports and labor shortages resulted in many containers being retained in L.A.’s container yards, so liners from China to L.A. faced a severe shortage of empty containers.

9.2.2.3

The Rapid Recovery of Highway Freight in the Later Stage of the Outbreak, with China–Europe Railway Express Becoming a New Channel for International Transport

Land transport showed strong resilience in the face of the outbreak, suffering only briefly in the early stages, and then recovering quickly. The COVID-19 outbreak in China coincided with the Chinese New Year, with the fewest freight vehicles in operation nationwide at the end of January. However, with effective pandemic control and the successful resumption of work and production, highway freight quickly recovered. According to the analysis of Boston Consulting Group (BCG), China’s highway transport recovered by 70–80% in the first quarter (Chen et al. 2020). In May 2020, the operating mileage of highway freight vehicles exceeded that of the same period in 2019. Excluding Xinjiang, Tibet, Heilongjiang and other border regions, freight traffic in many cities across China recovered to the same level as that of the previous year. In central, southern, northwestern and most of northeastern China, the volume of vehicles in operation even exceeded that in the same period of 2019. As for railway freight, due to the pandemic, sea and air transport capacities were reduced and freight rates were rising. Railroad freight trains in normal operation took over as demand shifted. As an important mode of transport in the “Belt and Road Initiative”, the China–Europe Railway Express formed a complete service system, playing an important role in ensuring capacity during the COVID-19 prevention and control period. In the first half of 2020, there were 5122 trains, an increase of 36% compared with the same period the previous year. The number of trains operating in a single month reached a record high for four consecutive months (Sinotrans 2020). 3.670 million anti-pandemic materials were transported on these lines to help the global fight against COVID-19. The total volume of transported goods reached 461,000 TEUs, reaching countries like Italy, Germany, France, Spain, Czech Republic, Poland, Hungary, the Netherlands, and Lithuania. These countries then functioned as nodes to further distribute goods to other European countries. The

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regular and stable operation of the China–Europe Railway Express has strongly supported cooperation between China, Europe, and the other countries along these routes in their fight against COVID-19, promoted the cross-border flow of goods and services, and helped the resumption of work and production. It has further reduced the impact of COVID-19 on the cooperation between China and Europe in the industry chain and the supply chain, and provided a new channel for international transport.

9.2.3 As Consumer Logistics Grows in Scale, Ensuring Health and Safety Becomes a Regular Requirement 9.2.3.1

An Increase in the Proportion of Online Shopping as E-commerce Logistics Continues to Grow in Scale

The COVID-19 outbreak and home quarantine have contributed to the rapid development of digital services such as online shopping, online entertainment, online offices, and online education. These are based on the growing demand for new e-commerce services such as “community group buying” that can meet the need for essential goods and high-frequency household consumption of fresh produce. “Livestream shopping” has enhanced the off-site shopping experience and is growing rapidly. According to data released by the National Bureau of Statistics, the value of total retail sales of consumer goods was 39.2 trillion RMB in 2020, down 3.9% year on year, the only major macro indicator that did not achieve positive growth. However, online retail sales value was 11.76 trillion RMB, up 10.9% from the previous year. Online retail sales of physical goods grew by 14.8%, accounting for 24.9% of total retail sales of consumer goods. Food, clothing, and consumer goods grew by 30.6%, 5.8% and 16.2%, respectively (The National Bureau of Statistics of China 2021). According to iResearch, from March to May 2020, the value of national online retail sales reached 2.65 trillion RMB, up 7.3% year on year (iResearch 2020), showing a counter-trend growth compared to the negative growth rate in total retail sales of consumer goods in the same period. With the growing demand for online shopping and shopping innovations, e-commerce logistics, mainly in the form of express delivery, is also expanding. According to the State Post Bureau of China, the national express delivery business volume grew by 31.2% year on year in 2020, as the express delivery industry grew in size (The State Post Bureau of China 2021).

9.2.3.2

Triggering Demand Growth for Instant Logistics and Promoting Daily Preventative Practices

During the period of pandemic control, home quarantine has resulted in inaccessibility in shopping and daily life. Instant logistics services, with their errands and food delivery services are favored by consumers. Not only has delivery orders for food

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and beverage increased significantly, but the diversity of consumer demand has also increased significantly, with a sharp rise in the demand for fresh fruit and vegetables, daily necessities, afternoon tea, business errands, and direct delivery within the same city. With the rise of online healthcare, home delivery of medication has become another source of demand for instant logistics. During the pandemic control period, the average daily supply of vegetables at Freshhema.com was six times more than usual. Transactions at Missfresh.cn increased by 321% over the same period of the previous year, with total sales exceeding 40 million orders during the seven days of the Chinese New Year (Jia 2020). Pandemic control measures imposed higher safety regulations on instant logistics delivery: (1) onboard riders were required to report their daily health status; (2) the platform reminded and monitored riders on the wearing of masks on a daily basis; (3) riders were required to disinfect parcels and take appropriate preventative measures every day. After the outbreak eased in the second half of 2020, consumer demand for safe services did not weaken. Instant logistics platforms continued to urge the same daily practices for delivery riders on the whole, resulting in a standardized hygiene routine. Consumers are also concerned about the health, hygiene, and safety monitoring of e-merchants and delivery riders. It has become mandatory for every rider to put on a mask during deliveries.

9.2.4 Disruptions and Recovery of Cold-Chain Logistics, with Stricter Control Over Operations 9.2.4.1

Cold-Chain Demand Plummeted Due to the Outbreak, Recovering Rapidly on the Whole After the Outbreak Stabilized

COVID-19 has had an extensive, long-lasting, and profound impact on cold-chain logistics. First, during the outbreak phase, cold-chain logistics was disrupted in areas such as supply and demand. Second, during the remission and stabilization phase of the pandemic, cold-chain cargo also became a carrier of the COVID-19 virus. The whole industry faced difficulties due to insufficient demand, reduced service efficiency, insufficient resource capacity, and delayed staff return. According to a survey conducted by China Federation of Logistics and Purchasing, 52.63% of enterprises in the cold-chain transport sector mentioned that transport volume had been reduced by more than 30%, with another 15.79% reporting that it had been reduced by 10–20%. In the cold-chain storage sector, in comparison with the same period the previous year, more than 70% of enterprises experienced a reduction in cold-storage business, with 36.84% experiencing a decline of more than 30% (China Federation of Logistics and Purchasing 2020). In terms of service supply, during the outbreak phase, traffic control and road closures were imposed in many regions across the country, resulting in the obstruction of cold-chain transport routes. It was also difficult for the frontline logistics

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staff to return to work. There were problems with insufficient capacity and increased operating costs due to staff shortage. After the outbreak stabilized and was brought under control, there were sporadic COVID-19 outbreaks among personnel handling imported cold-chain cargoes. Cold-chain logistics became a crucial and sensitive industry for pandemic prevention and control, with certain shortages in service efficiency, resource capacity, and human resources. In terms of customer demand, during the outbreak phase, the cold-chain procurement volume of major wholesale markets of fresh agricultural products across the country showed a sharp decline. With the full COVID-19 outbreak and home quarantining, cold-chain customers such as traditional food enterprises, large supermarkets, and food manufacturers were hit hard by the outbreak, and cold-chain logistics demand showed a sharp decline. As the pandemic stabilized, the demand for coldchain logistics recovered to some extent, but the demand for cold-chain logistics services for fresh imports remained low due to the higher risk of COVID-19 transmission for these products. Meanwhile, the logistics demand for fruit and vegetables, pharmaceuticals and other low-temperature items recovered. China’s cold-chain market value in the whole of 2020 was 374 billion RMB, up 10.3% year on year, while the national total volume of China’s cold storage was 70.80 million tons, up 17.1% year on year (Cold Chain Profession Committee of China Federation of Logistics and Purchasing 2020).

9.2.4.2

Further Standardization of Operational Processes and Stricter Control of Cold-Chain Logistics Under COVID-19

Under the impact of COVID-19, the operational processes of cold-chain logistics have been further standardized and control has become increasingly strict. The virus can generally survive long periods of time in the cold chain. According to academician Li Lanjuan, existing coronaviruses are known to survive for more than 3–6 months at around 4 °C, and up to 20 years below −20 °C (Sohu.com 2020b). It has been pointed out that the closed-loop global cold-chain operation system provides a survival environment for the COVID-19 virus to move around the world at will, a major factor contributing to its spread (Wu and Wu 2020). Based on this finding, government control of cold-chain logistics has become increasingly stringent, to help contain the virus under normalized circumstances, with further improved standardization of cold-chain logistics operations. COVID-19 has directly resulted in the strict supervision of cold-chain import processes. In November 2020, in order to further control the pandemic, the Ministry of Transport of China issued the “Technical Guidelines on the Disinfection of ColdChain Logistics Food Imports Transported on Highways and Waterways, to Prevent and Control the Spread of COVID-19”, proposing strict management of food imports in key links such as loading/unloading and transport, and increasing the frequency of cold-chain food disinfection. These guidelines focus on four key areas: managing and regulating operators, main tools, information management, and emergency response. Places like Beijing have banned the import of cold-chain products that cannot offer

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information traceability. These strictly enforced procedures and operations may be made mandatory and become more widespread in the future, with long-term impact on the cold-chain logistics industry. COVID-19 has also prompted increasingly stringent and standardized management of the cold-chain in domestic transport and storage. In October 2020, the National Health Commission and the State Administration for Market Regulation jointly issued the “Hygiene Regulation for National Food Safety Standard in ColdChain Food Logistics”, which stipulates the basic requirements for food cold-chain logistics, as well as management guidelines in handover, transport, distribution, storage, personnel management, traceability, and recall to complement and help support pandemic control measures. Many local governments have also introduced standard specifications for cold-chain operations, such as: the local standard “Specifications for road transportation of fresh-keeping and refrigerated scallops” for Dalian in August 2020; the simultaneous release of three technical specifications on coldchain logistics for aquatic products, livestock and poultry meat, and fruit and vegetables; and the group standard “Requirements for humidity and temperature control and temperature measurement for cold-chain logistics”.

9.2.4.3

COVID-19 Offers New Opportunities and New Models for the Development of Cold-Chain Logistics

COVID-19 has posed challenges for cold-chain logistics, but also provided opportunities for its development. For example, in February 2020, JD.com announced the launch of a “national green channel for fresh product”, integrating its core logistics, supply chain, and operational resources to solve the problem of stagnant fresh products. A single project in Yongfu County, Guilin, Guangxi, helped local farmers to sell 3000 tons of satsuma oranges in two weeks. The sales volume was already 65% of the production volume for the entire year (cb.com.cn 2020). At the same time, COVID-19 has accelerated the development of China’s pharmaceutical cold-chain logistics. First, the cold-chain storage and transport capacity of vaccines, biological products, and diagnostic reagents have been greatly enhanced. In January 2021, the Ministry of Transport selected 28 firms, including SF.com, JD.com, Sinotrans, Sinopharm, and Jztey.com to be the first key enterprises in the cold-chain transport of vaccines. Second, online healthcare was accepted by residents during the outbreak. Major hospitals launched online consultation services, with logistics companies providing home delivery of medication and medical devices. SF Cold Chain offers an online “home delivery” service for many domestic medical institutions such as Im.wedoctor.com and Hainan General Hospital, helping online hospitals deliver prescribed Western or Traditional Chinese medication and medical devices after consultations online. In this way, patients can receive “contactless” medical treatment without having to visit hospitals.

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9.3 The Response and Reaction of China’s Logistics Industry Under COVID-19 In the face of COVID-19, government departments at all levels and many logistics enterprises have taken measures to overcome the crisis together. On the one hand, government departments have introduced relief policies to help enterprises overcome difficulties, and resume work and production; on the other hand, logistics enterprises have actively responded to operational difficulties and achieved sustainable development by quickly applying new technologies, new facilities, and innovative business models. Logistics enterprises have also assumed social responsibility in the national anti-pandemic system and become an important part of the national emergency relief system.

9.3.1 The Government Quickly Introduced Policies to Help the Logistics Industry Cope with COVID-19 Since the COVID-19 outbreak, governments at all levels have introduced more than a hundred policies to help enterprises tide over the difficulties. These policies include fiscal, tax and financial policies for general enterprises, as well as special support, operational guidance, and standardized development policies for the logistics industry.

9.3.1.1

Fiscal, Tax and Financial Policies Rapidly Introduced During the Outbreak

During the pandemic control period, to ensure economic development and urban livelihoods, governments at all levels actively introduced policies to assist enterprises in coping with COVID-19 and sustaining development. Most of them were closely related to the logistics industry. For example, in financial policies, governments in Sichuan Province introduced policies on February 5, 2020 to subsidize logistics costs for shopping malls, supermarkets, convenience chain stores, wholesale markets, and other trade and distribution enterprises involved in the supply of daily necessities. In tax and fee policies, since February 17, 2020, all national toll roads have been toll-free. Vehicles of medical and healthcare institutions and logistics enterprises assisting in pandemic control were exempted from vehicle tax during 2020. In financial policies, on March 26, 2020, the China Banking and Insurance Regulatory Commission issued the “Notice on Strengthening Financial Services for the Resumption of Work and Production in Collaboration with the Industry Chain”, to help resume work and production in collaboration with the industry chain. The notice was designed to help industry chains explore innovative financial service products,

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and encourage financial institutions to research and develop new financial products that could serve core logistics enterprises.

9.3.1.2

Further Facilitate Customs Clearance and Improve Prevention and Control Measures, to Strictly Reduce Transmission Risks from Abroad

During the COVID-19 outbreak phase, the General Administration of Customs issued a series of policies to ensure the smooth functioning and flow of the foreign trade industry chain and supply chain. These included the following measures: (1) local customs lifted transit restrictions for the import of pandemic prevention materials or products urgently required by enterprises to resume work and production; (2) measures were taken for cosmetics used for disinfection and sterilization, such as attaching Chinese labels after entry, release before inspection, etc.; (3) support was given to agricultural and food imports, with advanced 24-h bookings for customs clearance. Such goods would be given priority in inspection and testing, to ensure a steady market supply. The General Administration of Customs also required local customs to simplify clearance procedures and reduce clearance costs. After the pandemic stabilized, cold-chain products had become a potential channel for transmitting the COVID-19 virus into the country. The Ministry of Transport also issued a policy urging enterprises to impose strict disinfection of cold-chain logistics-related personnel and delivery equipment, and to implement closed-loop management of highway freight drivers of cross-border cold-chain logistics at port, operational and residential points. Customs has also stepped up efforts to intercept unqualified materials at ports of entry, and to further enforce health declarations upon entry, in order to strictly reduce the transmission risks of the COVID-19 virus entering through ports.

9.3.1.3

Constructing Green Channels to Ensure Smooth Transport of Pandemic Prevention Materials and Daily Necessities

During the COVID-19 outbreak period, the Ministry of Transport and the National Health Commission of China jointly issued a document requiring the strict implementation of green channels for emergency transport, ensuring that vehicles taking part in the COVID-19 emergency were not required to stop at checkpoints, and had priority access without needing to pay tolls. The State Post Bureau of China raised the emergency response level to Level II at the start of the outbreak, requiring logistics companies to establish a system ensuring uninterrupted delivery services. At the same time, in order to ensure a daily supply of necessities during the pandemic, the Ministry of Transport issued the “Implementation Opinions on Coordinating Pandemic Prevention and Control and the Social and Economic Development of Transport”, in order to fully guarantee the transport of agricultural products and other materials for production and livelihoods, and to ensure the normal operation of postal express and urban distribution.

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9.3.2 Logistics Companies Respond Actively to Short-Term Operational Difficulties Under COVID-19 9.3.2.1

Actively Adopting Pandemic Prevention and Control Measures, and Creating Conditions for Work and Production Resumption

Faced with the sudden COVID-19 outbreak, logistics enterprises took measures to guarantee and promote work and production resumption and maintain operation services. One of the ways was by enhancing pandemic prevention measures. Many logistics companies set up pandemic prevention teams and actively prepared materials such as masks, protective gear, goggles, alcohol and disinfectants to ensure the safety of their daily operations. They also established daily inspections and safety routines for daily operations. These include daily temperature testing for employees; setting up health accounts and filling in employees’ health status; ensuring that transport staff wear masks and keep the interior of their vehicles well ventilated; disinfecting the interior of vehicles and goods before loading/unloading operations. For example, JD Logistics implemented an emergency plan almost immediately, making daily routine checks on its staff on duty. In addition, the companies adopted a combination of “training + protection” to safeguard the employees’ health during the outbreak, including actively organizing pandemic prevention classes, raising awareness on such prevention, setting up a COVID-19 fund for employees, and purchasing insurance. ZTO Express and YTO Express both set up special COVID-19 welfare funds. The frontline employees of ZTO Express could receive a maximum of 500,000 RMB in subsidies if diagnosed with COVID-19 at work. YTO Express provided a 3-month interest-free loan of 100,000–300,000 RMB for their branches facing difficulties (The State Post Bureau of China 2020). The head office of YTO Express also bought “COVID-19 Insurance Policies” for all its employees, including salesmen and operators across the entire network.

9.3.2.2

Multi-channel Financing to Ensure Daily Operations

During the COVID-19 outbreak phase, many logistics enterprises shut down work and production. In order to help pay rental fees and employees’ salaries, certain small and medium-sized logistics enterprises raised funds through multiple channels to ensure survival. Their first method was to ease cash flow by means of “open-source” operations, such as (1) fully communicating with cooperative financial institutions for credit support; (2) looking for strategic equity financing for long-term cooperation to expand capital reserves. Their second method was to reduce expenses by saving labor costs, such as (1) resuming work in phases and batches; (2) laying off employees. Their third method was to reallocate assets and reduce the proportion of fixed costs, by (1) selling assets; (2) acquiring external resources through leasing and

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sharing; (3) operationally leasing large fixed assets; (4) partially outsourcing nonessential business operations. The fourth method was to strengthen communication with government departments and strive for preferential policies such as financial subsidies, tax cuts, incentive funds, and financial support to compensate for the rising costs brought by the pandemic.

9.3.2.3

Adjusting the Structure of Transport Resources to Respond Flexibly to Structural Changes in Market Demand

The COVID-19 outbreak resulted in a decline in passenger demand and an increase in freight demand in the transport sector. Certain integrated transport service companies, which operate both passenger and freight transport, also quickly adjusted their passenger and freight capacity structure to respond to the structural shift in market demand. Take aviation transport as an example: during the outbreak, major airlines adjusted their air cargo structure by launching preighters (passenger aircraft converted into freighters), making transfers abroad, increasing charter flights, and adding new cargo routes to increase air cargo capacity. For example, as of April 2020, China Eastern increased its air cargo capacity by launching preighters twice as often as during the same period in 2019, dispatching more than 240 international air cargo flights a week, with preighters accounting for about 120 of them (Caacnews.com.cn 2020). Another example is China Postal Express and Logistics actively responding to the problem of international mail and express shipments being stranded abroad due to COVID-19. It overcame this problem by making transfers abroad, increasing charter flights, and opening up new flight routes. SF Airlines opened additional routes to Europe, India, and the U.S., and dispatched 210 charter flights carrying pandemic prevention materials between February and March during the 2020 COVID-19 outbreak. China Postal Airlines opened additional routes to Russia and Belgium and dispatched 24 charter flights carrying pandemic prevention materials in March 2020, delivering 42,000 mail items weighing 292 tons. Similarly, YTO Express dispatched 84 charter flights for pandemic prevention materials weighing more than 422 tons during the outbreak (Xi 2020).

9.3.3 Large Enterprises are Actively Assuming Social Responsibility in the National COVID-19 Crisis 9.3.3.1

Actively Serving the National Emergency Rescue and Material Security System

Under the national emergency rescue system, transport logistics resources and their rapid response are important factors in determining the effectiveness of the rescue missions. The key to building a national emergency and material security system is

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to ensure material availability by integrating production, reserves, and deployment to truly achieve availability anytime and anywhere during a crisis. Transport logistics is an important means of deploying these emergency supplies. With the development and growth of China’s logistics industry, logistics enterprises were actively serving the outbreak areas, participating in the deployment and transport of emergency materials, and playing an important role in serving the national emergency and material security system. According to a survey conducted by China Federation of Logistics and Purchasing on 546 Grade A logistics enterprises nationwide, more than 94% of them were willing to participate in the national emergency logistics system (Wu 2020). During the COVID-19 outbreak, both large state-owned and private logistics enterprises took the initiative to fight the pandemic and ensure the efficient operation of the national emergency and material security system. Companies such as JD Logistics, SF.com and Jztey.com played important roles in transporting donated medical supplies and disaster relief materials. JD Logistics accepted orders normally, and carried out effective deliveries in nearly 300 cities nationwide in less than 40 days during the outbreak phase, delivering 220 million units of rice, flour, grain and oil, meat, eggs, vegetables, and milk weighing 290 kilotons to consumers nationwide (Xinhuanet.com 2020). ZJS Express set up a “Public Welfare Support Team for Hubei Materials”, and dispatched special public welfare vehicles from different locations to quickly transport relief materials to Wuhan.

9.3.3.2

Pooling Transport Resources to Help Support Wuhan’s Outbreak Areas

During the COVID-19 outbreak and lockdown of Wuhan, large logistics enterprises actively responded to the national call by delivering medical supplies, vegetables, and daily necessities to Wuhan, pooling their advantageous resources and participating in emergency logistics to support the outbreak areas. By taking responsibility for the industry, they contributed greatly to the fight against COVID-19. China Post immediately opened a green channel for medical transport after January 25, 2020, offering free transport and distribution services for donated materials to Wuhan. SF.com concentrated its efforts on providing public welfare transport for governments and charitable organizations around the country, while its subsidiary company, SF Airlines quickly opened up many all-cargo air routes both at home and abroad to ensure the rapid delivery of relief materials to Wuhan. JD Logistics opened a special channel for relief materials to Wuhan from the rest of China, and answered calls from the government and public welfare organizations to assist the city. Cainiao.com cooperated with major logistics companies such as ZTO Express, STO Express, Yunda Express, Best Express, and Deppon Express, as well as overseas logistics companies, to officially open green channels, both in China and abroad to transport domestic and overseas donated items to Wuhan for free. Suning.com, Yimidida.com, and other major logistics companies also opened independent green channels to ensure the smooth delivery of anti-pandemic materials during this period.

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9 Response and Development of China’s Logistics Under COVID-19

Proactively Taking Part in Social Welfare Activities to Fight COVID-19

Besides leveraging their own capabilities to provide logistics services to the outbreak areas, major logistics companies also donated materials to Wuhan on their own initiative, demonstrating the social commitment of the industry. On January 24, 2020, JD.com announced the donation of 1 million medical masks to Wuhan, with 60,000 items of medicines and medical supplies, including hand sanitizer, disinfectants, amoxicillin, oseltamivir, etc., to be sent in batches to local warehouses near Wuhan. An internal policy of JD.com allowed managers to donate supplies from nearby warehouses to an emergency disaster area within China without having to report it. On January 26, 2020, China Post Group Limited announced its decision to donate 20 million RMB to Wuhan to support the city in its fight against COVID-19. On the same day, SF Express also announced that they were donating 20 million RMB to purchase medical supplies, masks, protective gear, disinfectant, goggles, and other urgent relief materials. Two special SF Express flights would be delivering these donated resources to Wuhan.

9.3.4 Accelerating “Informatized” and “Fully Unmanned” New Technologies and New Facilities 9.3.4.1

Unmanned Technologies and Facilities Have Become the New Focus of Government and Logistics Enterprises Alike

In recent years, governments at all levels have repeatedly issued important documents on developing logistics technology, and many logistics enterprises have actively applied suitable new technologies to improve their logistics operations. As China’s new technology revolution picks up pace, new technologies represented by information technology are driving the industry’s upgrading continuously. A systematized smart logistics system is taking shape in China. Faced with the sudden COVID-19 pandemic, many logistics enterprises have begun exploiting the new technology applications, constantly adapting to the new situation and new needs under the pandemic. Government departments also introduced policies to encourage the application of such new technologies by enterprises. The main focus of these enterprises is to significantly improve unmanned operation capacity in warehousing, distribution, and emergency dispatch. For example, JD Logistics now relies on the IoT, deep learning algorithms, and other technologies to improve its logistics operational efficiency. First, the company has realized “goodsto-person” picking in warehouses; second, it has prioritized picking of medical orders; third, its system can intelligently plan transport routes and precisely dispatch vehicles to ensure a daily supply of materials and necessities during the outbreak. Almost immediately after JD.com announced that it was donating medical supplies

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to Wuhan, the first batch was delivered to the frontline in just seven hours. During the lockdown period, an unmanned vehicle was deployed by JD.com to make the first deliveries to Wuhan No. 9 Hospital, where the outbreak was more serious, and to its neighboring districts. The unmanned vehicle could complete about 70% of the service orders within these districts. The government has further advanced its “New Infrastructure” strategic deployment and implementation plan,4 encouraging the logistics industry to develop smart innovative logistics. New Infrastructure investment and construction includes 5G infrastructure, ultra-high voltage, high-speed intercity rail express and rail transport, charging pillars for electric cars, big data centers, artificial intelligence, industrial Internet, and other major technological fields. Most of these technological fields are closely related to informatized or unmanned logistics. By further promoting New Infrastructure, the overall technology level of the logistics industry has improved, providing technical support for logistics operations during the COVID-19 outbreak.

9.3.4.2

A “Transparent” Technical Facilities System with Full Tracking Capability is Gradually Being Perfected

During the COVID-19 outbreak, the ability to track cargo throughout the logistics process became an important concern for customers of logistics enterprises. The visualization and transparency of the entire operating process soon became a common demand of the entire logistics industry. On the one hand, there may be COVID-19 cases in many areas, resulting in traffic restrictions and production shutdowns, which will in turn lead to disruptions in the supply chains and changes in logistics routes for the related enterprises. Enterprises need a transparent information system to understand the real-time operational situation so that they can quickly respond to unexpected problems. On the other hand, enterprises need to make rational demand forecasts and contingency plans during the pandemic and obtain enough big data, which in turn needs to be supported by a complete, visualized IT system. Real-time recording of every procedure during COVID-19 can offer precise tracking and close contact isolation after an outbreak. This can help decision-making and emergency support for the whole community in pandemic control. One example is Imdada.cn’s “Cangqiong” smart big data logistics platform, which uses trillions of information accumulated over the years as its basic database, offering support for a smart ordering, distribution, capacity control system for supply and demand. It can also record and analyze the stores, equipment, commodities, customers, etc. that each rider has come into contact with in real time. If there is a 4

The concept of “New Infrastructure” was first introduced at the Central Economic Work Conference in December 2018. Different from traditional infrastructure construction, “New Infrastructure” mainly refers to high-tech Infrastructure construction. “New Infrastructure” was included in the State Council government’s work report in 2019. As China’s economy recovered after the COVID-19 outbreak was brought under control, “New Infrastructure” played a huge role in stabilizing investment, promoting innovation, and supporting the fight against COVID-19. In March 2020, the Party Central Committee further directed measures to accelerate the construction of New Infrastructure.

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sudden COVID-19 outbreak among delivery riders, the system can offer case data to help pandemic control at any time. Its stable and high-quality services have won the trust of many customers. In June 2020, Dada Group was officially listed on NASDAQ, becoming the first Chinese “crowdsourcing” logistics company listed on the stock market.

9.3.5 Logistics Enterprises Actively Innovate Their Operational Methods and Business Models 9.3.5.1

Innovating Logistics Operations Such as Contactless Delivery and Community Group Buying

Due to the impact of COVID-19, in order to minimize the risk of infection caused by human contact in logistics delivery, China’s express delivery, instant delivery, and other consumer logistics systems have innovated a “contactless” model for terminal logistics delivery. “Contactless delivery” marks a change in the traditional face-toface logistics delivery, placing goods at designated pickup points for customers, thus reducing direct contact between logistics operators and customers and effectively minimizing the transmission risks. “Contactless delivery” was one of the main delivery methods for e-tailing before the pandemic. During the COVID-19 outbreak phase, Meituan.com, an instant logistics company, took the lead in offering “contactless delivery” (Sohu.com 2020c). “Contactless delivery” soon began to be more widely applied in different market segments of the logistics market. “Contactless delivery” mainly operates through contactless shelves, smart mailboxes, unmanned delivery vehicles, drones, and customer-designated outlets (such as the entrance to a district or a front desk) without requiring any “face-to-face” physical contact. Smart mailboxes emerged as an important carrier of “contactless” express parcels at logistics outlets during the outbreak. According to the statistics of the State Post Office, China had around 406,000 smart mailboxes in 2020, and deliveries to smart mailboxes accounted for 10% of total express mail. SF Express’s “Fengchao” smart mailboxes not only provide self-collection services and express delivery, but also allow fast food deliveries in cabinets in Hubei Province and other outbreak areas, achieving integrated, contactless, “instant express” deliveries to further reduce direct contact between consumers and logistics operators. COVID-19 has, to a certain extent, accelerated the use of small community “lastkilometer” delivery hubs (mainly unmanned smart mailboxes and manned poststations), further reshaping the ways consumers receive express deliveries. During the COVID-19 outbreak, most people were isolated at home, and “contactless delivery” became very popular and the preferred method for express pick-ups. Even after the outbreak stabilized, this habit, formed during the outbreak, gradually became one of the three preferred modes of home delivery in urban areas: namely, door-to-door

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delivery, smart mailboxes, and post-stations. The three modes have met the diversified needs of different consumers. In addition to “contactless delivery”, new logistics operations emerged during COVID-19 to support community group buying, fresh food retail, and other business models. Most of these modes of operation can quickly distribute daily necessities and fresh agricultural products in the form of FDCs, with many community leaders’ houses, fresh food chain stores, property gatehouses, and express outlets rebuilt into small or medium-sized community warehouses and distribution centers. These new “community-level” distribution hubs have reduced personnel contact, increased logistics operations, and lowered the cost of logistics operations for fresh products.

9.3.5.2

Integrated Online and Offline Consumption has Led to Logistics Business Innovations

Under COVID-19, household consumption, once dominated by traditional agricultural markets and large supermarkets gradually transformed into a mixed, multifaceted “online and offline” model. Accordingly, traditional consumer logistics is also moving from a “store delivery” model for merchants to a hybrid “store + home delivery” model for merchants and consumers. Home quarantine, as a result of COVID-19, has further restrained offline household consumption. Logistics companies began to adopt innovative business models that promote consumer logistics. For example, during the initial COVID-19 outbreak, which started around Chinese New Year’s Eve and lasted for the subsequent six days, many brick-and-mortar stores were closed, but online orders for fresh fruit, vegetables, and frozen foods were four to nine times those during the same period the previous year. New O2O hybrid models, including livestream shopping, community group buying, food and beverage deliveries, and fresh produce retail were accepted by more and more consumers during this period. Consumer logistics for household products continues to grow, leading and driving business innovation in home delivery logistics. New business models have also emerged for consumer logistics, such as express co-delivery and errand purchasing.

9.4 Outlook on the Development of China’s Logistics in the Post-COVID-19 Era The impact of COVID-19 on the global economy and society will be lasting and profound. China’s logistics industry needs to gradually adapt to the “new normal” of COVID-19, and be prepared to fight a protracted war, seizing this great historical period when China is advancing high-quality economic development and building a new development paradigm, to adapt its development strategy and turn the challenges of COVID-19 into development opportunities.

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9.4.1 The Increasing Importance of Logistics in the National Economy and Social Operation Modern logistics is a fundamental, strategic, and pioneering industry of the national economy. Logistics networks provide natural support for emergency disaster relief, while large logistics enterprises are capable of playing a greater role in this area, and taking on more strategic and social responsibilities for the country. During the COVID-19 outbreak, China’s large logistics enterprises made important contributions in responding to the pandemic with their nationwide networks, showing their social responsibility to the public. Thanks to the crucial position and role they play in the national economy and social operations, logistics enterprises have received much attention from the government and the public. As the industry develops and society progresses, the logistics industry will further integrate into the national emergency relief system, and contribute more to the country in the terms of humanitarian aid, social welfare, low-carbon environmental conservation, and job creation.

9.4.2 COVID-19 Has Accelerated the Global Supply Chain Reconfiguration, As Regional Logistics Markets Make Profound Adjustments During the COVID-19 outbreak, the global supply chain was disrupted on a major scale, and core supply chain enterprises began adjusting their supply chains to improve the emergency response capability and elasticity of these chains. Along with the adjustment of global supply chains, the demand and supply structure of major regional logistics markets is also undergoing profound adjustments. The spatial configuration of global logistics demand may be moving toward localization and regionalization. The original spatial structures of major logistics hubs, channels, and supply chains are facing different degrees of re-adjustment. In order to respond to the government’s call to build a new development paradigm and strengthen cooperation with the ASEAN, Asia, Africa, and other countries in the “Belt and Road Initiative”, Chinese enterprises are also readjusting and reconfiguring their global supply chains and resources. Logistics enterprises will actively cooperate with customer enterprises to deploy their resources and capabilities in a new configuration.

9.4.3 Logistics Enterprises Will Further Focus on and Enhance Their Resilience to Risks COVID-19 has raised concerns about the supply chain security and risk resilience of all kinds of enterprises. The many problems logistics enterprises have faced during COVID-19, in capital, personnel, road access, and business operations, have

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also prompted more enterprises to start paying attention to the need to respond adequately to emergencies and promote sustainable business operations. At present, there are still many uncertainties in the global economic, political, social, trade, and natural ecology fields. The rapid development of technology and changes in customer demand are constantly altering the market environment, so logistics companies must continuously enhance their risk resilience capabilities.

9.4.4 Contactless Commerce is Becoming More Widespread, with Intelligent Facilities Increasingly Used Contactless commerce refers to the widespread use of modern information technology and artificial intelligence to offer a carrier and platform for human production, distribution, interaction, and consumption, realizing transactions without physical contact in an entirely contactless commercial process. E-tailing, TV shopping, livestreaming, micro-business, community sales, and unmanned vending machines are all basic forms of contactless commerce, offering new modes of transaction, transforming traditional face-to-face transactions, and breaking through the limitations of time and space. Business, capital, and information flow in contactless commerce are relatively easy to realize, both on the Internet and in its trait of non-physical contact. Logistics, which is the final delivery point of business activities, is the one difficulty faced by contactless commerce. To enhance consumer experience, the transformation to contactless logistics needs to be supported by “New Infrastructure”. COVID-19 has driven the development of contactless commerce globally, and logistics companies have increased investment in automated and smart facilities to reduce labor costs and staff gathering. The proportion of unmanned or reduced personnel logisticsbased warehousing, sorting, distribution, and delivery services in China’s logistics industry is set to increase. Facilities such as smart delivery robots, automated parking lots, smart vending machines, and smart mailboxes will become even more widely used. In the future, the Chinese government and logistics companies will continue to promote the use of intelligent logistics facilities and equipment, further supporting the development of more contactless businesses.

9.5 Summary This chapter provides an in-depth analysis of the impact of the COVID-19 pandemic on China’s macroeconomy and logistics industry. It specifically summarized the key measures taken by the Chinese government and enterprises to counter the outbreak, and analyzed the outlook on the development of China’s logistics in the post-COVID19 era. The COVID-19 outbreak in China has gone through four major phases: latent spread, full-blown outbreak, suppression and mitigation, and stabilization and

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normality. Thanks to the decisive actions taken by the Chinese government, advocating home quarantine and encouraging the wearing of masks, China was the first country in the world to contain the outbreak, resume work and production, and achieve positive growth in key macroeconomic indicators. This report summarizes the impacts COVID-19 has had on China’s logistics market, which are as follows: (1) There have been frequent global supply chain disruptions and readjustments, as global markets move toward regionalization and localization. With frequent supply chain disruptions, enterprises have begun to focus on building flexible and resilient systems. As the supply chains shift toward regionalization and localization, logistics enterprises are required to rationally readjust their business focus. (2) There have been adjustments in the supply and demand structure of the transport market as land transport logistics develops rapidly. These are mainly seen in a shortage of air logistics capacity triggered by the pandemic, with the bellyhold cargo model becoming a liability. COVID-19 has resulted in the fall and subsequent rise in maritime logistics demand, as international cargo has stagnated. Highway freight rapidly recovered after the initial outbreak. The China– Europe Railway Express has become a new channel for international transport. (3) Consumer logistics is growing, and ensuring health and safety has become a regular requirement. This has mainly resulted in an increase in online home shopping, as e-commerce logistics continues to expand. It has also triggered the growth in demand for instant logistics, and helped promote daily preventative practices. (4) Cold-chain logistics experienced disruption and recovery, and operational control has become increasingly strict. The sudden COVID-19 outbreak caused a sudden drop in cold-chain demand, although there was rapid recovery after the outbreak stabilized. Operational cold-chain logistics processes under COVID-19 have been further standardized, with more stringent control measures being enforced. COVID-19 has also provided new opportunities and new models for the development of cold-chain logistics. This report summarizes the main strategies of the Chinese government and enterprises in combating COVID-19 as follows: (1) The government quickly introduced policies to support the logistics industry in coping with the pandemic; (2) logistics companies responded to the short-term operational difficulties in various ways; (3) large companies actively assumed social responsibility by participating in the national emergency response system; (4) the entire industry quickened its pace of “informatization”, moving toward “unmanned” new technologies and facilities; (5) logistics enterprises actively tried to innovate their operational methods and business models. As for the development of China’s logistics in the post-COVID-19 era, this report believes that: (1) The logistics industry will continue to strengthen its key position in the national economy and social operation; (2) the pandemic has accelerated the restructuring of global supply chains, with regional logistics markets facing profound adjustments; (3) logistics enterprises will further focus on and enhance their resilience to risks; (4) contactless commerce will become more widespread, and intelligent facilities and equipment will be increasingly used.

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References Caacnews.com.cn (2020) Civil Aviation’s largest fleet of preighters! China Eastern Airlines leads the way in cargo transport. http://www.caacnews.com.cn/1/6/202004/t20200420_1299179_wap. html. Accessed 20 Apr 2020 Cb.com.cn (2020) More than 3000 tons of tangerines and millions of flowers: JD Livestreaming’s battle against COVID-19. https://baijiahao.baidu.com/s?id=1659745361286367461&wfr=spi der&for=pc. Accessed 28 Feb 2020 CCTV.com (2020) Ministry of transport: stabilizing fundamental foreign trade transport, and reducing fees by more than 7 billion RMB in phases. http://news.cctv.com/2020/04/18/ART IaliDUMsxjTPo6PrRaaKr200418.shtml. Accessed 18 Apr 2020 Chen Q, Wei J, Peng Y (2020) Impact of COVID-19 on the transport logistics industry (I). http:// www.hhhttckd.com/wlzx/93866.html. Accessed 16 Apr 2020 China Federation of Logistics and Purchasing (2020) Survey and analysis report: the impact of COVID-19 on the food cold-chain industry. http://www.chinawuliu.com.cn/lhhzq/202002/26/ 494172.shtml. Accessed 26 Feb2020 Cold Chain Profession Committee of China Federation of Logistics and Purchasing (2020) Annual roundup: the top ten events in the cold-chain logistics industry in 2020. https://www.sohu.com/ a/447314391_608787. Accessed 28 Jan 2020 Gov.cn (2020) Xi Jinping: speech at the meeting to coordinate COVID-19 prevention and control and deploy economic and social development work. http://www.gov.cn/xinwen/2020-02/24/con tent_5482502.htm. Accessed 24 Feb 2020 Gov.cn (2021) The State Council Information Office held a press conference on the annual import and export situation in 2020. http://www.gov.cn/xinwen/2021-01/14/content_5579875. htm. Accessed 14 Jan 2021 iResearch (2020) China’s 2020 retail consumption report and analysis after the COVID-19 Outbreak. http://report.iresearch.cn/report_pdf.aspx?id=3618. Accessed 13 Jul 2020 Jia Y (2020) Instant delivery under COVID-19: how can companies grow counter-trend under the surge of orders? https://m.sohu.com/a/371113830_170557. Accessed 6 Feb 2020 People.cn (2020) WHO: new cases reported outside China exceed those within China for the first time. https://baijiahao.baidu.com/s?id=1659657285388904581&wfr=spider&for=pc. Accessed 27 Feb 2020 Sinotrans (2020) Sinotrans limited’s half-year report for 2020. http://www.sinotrans.com/col/col 2362/index.html Accessed 17 Aug 2020 Sohu.com (2020a) In 2019, China’s civil aviation transported 7.532 million tons of cargo and mail, 60% of the U.S. cargo volume in the same period. https://www.sohu.com/a/384072776_162522. Accessed 29 Mar 2020a Sohu.com (2020b) Opportunity or challenge? How to develop the cold chain under COVID-19. https://www.sohu.com/a/433766738_120941796. Accessed 23 Nov 2020 Sohu.com (2020c) Chinanews.com: Meituan.com first to launch ‘contactless delivery’ in China, achieving nationwide coverage this week. https://www.sohu.com/a/369417476_12375. Accessed 29 Jan 2020c Sohu.com (2021) The U.S. is madly hoarding Chinese goods! L.A./Long Beach continues to experience severe congestion and shortage of dockworkers and vehicle racks. https://www.sohu.com/ a/444421899_99935301. Accessed 14 Jan 2021 The National Bureau of Statistics of China (2021) Total retail sales of consumer goods up 4.6% in December 2020. http://www.stats.gov.cn/tjsj/zxfb/202101/t20210118_1812428.html. Accessed 18 Jan 2021 The State Council Information Office (2021) Press conference on the annual import and export situation in 2020. http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/44687/44744/index.htm. Accessed 14 Jan 2021

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The State Post Bureau of China (2020) Major postal and delivery companies to resume normal operations nationwide. http://www.spb.gov.cn/xw/dtxx_15079/202002/t20200209_202 0709.html. Accessed 9 Feb 2020 The State Post Bureau of China (2021) The State Post Office reports on the operation situation of the postal industry in 2020. http://www.spb.gov.cn/xw/dtxx_15079/202101/t20210114_376 0170.html. Accessed 14 Jan 2021 Wu J (2020) Logistics Industry under COVID-19: more than 94% of enterprises willing to join the national emergency logistics system. Henan Business Daily, Accessed 04 Mar 2020 Wu A, Wu C (2020) A study of COVID-19 transmission from the closed-loop perspective of cold-chain logistics: origins, research, evaluation and countermeasures. Inf Eng 06:122–127 Wuhan.gov.cn (2021) The 2021 government work report for Wuhan City. http://www.wuhan.gov. cn/zwgk/xxgk/ghjh/zfgzbg/202102/t20210204_1628560.shtml Accessed 4 Feb 2021 Xi C (2020) Challenges and countermeasures in international logistics under COVID-19. Logist Technol Appl 05:58–62 Xinhuanet.com (2020) World retail congress: China’s supply-chain experience in the wake of COVID-19. http://www.xinhuanet.com/tech/2020-04/26/c_1125908537.htm. Accessed 26 Apr 2020 Xinhuanet.com (2021) WTO expects a further recovery in global trade. https://baijiahao.baidu.com/ s?id=1695780348290343213&wfr=spider&for=pc. Accessed 01 Apr 2021

Chapter 10

Development and Prospects of International Logistics in China Under the New Development Paradigm Jun Liu

As a result of COVID-19, the international political and economic environments have undergone rapid changes. China has also formulated a strategic plan to accelerate the construction of a “dual circulation” development paradigm. International logistics is an important basis for connecting the domestic and international markets, and also plays a very important role in the “dual circulation” development paradigm. Therefore, the Chinese government ascribes great importance to the construction of an international logistics system, and China’s international logistics has seen new development opportunities. This chapter consists of three sections. Section 10.1 describes the development environment of China’s international logistics, including the new international economic situation and China’s new development paradigm and its policy system, and the innovative development of the industry. Section 10.2 describes the development status of China’s international logistics from four aspects: the Belt and Road Initiative and the changes in the development patterns of international logistics; the development of logistics in free trade zones; the service capacity of international logistics; and the status of representative international logistics enterprises. Section 10.3 describes the development trend of China’s international logistics, in areas such as the relationship between international and domestic logistics systems, the international logistics network pattern, the international freight transportation structure, and the greening and intelligentization of international logistics.

© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_10

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10.1 The Development Environment of International Logistics in China Under the New Development Paradigm The development environment of China’s international logistics continues to undergo optimization. First, changes in the international and domestic economic environments have necessitated new requirements for the development of international logistics in China. Second, China is gradually perfecting its policy system to support the development of international logistics. Third, industry innovation is also accelerating the development of international logistics.

10.1.1 The New International Economic Situation and New Requirements Necessitated by the New Development Paradigm 10.1.1.1

The New International Economic Situation Requires Readjustments in China’s International Logistics Pattern

There are increasing global changes due to the COVID-19 pandemic. First, international trade frictions have intensified, with increasing instability of the global industry chains and supply chains. Under the combined impact of COVID-19 and trade protectionism, the international economic and trade landscape is undergoing profound changes. Second, the global governance system is at an important turning point. International organizations such as the Group of Twenty (G20), the Shanghai Cooperation Organization (SCO), and the Asia–Pacific Economic Cooperation (APEC) are paying increasing attention to the power of emerging economics, and developing countries’ influence in the world is rising (Xinhuanet.com 2019). The global industry chains and supply chains have been drastically impacted by non-economic factors, and the world has entered a period of adjustment. The instability of global trade and supply chains makes supply chain flexibility and crisis resilience important foci of enterprises. Along with the changes in the global supply chains, the supply and demand structure of major regional logistics markets in the world is also undergoing profound adjustments thanks to global multipolarity, localization, and polycentricity, which are becoming new characteristics in the spatial distribution of global logistics demand. Due to this new international economic situation, China’s original hub, channel and supply chain pattern for international logistics must also be adjusted accordingly.

10.1 The Development Environment of International Logistics in China …

10.1.1.2

239

The New Development Paradigm Requires Further Connection of the Domestic and International Logistics Systems

The construction of a “dual circulation” development paradigm is an important means for China to acquire new advantages. The new development paradigm is not a closed domestic circulation, but an open domestic and international dual circulation. The key to constructing the new development paradigm is to stimulate economic circulation and allow unimpeded movement within the industries. The logistics industry can link production, distribution, circulation, and consumption, and is key to building a modern circulation system and that incorporates the “dual circulation” development paradigm. However, the current development level of China’s international logistics cannot match China’s status as a major manufacturing country and the world’s largest exporter of goods. In order to better link the domestic and international markets and realize domestic and international circulation, the government has quickly eliminated deficiencies in international logistics in order to leverage the international and domestic markets and their resources to improve resource allocation efficiency and the service level of international logistics.

10.1.1.3

The New Development Paradigm Requires Rapid Improvement in the Service Capacity of International Logistics in the Central and Western Regions

The major development of the Western region is an important regional development policy of China. This development plays a significant role in the building of a “dual circulation” development paradigm. In May 2020, the Central Government and the State Council put forward a new policy on the opening-up and high-quality development of the Western region, Guiding Opinions on Promoting the New Paradigm in Developing the Western Region in a New Era. The new development paradigm requires the Central and Western regions to continue opening up to the outside world in order to form a comprehensive eastcentral-west, sea-land-air pattern linking both home and abroad. This will promote the formation of a large, unified domestic and international market, so that more personnel and logistics can participate in the domestic and international “dual circulation.” However, the current service capacity of international logistics in the Central and Western regions cannot meet the needs outlined above. The Central and Western regions are only open to the world to a limited extent, with low internationalization of logistics services. There are also problems in operating international logistics channels, such as insufficient railway capacity, low proportion of multimodal transport, and a deficient international transport network. Hence, the Central and Western regions urgently need to raise their service capacity for international logistics.

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10.1.2 Gradually Improving the Policy System to Accelerate the Development of International Logistics 10.1.2.1

Related Policies on Optimizing the Business Environment for International Logistics

Since the 19th CPC National Congress, China has introduced a number of policies on optimizing the business environment for international logistics. In October 2018, the State Council issued the Work Plan for Optimizing the Business Environment at Ports to Facilitate Cross-border Trade while, in November 2018, the General Office of the State Council of the People’s Republic of China issued the Notice on Addressing Enterprises’ Concerns to Further Implement Policies Optimizing the Business Environment. In August 2019, the State Council issued the Notice on the Overall Plan for the Six New Pilot Free Trade Zones. In the same month, the General Office of the State Council of the People’s Republic of China issued the Notice on the Video and Telephone Conference to Assign Key Tasks for Optimizing Business Environment by Deepening Reforms to Streamline the Government, Delegate Power, and Improve Government Services. In July 2020, the General Office of the State Council of the People’s Republic of China issued the Implementation Opinions on Further Optimizing the Business Environment to Better Serve Market Players. In August 2020, the State Council also issued the Opinions on Further Improving Work to Stabilize Foreign Trade and Foreign Investment. Optimizing the business environment for international logistics is an important aspect of these notices and opinions. Their specific measures include: expanding the “single window” function for international trade to further improve customs efficiency; developing cross-border e-commerce; and keeping regulatory standards in line with the rest of the world’s.

10.1.2.2

Related Policies on Tax and Fee Cuts in International Logistics

Tax- and fee-cut policies in international logistics are conducive to reducing import and export costs. In April 2018, the National Development and Reform Commission and three other departments jointly issued the Notice on the Key Work of Cost Reduction in 2018. In June of the same year, the Ministry of Transport of the People’s Republic of China (MOT) and the National Development and Reform Commission jointly issued the Notice on Further Liberalizing Certain Port Fees and Charges and Related Matters. In March 2019, the MOT and the National Development and Reform Commission jointly issued the Measures on Port Charges and Fees. In March 2020, the MOT and the National Development and Reform Commission jointly issued the Notice on the Phased Reduction of Port Charges and Other Matters and in June 2020, the MOT and the National Development and Reform Commission jointly issued the Implementation Opinions on Further Reducing Logistics Costs. These notices all require the reduction of port charges, road tolls, and railway, air and highway freight charges, thus reducing import and export logistics costs through tax and fee cuts.

10.1 The Development Environment of International Logistics in China …

10.1.2.3

241

Related Policies that Offer Special Support for International Logistics and Enhance Supply Chain Innovation and Development

The Chinese government has introduced special policies to accelerate the construction of international logistics and its supply chain. In September 2020, the General Office of the State Council of the People’s Republic of China issued the Opinions on Accelerating the Development of New Consumption through New Business Forms and New Models, to accelerate the construction of an international postage and express logistics system intended to nurture world-class logistics platform and supply chain enterprises. In October 2020, the MOT issued the Opinions on the Issues of Modernizing the Governance System and Governing Capability of Transport, which requires speeding up the construction of an international logistics supply chain system and promoting the synergistic integration of international logistics with the industry chains and supply chains. In April 2020, the MOT issued specific measures to promote the development of international logistics, focusing on four areas to improve international freight capacity: first, increasing international air cargo capacity and encouraging airlines to use preighters for cargo transport; second, improving the transport capacity of the China–Europe Railway Express, mainly by increasing train frequency; third, opening up international express shipping, reducing ports of call along the way, improving the speed of navigation, and shortening transport time, so as to reduce the backlog of postal express packages and, fourth, enhancing deployment capability by using feeder transport for ports and other means to ensure the normal operations of international highway transport. Currently, to ensure the unimpeded flow of maritime traffic, the MOT has also implemented measures such as enhanced monitoring of trunk ports and liner companies, reducing or waiving certain enterprise fees, and actively communicating and coordinating with major trading partners and international maritime organizations. These measures have accelerated the diversification of China’s international transport modes, improved operational efficiency, and ensured smooth international logistics operations.

10.1.2.4

Government Policies Supporting the Rapid Development of Cross-Border E-commerce

China’s government departments have introduced many policies to support the development of cross-border e-commerce. The General Administration of Customs of the People’s Republic of China has introduced codes to help monitor cross-border e-commerce imports and exports, regulated the import and export behavior of emerchants, and facilitated customs clearance (Hu 2020). China’s major policies related to cross-border e-commerce logistics ss of August 2021 are summarized in Table 10.1.

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Table 10.1 China’s main policies related to cross-border e-commerce logistics Date

Issuing department

Policy name

Main content

May 2020

The State Council

The approval of the state council on establishing comprehensive pilot zones for cross-border e-commerce in 46 cities and regions, including the Xiong’an new area

Set up comprehensive pilot zones for cross-border e-commerce in 46 cities and regions, including the Xiong’an New Area

July 2020

The State Council

Notice of the state council on replicating and promoting reforms and the pilot experience of the sixth batch of pilot free trade zones

Replicate and promote the warehouse model of rejected goods centers for cross-border e-commerce retail imports in China

August 2020

The General Office of the State Council

Opinions of the general office of the state council on further improving work to stabilize foreign trade and foreign investment

Support cross-border e-commerce platforms, the development of cross-border logistics, and the construction of overseas warehouses

April 2021

The General Office of the State Council

Opinions of the general office of the state council on serving the “six stabilities” and “six assurances” to further enhance reform work to streamline the government, delegate power, and improve government services

Continue expanding the scope and number of pilot cities for cross-border e-commerce retail import. Adjust and expand the list of cross-border e-commerce retail import goods

July 2021

The General Office of the State Council

Opinions of the general office of the state council on accelerating the development of new business forms and new modes for foreign trade

Improve support policies for developing cross-border e-commerce, promote the construction of comprehensive pilot zones for cross-border e-commerce, and expand the network of overseas warehouses around the world (continued)

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Table 10.1 (continued) Date

Issuing department

May 2017

General Administration Key task of the customs of Customs in promoting the ‘Belt and Road Initiative’ in 2017

Actively promote the construction of the “Internet Silk Road”, support cross-border e-commerce enterprises in setting up overseas warehouses in logistics hubs along these routes

March 2019

The State Post Bureau, the Ministry of Commerce, and the General Administration of Customs

Several opinions on promoting the high-quality development of cross-border e-commerce delivery services (temporary regulation)

Support the establishment of a credit system for cross-border delivery enterprises, further improve the cross-border delivery system, and enhance its convenience by facilitating customs clearance

February 2020 Ministry of Commerce

Notice on stabilizing foreign trade and foreign investment and promoting consumption in response to COVID-19

Support the development of new business forms and new modes of foreign trade, guide cross-border e-commerce pilot zones to offer information services on overseas warehouses, and help enterprises increase exports by using these overseas warehouses. Support the integrated development of market procurement commerce and cross-border e-commerce, and explore new transaction channels during the closure periods of these pilot markets

August 2021

Special action plan for the quality development of commerce logistics (2021–2025)

Guide and support key trade enterprises, cross-border e-commerce platforms and cross-border logistics enterprises to promote the high-quality construction of overseas warehouses and logistics centers

The Ministry of Commerce, and others

Policy name

Main content

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10.1.3 The Industry Accelerates Innovation to Provide New Impetus for the Development of International Logistics 10.1.3.1

New International Trade Patterns and New Modes Continue to Emerge

The rapid development of cross-border e-commerce, market procurement, and other new business forms as important sources of growth is driving the development of China’s foreign trade. China set up 46 new cross-border e-commerce comprehensive experimental zones and 17 market procurement pilot zones in 2020. It has expanded its pilot projects on cross-border e-commerce retail import to 86 cities and the entire island of Hainan (Ministry of Commerce of China 2020). In 2020, 2.45 billion import and export items were granted entry or exit on the supervisory crossborder e-commerce platform of China Customs, up 63.3% year-on-year. The import and export value of cross-border e-commerce was RMB 1.69 trillion in 2020, up 31.1% year-on-year (General Administration of Customs of the People’s Republic of China 2021a). Market procurement export was valued at RMB 704.54 billion in 2020, up 25.2% year-on-year. The development of new business forms and new modes of foreign trade has promoted the innovation of international logistics services. International logistics in the forms of overseas distribution centers, free trade zones, and other new modes of operation are developing rapidly as a result, driven by significant growth in crossborder e-commerce. Fourth Party Logistics (4PL) for international logistics has been constantly emerging. International express enterprises, international shipping enterprises, and international liner enterprises are quickly transforming themselves into integrated supply chain solutions providers.

10.1.3.2

A New Generation of Information Technology has Become Widely Used in International Logistics

Supported by new-generation information technology such as intelligent logistics information platforms and smart ports, China’s international logistics is gradually completing digitalization and movement online to allow complete visualization of the entire logistics process. In 2020, Qingdao Port utilized its “single window” big data platform to digitalize delivery orders for import containers, raising overall customs efficiency by 80% (People’s Daily 2020). In January 2020, Xi’an International Inland Port Investment and Development Group (ITL Group) Co., Ltd. launched its “Inland Port Cloud Wharf”. This is a smart logistics platform hub for international multimodal transport companies servicing the “Belt and Road Initiative”. In January 2021, Tianjin Port completed a project to fully automate its traditional container terminals, the first of such projects in the world. In November 2020, following completion, China’s first smart port with a full-scenario 5G application, the Xiamen Ocean Gate Container

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245

Terminal, was put into operation (CTN.com 2020). A fleet of 5G driverless container trucks (DCV) has completed its trial run after the launch of the terminal.

10.1.3.3

Gradually Converging Domestic Logistics Standards with International Standards

Port management regulations are an important component of international logistics regulatory standards. China has implemented several initiatives to converge the Enterprise Credit Management (ECM) System under the Customs Administration of the People’s Republic of China with international standards. The Sanitary and Phytosanitary Measures (SPS) Agreement is a multilateral agreement in international trade requiring the quarantine of plants and animals for customs inspection. During the 12th Five-Year Plan period, China issued quality inspection standards under the SPS Agreement. The transparency of the implemented technical barriers to trade (TBT) Agreement is unanimously recognized by WTO members. In 2020, the Customs Administration of the People’s Republic of China achieved mutual recognition with 42 countries and regions, endorsing “authorized economic operators (AEOs)” in all participating countries. This mutual recognition system has the highest number of participating countries in the world (Sun 2021). In 2020, 949 Chinese enterprises were newly certified nationwide as AEOs, bringing the total number of Chinese AEO firms to 28,604, the highest in the world. Other than that, China is also actively promoting the widespread application of international logistics standards. For example, China has been exploring the “railway bill of lading” in international railway freight to facilitate international trade in inland areas. In December 2018, an International Through Rail Waybill (ITRW) was used for the first time as an international credit agreement document and proof of cargo control rights on the China–Europe Railway Express from Siberia, Russia to Chengdu, China. In September 2020, Chongqing New Land-Sea Corridor Operation Co. Ltd. issued the first multimodal transport bill of lading for the China International Freight Forwarders Association (CIFA), achieving mutual recognition and interoperability of rail-sea transport. International multimodal and intermodal freight companies no longer need to consign different carriers for land and sea transport.

10.2 The Development Status of International Logistics in China Under the New Development Paradigm As the Belt and Road Initiative is being constantly promoted, the formation of free trade zones and the attention paid to them by government departments have reshaped the development pattern of China’s international logistics. Its international logistics service capacity has also been rapidly enhanced.

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10.2.1 “The Belt and Road Initiative” has Reshaped China’s International Logistics Development Pattern At present, China is forming a new development paradigm through the two-way opening up of land and sea. “The Belt and Road Initiative” has promoted the effective development of China’s international logistics infrastructure and enhanced the security, openness, and reliability of its global transport network and logistics supply chains.

10.2.1.1

The Construction of International Logistics in the Central and Western Regions has Accelerated Significantly

Central and Western China are important regions in the Belt and Road Initiative. Since the proposal of the Belt and Road Initiative, the construction of international logistics in the Central and Western regions of China has sped up significantly. These regions have quickened the pace of constructing railroads, highways, and port-and-park links, actively developed intermodal land-sea and air-rail transport, and organically integrated the China–Europe Railway Express, the Yangtze River Golden Waterway, and other transportation services to open up major domestic and international logistics channels. The China–Europe Railway Express and the New International Land-Sea Trade Corridor have become important corridors for international logistics in the Central and Western regions. The China–Europe Railway Express now has trains operating to 92 cities in 21 countries outside China, forming an important bridge and green channel to the Eurasian Continent. The five hub cities of Xi’an, Chongqing, Chengdu, Zhengzhou and Urumqi are the most important cities on these railway express lines. In 2020, the China–Europe Railway Express operated 10,895 trains from these five cities, accounting for 87.86% of the total number of trains dispatched (YICAI.com 2021). In 2020, the China–Europe Railway Express operated a total of 12,400 trains and transported 1,135,000 TEUs, up 50% and 56%, respectively, year-on-year, with a comprehensive heavy box rate of 98.4%. During the COVID-19 outbreak, the China– Europe Railway Express played an important role in maintaining the stable operations of the global industry chains and supply chains. The New International Land-Sea Trade Corridor is a new trade corridor built by the Western provinces of China in collaboration with Singapore. With Chongqing as the operation center and Guangxi, Guizhou, Gansu and other Western provinces as the key nodes, the New International Land-Sea Trade Corridor will transport rail, ocean and highway freight to the rest of the world via the Beibu Gulf in Guangxi. In 2020, the New International Land-Sea Trade Corridor operated 4607 trains, up 105% year-on-year, and ocean-rail intermodal containers reached 282,000 TEUs, up 75% year-on-year, dispatched to 250 ports in 96 countries and regions (People’s Government of Guangxi Zhuang Autonomous Region 2021).

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The railway express has accelerated the integration of the Central and Western regions into the “the Belt and Road Initiative”, stimulating its potential and development momentum. The linkage of the China–Europe Railway Express with the New International Land-Sea Trade Corridor has played an important role in ensuring the smooth operations of China’s industry chain and supply chain in foreign trade. International logistics in Central and Western China has realized the seamless connection of “the Belt and Road Initiative” with the Yangtze River Economic Belt.

10.2.1.2

Positive Progress Made in the Construction of Infrastructure and Logistics Corridors with Countries in the “Belt and Road Initiative”

Under the Belt and Road Initiative, there is a huge demand for the construction of highways, railways, ports and airports in the countries of the Initiative. The construction of infrastructure and logistics corridors has become a hotspot for investment. Chinese companies are speeding up the international logistics projects along the routes of the Belt and Road Initiative. China has signed 22 international road transport facilitation agreements with 19 countries, 70 bilateral and regional maritime agreements with 66 countries and regions, and bilateral intergovernmental air service agreements with 100 countries (MOT 2020). China’s economic and trade relations with Europe and other countries along the routes are developing rapidly, and the demand for international logistics is rising significantly. In 2020, Chinese companies invested US$17.79 billion in non-financial projects in 58 countries along the routes of “the Belt and Road Initiative”, up 18.3% year-onyear and accounting for 16.2% of the total in the same period. The contract value of newly-signed projects was US$141.46 billion, and the completed turnover was US$91.12 billion, accounting for 55.4% and 58.4% of the total amount in the same period, respectively (Yidaiyilu.com 2021).

10.2.2 Free Trade Zone Logistics has Become an Important Component of China’s International Logistics System 10.2.2.1

The Rapid Development of the Free Trade Zone Network

A free trade zone is a multifunctional special economic zone operating mainly under preferential taxation and special customs supervision policies, primarily to achieve trade liberalization and facilitation. China established its first free trade zone, the China (Shanghai) Pilot Free Trade Zone, in 2013. At present, China has 21 free trade zones under six batches, located in 21 different provinces/municipalities. Table 10.2 shows the provinces and dates in which China established the free trade zones.

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Table 10.2 The provinces and dates in which China established free trade zones Batch

Date

Province/Municipality

Quantity

1

September 2013

Shanghai

1

2

April 2015

Guangdong, Tianjin, Fujian

3

3

March 2016

Shaanxi, Sichuan, Chongqing, Hubei, Henan, Zhejiang, Liaoning

7

4

October 2018

Hainan

1

5

August 2019

Heilongjiang, Yunnan, Hebei, Guangxi, Jiangsu, Shandong

6

6

September 2020

Hunan, Anhui, Beijing

3

At present, free trade zones have become an important part of China’s exportoriented economy. In 2020, the first 18 free trade zones have helped establish 393,000 new enterprises, with RMB 176.38 billion of actual foreign investment. Their total import and export value was RMB 4.7 trillion, accounting for 17.6% and 14.7% of foreign investment and total import and export value, respectively (Economic Daily 2021). The formation of free trade zones has stimulated the growth of international cargo sources and expanded the hinterland range of these sources. At the same time, the development of free trade zone logistics has further improved the scale and service level of international freight transportation in China.

10.2.2.2

The Gradual Formation of an International Logistics Network for Free Trade Zones

During the 13th Five-Year Plan period, the agglomeration effect and radiation effect of international logistics led to the gradual formation of an international logistics network for China’s free trade zones. The free trade zones are now linked to several international logistics corridors. For example, the Guangxi area and the ASEAN have deepened cooperation, linking the 21st Century Maritime Silk Road with the Silk Road Economic Belt. Yunnan’s free trade zones are mainly used to build major nodes and hub centers connecting the Great International Passageway to South and Southeast Asia. Heilongjiang’s free trade zones are mainly used to build logistics hubs and regional cooperation centers servicing Russia and Northeast Asia. Hunan’s free trade zones form an international investment and trade corridor linking the Yangtze River Economic Belt and the Guangdong-Hong Kong-Macao Greater Bay Area. Free trade zones also play an important role in supporting the construction of international logistics hubs. Chengdu Shuangliu International Airport has launched 33 international “preighter” routes and is steadily operating 10 international routes for air cargo (SCOL.com 2021). Ezhou’s airport economic zone is speeding up the construction of Ezhou Airport, to build international air cargo hubs and logistics centers for the world. Zhejiang’s free trade zones are expanding their network of

10.2 The Development Status of International Logistics in China …

249

international logistics hubs, constructing them around the oil-and-gas industry chain. Hebei’s free trade zones are constructing key hubs for international commerce logistics and openly developing pilot zones to serve the coordinated development of the Beijing-Tianjin-Hebei Region.

10.2.3 The Rapidly Expanding Service Capacity of China’s International Logistics 10.2.3.1

The Network of International Logistics Infrastructure is Gradually Being Perfected

With the gradual improvement in the development environment of international logistics and the constant policy implementation, China’s sea, land and air channels and the New International Land-Sea Trade Corridor are developing rapidly. Its ports of entry are expanding in scale. In 2020, China’s goods had an import and export value of RMB 32.16 trillion, up 1.9% year-on-year, of which exports grew by 4.0% and imports fell by 0.7% (Ministry of Commerce of China 2021). The total import and export volume and international market share both hit a record high. Maritime international transport channels are an important component of China’s international logistics system, with more than 90% of China’s import and export freight volume being carried by sea (CRI.cn 2020). By the end of 2020, there were 24 coastal ports in China with cargo throughput of over 100 million tons. Among them, the cargo throughput of the five major port groups—the Bohai Bay, the Yangtze River Delta, the Southeast coast, the Pearl River Delta, and the Southwest coast— accounted for 70% of the country’s total, with container throughput accounting for 90% of the country’s total. China’s land-based international transportation channels mainly include the China–Europe Railway Express, its external highway network, and its three strategic oil-and-gas land pipelines. At present, the China–Europe Railway Express spans the east and the west of China. The external highway network mainly extends to Europe, South Asia, and Southeast Asia, forming a radiation network. The three major strategic oil-and-gas land pipelines are the Central Asia Gas Pipeline and the China-Kazakhstan Crude Oil Pipeline; the Sino-Myanmar Oil and Gas Pipeline; and the Sino-Russian Oil–Gas Pipeline. At present, freight volume does not make up a high proportion of China’s international logistics, but with the steady rise in demand for international air cargo, the pace of constructing China’s air cargo corridors is accelerating. Airport logistics hubs are actively enhancing their international cargo capacity. International air transportation channels are playing an increasingly important role in China’s international logistics system. As of 31 December 2020, China has 313 ports approved by the State Council opened to the outside world, made up of 80 airports, 129 seaports, and 104 land ports

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Table 10.3 Changes in China’s import and export freight volume and growth rate, 2018–2020 Year

Import and export Freight volume (million tons)

Growth rate (%)

Import

Export

Freight volume (million tons)

Freight volume (million tons)

2018

4452.90

4.2

2876.43

1576.47

2019

4578.33

2.8

3010.84

1567.50

2020

4912.13

7.3

3278.92

1633.21

Source Compiled from the Freight Supervision Business Statistics Bulletin (2018–2020), published by the General Administration of Customs of the People’s Republic of China

Table 10.4 The scale of transportation vehicles of various ports in China, 2018–2020 Year

Waterway (million trips)

Airway (million trips)

Railway (million trips)

Highway (million trips)

2018

0.4602

0.9799

2.3005

33.5151

2019

0.4545

1.0846

3.1692

34.8668

2020

0.3238

0.3589

2.9151

18.0686

Source Compiled from the Freight Supervision Business Statistics Bulletin (2018–2020), published by the General Administration of Customs of the People’s Republic of China

(22 railway ports and 82 highway ports) (General Administration of Customs of the People’s Republic of China 2021b). As foreign trade and economic cooperation continue to develop rapidly, the import and export freight volume of Chinese ports continues to grow. Tables 10.3 and 10.4 show China’s import and export freight volume and the scale of transportation vehicles of various ports for 2018–2020.

10.2.3.2

International Logistics Services are Developing Toward Informatization and Intelligentization

With the rapid development of blockchain technology, smart contracts, and digital payment, new technologies have provided increasing support for international logistics operations. China’s international logistics system is accelerating the pace of its development toward informatization and intelligentization. Smart Customs plays a key role in improving the efficiency of international logistics operations at ports. In recent years, the areas where innovative technologies can be applied in China Customs have increased significantly; Concurrently, overall customs clearance time has fallen. In 2020, Tianjin Customs used AI technology, big data, and cloud platforms to develop an intelligent mapping system that can be intensively used for inspection and monitoring. At present, the total processing time for single-ticket cargo in Tianjin Customs has been reduced from an average of 18.5 min in early 2020, to 8.8 min in early 2021 (Yuan 2021). Moreover, China Customs has

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251

utilized the Internet of things (IoT) and blockchain technology at intelligent tollgates. Inspectors are also able to make use of mobile individual equipment to carry out inspections. These have not only improved the openness and transparency of law enforcement, but also effectively enhanced the efficiency of customs clearance. At present, SIPG and COSCO SHIPPING Lines have realized data interconnectivity of shipping companies and port systems with the help of blockchains to achieve entirely paperless import processing and zero delays in business imports for customers (ZGSYB.com 2020). In March 2020, COSCO SHIPPING Technology processed global COVID-19 data using the IoT, the shipping data center, the Shipping Algorithm Platform, and its shipping blockchain platform, to develop and launch a system for “identifying potential COVID-19 risks”, to ensure the safe and efficient navigation of ships. Cainiao Network Technology Co., Ltd. has been building an intelligent logistics framework worldwide since 2018. The Cainiao eHub project has begun construction in Hangzhou, Hong Kong, Kuala Lumpur, Dubai, Moscow and Liège (Belgium). With paperless clearance at Customs and using cross-border e-customs platforms, the eHub allows for the digitalization of cross-border e-commerce businesses, realizing the seamless integration of their freight trunk lines with “last kilometer” delivery (Caijing.com 2021).

10.2.3.3

The Continuous Innovation of Cross-Border E-commerce Services for International Logistics

As Chinese manufacturing becomes more widespread in the world and with foreign consumption moving online, the rapid development of cross-border e-commerce has driven the continuous growth of its logistics market. Figure 10.1 shows the size of China’s cross-border e-commerce logistics market in 2016–2019. In 2019, the size of China’s cross-border e-commerce logistics market was valued at RMB 2.1 trillion. Between August 2019 and July 2020, parcels dispatched from China through cross-border e-commerce accounted for 60% of the world’s total (Qianzhan.com 2021). This rapid growth in market demand has stimulated the constant innovation of international logistics for cross-border e-commerce. The proportion of crossborder e-commerce freight carried by the China–Europe Railway Express is growing rapidly, with the first cross-border e-commerce B2B export train launched in China. By the end of 2020, the total volume of cross-border e-commerce freight sent through the China–Europe Railway Express (Chongqing-Xinjiang-Europe Railway) had exceeded 7000 TEUs (CNR.cn 2021). Overseas warehouses have played an important role in stabilizing cross-border supply chains disrupted by COVID-19. According to statistics from the Ministry of Commerce of China, the number of overseas warehouses for cross-border ecommerce owned by Chinese enterprises has exceeded 1800, with a growth rate of 80% in 2020 and occupying an area of over 12 million square meters. Meanwhile,

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Fig. 10.1 The size of China’s cross-border e-commerce logistics market, 2016–2019. Source Related data published by the General Administration of Customs of the People’s Republic of China, Zhejiang Yeshitech Co., Ltd., Qianzhan Industrial Research Institute

China Customs is supporting the postal department in opening temporary crossborder mail routes to actively deliver mail and e-commerce goods in and out of the country. It has opened 15 temporary outbound ports and 13 temporary inbound ports so far (China Youth Network 2021).

10.2.4 Large Logistics Enterprises to Accelerate the Development of International Logistics 10.2.4.1

State-Owned Enterprises Continue to Raise the Service Level of International Logistics

To achieve mutually reinforcing “dual circulation” in domestic and international markets under the new development paradigm, state-owned enterprises have increased their international logistics construction, and continue to raise the professional levels of international logistics. The China Merchants Group is an active practitioner of the “Belt and Road Initiative”. As of the first half of 2020, the China Merchants Group’s global port network extended to 68 ports in 27 countries and regions, such as Sri Lanka’s Colombo Port and Hambantota Port, Turkey’s Kumport Terminal in the Port of Istanbul, the Port of Djibouti, the Port of Malta, the Port of Singapore, Thailand’s Port of Laem Chabang, Australia’s Newcastle Port, and Brazil’s Port of Paranagua, along with other important ports along the routes of the “Belt and Road Initiative” (Thinktank.com 2020). The key overseas model adopted by the China Merchants Group is the “Shekou Model” of “Port-Park-City” (“PPC”). It starts by constructing a port and then

10.2 The Development Status of International Logistics in China …

253

proceeds to promote interconnectivity and cooperation in competitive production capacity by integrating logistics services and developing integrated overseas parks. Built around the “Belt and Road Initiative”, the integrated logistics network of China Merchants Group has extended to 43 countries and regions. With 96 self-operated institutions, it is still expanding its network.

10.2.4.2

Private Enterprises are Actively Reconfiguring Their Global Logistics Layout

With the private economy gradually becoming an important engine driving China’s import and export growth in foreign trade, Chinese private logistics enterprises are also picking up the pace in reconfiguring their international logistics layout. In 2017, YTO Express acquired the On Time Group, which is the “first crossborder acquisition” by a Chinese private express logistics company. The international network of YTO Express has since expanded to more than 50 countries and regions around the world. In 2020, YTO Express opened many domestic and international routes such as Yantai-Tokyo, and Hangzhou-Kuala Lumpur-Sepang, which basically cover regions in Southeast and Northeast Asia. As of the end of 2020, YTO Express (International) had companies in 18 countries and regions around the world, with 46 self-built stations. Its business operations extend to over 150 countries along more than 2000 international routes (SSE.com 2021). In August 2020, JD Logistics acquired a controlling interest in KY Express, which started out as an air cargo business, for RMB 3 billion. In September, JD.com announced a strategic cooperation with Henan Civil Aviation Development and Investment Co., Ltd. The two companies will cooperate intensively to develop multimodal transport and an intercontinental air cargo system based around the “Aerial Silk Road”. As of December 2020, JD Logistics had 32 bonded and overseas warehouses in its cross-border network, with a total management area of 440,000 m2 and with established international routes to more than 220 countries and regions (Wang 2021). Cainiao Network Technology Co., Ltd’s international logistics trunk lines extend to more than 200 countries and regions worldwide, with a smart logistics backbone network linking 231 cross-border warehouses around the world. As of March 2020, Cainiao Network Technology Co., Ltd. was offering cross-border logistics services to 224 countries and regions worldwide with global partners. It has shortened delivery time to key countries from 70 days to less than 10 days (CE.cn 2020).

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10.2.4.3

10 Development and Prospects of International Logistics in China …

Foreign Investment Enterprises Accelerate Their Transformation into Integrated Whole Supply Chain Logistics Operators

Foreign investment enterprises are changing from logistics service providers to logistics integrators and supply chain service providers, with the core competitiveness of logistics significantly enhanced. For example, S. F. Holding Co., Ltd. and the HAVI Group jointly formed New HAVI, and acquired DHL’s supply chain business in Greater China to form SF DHL, a platform that is constantly updating and iterating its products and technologies to diversify and expand into high-value-added integrated logistics, constantly expanding its supply chain capacity and business revenue (CET.com 2021). In November 2020, Singapore’s YCH Group launched the ASEAN Smart Logistics Network (ASLN) and will collaborate on its first project, the Vinh Phuc Container Yard Logistics Center, with Vietnam’s T&T Group. It will be the first multi-modal logistics center in Vietnam that integrates land port functions and supply chain management functions. It will further strengthen the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity (CCI) through this hub in North Vietnam, enhancing China-ASEAN connectivity in trade and supply chains.

10.3 The Development Trend of International Logistics in China Under the New Development Paradigm Under the new development paradigm, the development trend of China’s international logistics is seen in these main areas: first, the gradual integration of China’s international and domestic logistics systems; second, China’s international logistics network pattern will be perfected; third, there will be more rational structuring of international freight transport and, fourth, there will be accelerated greening and intelligentization of international logistics.

10.3.1 International and Domestic Logistics Systems will Gradually Integrate Under the new development paradigm, China will continue to open up further through links running east and west, across the land and over the sea. As its land, sea, and air transport networks are constantly being perfected, with “three-dimensional interconnection” and intercommunication, China’s international and domestic logistics systems will gradually merge. The increasing connectivity between China’s coastal and inland regions will provide strong support for linkages both domestically and abroad. For example,

10.3 The Development Trend of International Logistics in China …

255

the Chongqing Municipal Government will continue to construct the New International Land-Sea Trade Corridor in the south to better connect the Western region with the ASEAN market; it will continue to promote the high-quality development of the China–Europe Railway Express in the west, and improve the service efficiency of the Yangtze River waterways in the east, by continuously optimizing the open and comprehensive three-dimensional international corridor along the river to the South China Sea. Construction of inland international logistics hubs will also be accelerated, to further enhance connectivity between China’s inland regions and the rest of the world. For example, the Xi’an Municipal Government is actively constructing the “Belt and Road Initiative” and the New International Land-Sea Trade Corridor in Western China, forming a channel to Central, South and West Asia and establishing itself as an international commerce logistics hub. In addition, air logistics will play an important role in building the new development paradigm. The Henan Provincial Government is aiming to build a logistics corridor that extends to the central, east, and west regions during the 14th Five-year Plan period, linking China with overseas countries. It will focus on building the Zhengzhou international air cargo hub, continue to improve its network of routes, and further enhance the influence and scope of the “Air Silk Road”.

10.3.2 The International Logistics Network Will Be Perfected To achieve the new development paradigm, China will accelerate the formation of a two-way international logistics network with internal and external connectivity, security, and efficiency. The functions and service levels of international logistics hubs will be further enhanced, and the network connectivity of international logistics will be improved constantly. In hub construction, China will build four hub clusters for international integrated transport, located in the Beijing-Tianjin-Hebei Region, the Yangtze River Delta City Group, the Guangdong-Hong Kong-Macao Greater Bay Area, and the ChengduChongqing Economic Circle. It will strive to expand and diversify its network of sea, land and air transport to the rest of the world. For example, the Shanghai Municipal Government is focused on building the most influential world-class aviation hub and consolidating its position as an international container hub port, to enhance the Yangtze River Delta’s function as a global hub. Chengdu forms an important node on the routes of the “Belt and Road Initiative”, the Yangtze River Economic Belt, and the New International Land-Sea Trade Corridor. The city will leverage its geographical advantage and build “twin support” for the Asia-Chengdu-Europe aviation hub and the Pan-Europe-Asia land port hub, as well as help speed up the construction of a strategic hinterland for domestic circulation and a gateway hub for domestic and international “dual circulation”.

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In channel construction, China is optimizing and improving its comprehensive transportation pattern, and is focused on building diversified international logistics corridors. China will focus on building seven international corridors for land transport—namely: the New Eurasian Continental Bridge, China– Mongolia-Russia, China–Central Asia–West Asia, China–Indochina Peninsula, China–Pakistan, China–Nepal–India, and Bangladesh–China–India–Myanmar. It will also further improve the four international maritime transport corridors— namely: corridors leading to the American Continents via Japan, South Korea and the Pacific Ocean; to Oceania via Southeast Asia; to Europe and Africa via Southeast Asia, South Asia and the Indian Ocean; and the “Ice Silk Road” across the Arctic Ocean. Additionally, China will continue to develop its air passenger and cargo channels.

10.3.3 Adjustments in the International Cargo Transportation Structure On the whole, China’s international logistics is changing from one that has developed relatively independently, to one focused on comprehensive and integrated development. As China’s road to its railway/waterway system is being reformed, its intermodal transport management is being standardized, and logistics quality and efficiency are being improved, its multimodal transport network will be perfected. The adverse impact of COVID-19, the congestion of international ports, the decline in terminal efficiency, the increased number of suspended shipments, and the Suez Canal blockage incident have all highlighted uncertainties that are present in ocean shipping. The China–Europe Railway Express is safe, punctual and less affected by the natural environment. Its freight cost is only 20–25% of air freight, and transport time is just 33–50% of ocean freight (China Traffic News 2021). The China–Europe Railway Express is becoming more and more attractive as an option for shipping cargo from China to Europe. At the same time, China is further upgrading the China section of the China–Europe Railway Express by building more train assembly centers for Central Asia and the China–Europe Railway Express to form a Eurasian transport corridor for international rail. As infrastructure is being perfected along the routes of the “Belt and Road initiative”, the freight volume of the China–Europe Railway Express will continue to grow. In international air freight, due to the significant increase in demand for import and export transportation, there will be more oversupply in air cargo, which will in turn lead to an expansion of air freight capacity for China.

10.4 Summary

257

10.3.4 The Greening and Intelligentization of International Logistics will be Further Accelerated The development of China’s transportation will be more focused on quality and efficiency, and China is promoting the construction of a secure, convenient, efficient, green, economic, and modern integrated transportation system. China’s international logistics will develop in the direction of greening and intelligentization. The concepts of new development and the new development paradigm put greater emphasis on green development that is focused on spatial development and ecological conservation. China will strive to achieve low carbon and high efficiency in its energy transport. For example, Tianjin Port has implemented green production, actively developed a low-carbon energy model, and vigorously used clean energy like liquefied natural gas to build a “Road-to-Railway + Bulk-to-Aggregate” double-demonstration world-class green port. Guided by the new development concept, China will further develop information technology, accelerate digitalization, networking and intelligentization, and continue to explore the high-quality development of international logistics. For example, Cainiao Network Technology Co., Ltd, a subsidiary of the Alibaba Group, is intensively utilizing modern technologies such as big data and cloud computing to continue to improve its eHub layout. By using digital technologies, it aims to optimize the logistics chain, ensure the efficiency and stability of international logistics, and gradually realize a global “72-h fast life”.

10.4 Summary This chapter introduces the development environment, current development situation, and development trend of China’s international logistics under the new development paradigm. As the world’s economic and political landscape undergoes profound adjustments, China proposes to build a new development paradigm. This requires further connecting of China’s domestic and international logistics systems. China has introduced a number of policies to step up efforts to develop international logistics. These are the main characteristics of China’s international logistics development: the “Belt and Road Initiative” has promoted the formation of China’s two-way openness in land-sea development pattern for international logistics; the network of free trade zones has basically been formed, enhancing interconnection between international logistics corridors and promoting the construction of international logistics hubs; smart customs and cross-border e-commerce logistics are constantly innovating, and the service capacity of China’s international logistics is improving rapidly. In the future, China’s domestic and international logistics systems will gradually integrate, with coastal and inland areas further connected; the service capacity of its two-way international and domestic logistics network will be more balanced; the different modes for transporting international cargo will develop in a coordinated manner and

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under a more rational transportation structure; and greening and intelligentization will become prominent features in the development of international logistics in China.

References Caijing.com (2021) Cainiao joins hands with Hong Kong Air Cargo to realize the maiden flight of Hong Kong eHub. http://tech.caijing.com.cn/20210329/4750733.shtml. Accessed 29 Mar 2021 CE.cn (2020) Cainiao plans ahead to boost the construction of international logistics system. http:// www.ce.cn/cysc/tech/gd2012/202003/31/t20200331_34583147.shtml. Accessed 31 Mar 2020 CET.com (2021) S.F. Holding: 2020 revenue will reach 154 billion yuan, moving towards an integrated logistics technology group. http://www.cet.com.cn/xwsd/2799787.shtml. Accessed 18 Mar 2021 China Traffic News (2021) Ten years of hardening and steady rise—a review and summary on the 10th anniversary development of China–Europe railway express. http://www.zgjtb.com/2021-03/ 12/content_258250.htm. Accessed 12 Mar 2021 China Youth Network (2021) In 2020, China became the only major economy in the world to achieve positive growth in merchandise trade. https://baijiahao.baidu.com/s?id=168886462178 5856403&wfr=spider&for=pc. Accessed 14 Jan 2021 CNR.cn (2021) Ten years of operation, what does China–Europe railway express (ChongqingXinjiang-Europe Railway) bring to Chongqing? http://cq.cnr.cn/tp/20210319/t20210319_525440 535.shtml. Accessed 19 Mar 2021 CRI.cn (2020) China actively enhances the capacity of international freight channels and promotes the smooth flow of international logistics. http://big5.cri.cn/gate/big5/news.cri.cn/20200418/3ad 96128-6840-1d70-645c-ddc82320e00c.html. Accessed 18 Apr 2020 CTN.com (2020) 5G full-scenario application smart port Xiamen landed. http://www.mot.gov.cn/ jiaotongyaowen/202011/t20201110_3486518.html. Accessed 10 Nov 2020 Economic Daily (2021) Ministry of commerce: the total foreign trade volume of the top 18 pilot free trade zones last year was 4.7 trillion yuan. https://www.sohu.com/a/448609182_118392. Accessed 4 Feb 2021 General Administration of Customs of the People’s Republic of China (2021a) In 2020, foreign trade imports and exports increased by 1.9% year-on-year, and exports increased by 4%—both the scale and share of foreign trade hit new highs in China. http://www.customs.gov.cn/customs/ xwfb34/mtjj35/3513954/index.html. Accessed 15 Jan 2021a General Administration of Customs of the People’s Republic of China (2021b) List of ports opened to the outside world by regions. http://www.customs.gov.cn/gkb/2691150/2691115/3663064/index. html. Accessed 10 May 2021 Hu S (2020) Special topic of cross-border e-commerce logistics industry in transportation industry: wide track, high growth, waiting for giants. https://www.sgpjbg.com/baogao/20224. html. Accessed 28 Sept 2020 Ministry of Commerce of China (2020) Report on China’s foreign trade situation in 2020 (Autumn 2020). http://zhs.mofcom.gov.cn/article/cbw/202012/20201203021345.shtml. Accessed 23 Jan 2021 Ministry of Commerce of China (2021) China’s business development in 2020. http://www.mof com.gov.cn/article/i/jyjl/j/202101/20210103035550.shtml. Accessed 30 Jan 2021 Ministry of Transport of the People’s Republic of China (2020). A new chapter in accelerating the construction of a strong transportation nation—on the release of the White Paper ‘The Sustainable Development of China’s Transportation.’ https://www.mot.gov.cn/jiaotongyaowen/202012/t20 201223_3506897.html?from=timeline. Accessed 23 Dec 2020

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People’s Daily (2020) Qingdao Port was rated as the No. 2 business environment for China’s top ten shipping container ports. http://www.customs.gov.cn//customs/xwfb34/mtjj35/3480941/ index.html. Accessed 24 Dec 2020 Qianzhan.com (2021) Analysis of the market status and development prospects of China’s crossborder e-commerce logistics industry in 2020 Policy boosts the market size to exceed 2 trillion. https://www.qianzhan.com/analyst/detail/220/210114-24f06757.html#comment. Accessed 14 Jan 2021 SCOL.com (2021) How big is the impact of these reforms in the Chengdu region? https://sichuan. scol.com.cn/ggxw/202103/58104762.html. Accessed 31 Mar 2021 SSE.com (2021) YTO express 2020 annual report. http://static.sse.com.cn/disclosure/listedinfo/ann ouncement/c/new/2021-04-28/600233_20210428_31.pdf. Accessed 28 Apr 2021 Sun X (2021) China customs handed over 2020 transcripts to play a functional role and serve the overall situation of opening up. http://www.customs.gov.cn//customs/xwfb34/mtjj35/3535905/ index.html. Accessed 1 Feb 2021 The Web Portal of People’s Government of Guangxi Zhuang Autonomous Region (2021) The transportation department of the autonomous region held a discussion with Guangxi Beibu Gulf International Port group. http://jtt.gxzf.gov.cn/xwdt/tpxw/t8014735.shtml. Accessed 20 Feb 2021 Thinktank.com (2020) Under the epidemic situation, China Merchants Group continued to promote the exploration and practice of the “Belt and Road” project. http://thinktank.xinhua08.com/a/202 00930/1957882.shtml?f=arelated. Accessed 30 Sept 2020 Wang X (2021) Layout German, British and Dutch overseas warehouses? JD Logistics’ IPO business experience: warehouse. https://baijiahao.baidu.com/s?id=1692544863942986691&wfr=spider& for=pc. Accessed 24 Feb 2021 Xinhuanet.com (2019) Remarks by Xi Jinping at the closing ceremony of the China–France global governance forum (full text). http://www.xinhuanet.com/world/2019-03/26/c_1124286585.htm. Accessed 26 Mar 2019 YICAI.com (2021) Top 10 foreign trade cities in 2020: Shanghai, Shenzhen and Beijing are the top three, and Chengdu has the fastest growth rate. https://www.yicai.com/news/101003332.html. Accessed 29 Mar 2021 Yidaiyilu.com (2021) In 2020, Chinese enterprises’ non-financial direct investment along the “Belt and Road” reached US$17.79 billion. https://www.yidaiyilu.gov.cn/xwzx/gnxw/162412. htm. Accessed 22 Jan 2021 Yuan J (2021) Tianjin customs promotes the in-depth application of intelligent map review in inspection work. http://www.customs.gov.cn//customs/xwfb34/302425/3511401/index.html. Accessed 14 Jan 2021 ZGSYB.com (2020) Blockchain powers Tesla’s “Shanghai speed”, Shanghai port sword refers to the “discourse power” of new international logistics technology. http://www.zgsyb.com/news. html?aid=543120. Accessed 2 Mar 2020

Chapter 11

Rural Logistics Construction in China Under the Rural Revitalization Strategy Jianhua Xiao

Rural revitalization is a major strategy proposed by the central government of China, and also an effective way to resolve issues concerning agriculture, countryside and farmers—the “Three Rural Issues”—in the new era. Implementing the rural vitalization strategy effectively and comprehensively is the key to accurately grasping the key development tasks at the present time. As a pioneering industry that helps transform rural commodity circulation and upgrade rural consumption, rural logistics plays an important role in supporting such strategy. In recent years, China’s rural logistics market has been expanding, its logistics network has been constantly improving, its modes of development has been rapidly innovated and its degree of specialization has been greatly enhanced. The rural logistics infrastructure will further improve as the rural revitalization strategy becomes more intensively implemented. This will usher in a new period of rapid development in rural logistics construction, with new technologies boosting the development of intelligent rural logistics. This chapter consists of three sections. Section 11.1 discusses the background and epoch-making significance of the rural revitalization strategy, summarizes the definitions and characteristics of China’s rural logistics, and describes the evolution of its system. Furthermore, it outlines the importance of rural logistics construction in implementing the rural revitalization strategy. Section 11.2 introduces China’s rural logistics construction under the rural revitalization strategy in detail and analyzes the factors driving its construction. Section 11.3 discusses the main problems and development trends faced by rural logistics construction in China.

11.1 The Importance of Rural Logistics Construction in Implementing the Rural Revitalization Strategy The rural revitalization strategy is a major strategic policy that will help build a moderately prosperous society and offer important guidelines for the rural projects of Chinese governments at every level in the new era. Rural logistics is a fundamental © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2022 J. Xiao et al., Contemporary Logistics in China, Current Chinese Economic Report Series, https://doi.org/10.1007/978-981-19-5833-5_11

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support industry for rural areas, and highly important in introducing agricultural products to the cities and drawing agricultural resources and livelihood materials into the rural areas. At the same time, rural logistics construction helps the modernization of agriculture and rural areas, promotes the integrated development of the primary, secondary and tertiary industries of rural areas, and accelerates urban– rural integration and the building of a new “industrial-agricultural-urban–rural” relationship.

11.1.1 The Background and Epoch-Making Significance of the Rural Revitalization Strategy 11.1.1.1

Background of the Proposed Rural Revitalization Strategy

In October 2017, the Report of the 19th National Congress of the Communist Party first proposed to implement a “rural revitalization strategy” to accelerate the modernization of agriculture and rural areas. In December 2017, President Xi Jinping put forward the concept of “comprehensive rural revitalization” for the first time at the Central Rural Work Conference, and clarified the conceptual ideology, phased objectives and tasks, and basic principles for implementing the rural revitalization strategy. In January 2018, Document No. 1 of the Central Government, “Opinions on Implementing the Rural Revitalization Strategy”, elaborated on these concepts. During the Two Sessions,1 General Secretary Xi Jinping delivered further instructions on the ways to implement “comprehensive rural revitalization”. In September, the Central Committee of the Communist Party of China and the State Council issued the Strategic Plan for Rural Revitalization (2018–2022), which provides detailed work priority plans and policy measures. In February 2020, Document No. 1 clearly proposed planning all stages of rural development, constantly raising the standards of rural construction, and perfecting the institutional framework and policy system of the “Three Rural Issues” in the new era. In October, the Recommendations of the CPC Central Committee on the Formulation of the 14th Five-Year Plan for Economic and Social Development and the Long-Range Goals Through to 2035 proposed to comprehensively implement the rural revitalization strategy, with industries helping agriculture and with cities helping the rural areas. China will foster a new “industrial-agricultural-urban–rural” relationship with industries and agriculture, and urban and rural areas complementing each other, working towards coordinated development to achieve common prosperity. At the same time, the modernization of agriculture and rural areas will be accelerated, effectively linking and consolidating work on poverty alleviation and rural revitalization. 1

The National People’s Congress of the People’s Republic of China and the Chinese People’s Political Consultative Conference are collectively referred to as “the Two Sessions”.

11.1 The Importance of Rural Logistics Construction in Implementing …

11.1.1.2

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The Epoch-Making Significance of the Rural Revitalization Strategy

The rural revitalization strategy is a major strategic proposal of the 19th Party Congress. It is of great significance as a major historical undertaking in building a moderately prosperous society and a modern socialist country. First, the rural revitalization strategy reflects China’s realistic needs for rural development. During the building of New China, the rural areas have contributed greatly to China’s industrialization and urban construction. However, compared with urban areas, China’s rural development is relatively backward, with an unstable agricultural foundation and low income for the farmers. Implementing the rural revitalization strategy is a major undertaking of the Communist Party to grasp the construction rules and changing characteristics of urban–rural relationship, which will help hundreds of millions of farmers achieve a better life. Second, implementing the rural revitalization strategy is a vital prerequisite in building a modern socialist country. Without agriculture and rural areas being modernized, there will be no modernization of China as a whole. The relationships between industries and agriculture and between the urban and rural areas are key issues in the modernization process. The Party Central Committee has always focused on rural revitalization, insisting on prioritizing the development of agriculture and rural areas. Third, implementing the rural revitalization strategy is a new breakthrough in solving “Three Rural Issues” in the new era. As socialism with Chinese characteristics enters a new era, the poor infrastructure and sluggish economic development of the rural areas are serious challenges that China faces. The rural revitalization strategy is a continuation and evolution of the policies on the “Three Rural Issues”, which will guide and focus agricultural and rural development in the new era. Implementing the rural revitalization strategy will expand income channels for farmers, comprehensively improve the production and living conditions of rural areas, and promote social equity.

11.1.2 The Definitions and Characteristics of Rural Logistics in China and the Evolution of Its System 11.1.2.1

The Definitions of Rural Logistics

Rural logistics refers to the physical movement of goods dispatched from or received in rural areas, encompassing activities like handling, loading/unloading, distribution processing, storage, and transportation and distribution related to the production, living and economic activities of rural residents. The objects of rural logistics include agricultural resources, agricultural products, rural consumer goods, and recyclable and renewable resources generated by agricultural production and living.

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Fig. 11.1 The composition of rural logistics

Rural logistics is different from agricultural products logistics and agricultural logistics (He et al. 2013). Compared with agricultural products logistics, rural logistics has a broader range of service objects, which include not only agricultural products, but also agricultural resources, daily necessities, and recyclable and renewable resources generated by farmers’ production and living. In the same way, rural logistics is not the same as agricultural logistics. Agricultural logistics is classified as a form of industrial logistics, consisting of the operation and processing of agricultural materials for production (procurement, storage, distribution, and productive consumption) and the different operational stages of agricultural products (production, distribution processing, packaging, transportation, storage, distribution, sales, consumption and information communication, etc.). It is an important component of rural logistics. Hence, rural logistics consists of not only agricultural production materials logistics and rural consumer goods logistics, but also agricultural products logistics and rural renewable resources logistics. It is a composite logistics system serving agricultural production and rural living through diverse logistics activities, as shown in Fig. 11.1.

11.1.2.2

The Characteristics of China’s Rural Logistics

Due to the inherent nature of agricultural and rural production and living activities, rural logistics is strongly characterized by its seasonality, time sensitivity, discreteness, diversity, and complexity (He et al. 2013). First, there is the seasonality of logistics demand. Agriculture is an industry with a long production period that relies on artificial cultivation for its products, making use

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of natural laws governed by animal and plant life cycles. The agricultural resources required for agricultural production are seasonal in their variety, quantity, and time sensitivity. The related agricultural resource logistics also show seasonal traits. Also, agricultural products are marketed seasonally and consumed throughout the year, which leads to the strong seasonality of agricultural logistics. Second, there is the time-sensitive nature of agricultural logistics. Agricultural and agricultural sideline products are mostly fresh produce that can easily rot and deteriorate, with strong time sensitivity. The depreciation rate is too high during the sales process, meaning that it must be supported by cold-chain logistics. Due to the time-sensitive nature of fresh agricultural products, rural logistics requires precise temperature and time control in the different stages of packaging, transportation, storage, circulation, and processing. Third, there is the discrete nature of its participating players. China has a vast rural land area, with a relatively scattered distribution of farm households. Since the implementation of the household responsibility system in China, each farmer is a single production and management unit. The farmers themselves undertake the logistics responsibilities of purchasing, cultivating, harvesting, selling, and transporting. Most farmers are both producers and market players in rural logistics, which has led to a large number of individuals and small-scale organizations with discrete characteristics involved in rural logistics. Fourth, there is the diversity of demand for logistics services. Geographical and natural conditions are important factors affecting the variety and quality of agricultural and rural sideline products, as well as their production methods, resulting in the diversity of rural logistics. Different production methods demand different logistics services, and the same service content can also lead to different levels of logistics costs. Fifth, there is the complexity of logistics operations. China’s rural product output is massive, with complex logistics operations. Also, due to China’s extensive rural areas and its discrete agricultural production methods, it is more difficult to rationally organize rural logistics. Furthermore, due to the urban–rural disparity and the economic and cultural differences between regions, it is also more difficult to integrate rural logistics with other logistics systems.

11.1.2.3

The Evolution of the Rural Logistics System in China

Since its founding in 1949, China has continuously promoted rural logistics construction. The evolution of China’s rural logistics system can be generally divided into four stages, based on the different phases of its major policies and rural economic development. (1) The Emergence and Germination Stage (1949–1978) From the early days of its founding in 1949 to the reform and opening-up era in 1978, China adopted a planned economic system, in which the state directed the production, distribution, and supply of commodities. All materials were

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distributed according to state plans, with state-owned businesses and cooperatives being the main distributors. During this period, rural goods were mainly transported by cars, trains or ships to freight stations for simple sorting, and then transported to state-owned warehouses for storage and distribution, sorted according to regional needs. During this stage, the rural transport infrastructure was very poor. Most warehouses were single-storey and unroofed, and loading/unloading and handling were mostly done manually with the help of simple machinery. Product circulation was recorded in physical books, and there was no special concept of rural logistics. (2) The Initial Exploratory Stage (1979–2005) After its reform and opening-up, China’s economy developed rapidly. Its agricultural production increased significantly and rural logistics entered the exploratory stage. In 1991, the “Eighth Five-Year Plan”2 proposed to enhance the construction of storage facilities and commercial outlets, accelerate the speed of material circulation, and reduce the number of transits in order to raise the socialization and specialization levels of material circulation. In 1996, the “Ninth Five-Year Plan”3 proposed to actively develop modern circulation organizations to form wholesale markets for bulk agricultural products. In 2000, the “10th Five-Year Plan”4 proposed to further deepen market-oriented reforms of the agricultural circulation system and allow intermediary organizations to actively promote the circulation of agricultural products. In 2001, China joined the WTO. Foreign rural logistics models and business concepts began to influence the development of China’s rural logistics, stimulating the growth of agricultural logistics demand. In 2003, the Ministry of Transport started a new wave of rural road construction, followed by rapid infrastructure construction of rural logistics. In 2005, with the launch of the “Thousands of Villages” market project by the Ministry of Commerce, China began to actively develop a modern commodity circulation network for its rural areas. (3) The Rapid Development Stage (2006–2016) In 2006, the 11th Five-Year Plan emphasized the need to resolve the “Three Rural Issues”. The Plan proposed to improve the rural circulation system, accelerate the transformation of the cooperative network and extend urban commercial outlets to the rural regions; deepen reforms of the rural circulation system, and actively tap into the rural market. During the “11th Five-Year Plan” period, the Ministry of Commerce built 100 large modern wholesale markets for agricultural products and nurtured 100 large commodity distribution enterprises. In 2006, the Ministry of Transport implemented the Five Year, 100 Billion RMB Plan, investing 100 billion RMB in rural roads for five consecutive years and actively constructing rural roads linking villages. In 2014, the Ministry of 2

The “Eighth Five-Year Plan” refers to China’s economic and social development plan for 19911995. 3 The “Ninth Five-Year Plan” refers to China’s economic and social development plan for 1996– 2000. 4 The “10th Five-Year Plan” refers to China’s economic and social development plan for 2001–2005.

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Commerce selected some rural areas in China for comprehensive e-commerce demonstration projects. In the same year, the State Post Bureau launched the Express Deliveries to the Countryside Project. In 2015, the State Council issued the Several Opinions on Deepening Reforms and Innovation to Speed Up Agricultural Modernization and Guiding Opinions on Promoting and Accelerating the Development of E-commerce in Rural Areas, encouraging firms to quickly enhance the rural logistics system, by developing third-party distribution and joint distribution, building cold-storage facilities, and improving concentration and distribution at agricultural production areas. Agricultural logistics and related parks have developed rapidly. In 2016, the e-tailing turnover of China’s agricultural products was 220 billion RMB, an increase of more than 50% year on year. There were 200 agricultural products’ e-commerce parks, accounting for 12% of all e-commerce parks (Hong and Hong 2017). (4) The Rural Revitalization Stage (2017-present) In 2017, the Party Central Committee first proposed to implement the rural revitalization strategy to accelerate the modernization of agriculture and rural areas, launching the rural revitalization stage in China’s rural logistics construction. In 2017, retail sales for China’s rural networks exceeded one trillion RMB for the first time, reaching 1.24 trillion RMB, up 39.1% year on year. In 2018, the Central Government’s Document No. 1 proposed to speed up the modernization of rural circulation, build a modern cold-chain storage and logistics system for agricultural products, and achieve basic modernization of agriculture and rural areas by 2035. In 2020, the State Post Bureau issued the Three-Year Action Plan for Introducing Express Deliveries into Villages (2020–2022), incorporating rural logistics construction in its strategic deployment plan. Driven by the rural revitalization strategy, rural logistics has been expanding. Its circulation network has gradually improved, and its modes of service have undergone innovation and upgrading. The construction of logistics parks has become a hotspot for development.

11.1.3 The Importance of Rural Logistics Construction in Implementing the Rural Revitalization Strategy 11.1.3.1

It Helps Promote the Integrated Development of Primary, Secondary, and Tertiary Industries in Rural Areas

With the continuous advancement in rural logistics construction, the integration of primary, secondary, and tertiary industries in rural areas will be accelerated, which will help extend the agricultural industry chain, realize the gradual and coordinated development of the agricultural, logistics and information industries, and enable farmers to reasonably share the value-added benefits of the entire industry chain. In rural logistics construction: (1) Each region will make use of the infrastructure and resource advantages of its transport, marketing, and postal services to reasonably plan

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a rural logistics pattern and share resources; (2) each region will nurture new agricultural firms with well-developed industry chains, high technical level and strong driving ability, and (3) each region will build a cold-chain logistics system and logistics nodes in advantageous production areas to promote the integrated development of agricultural production, processing, and circulation.

11.1.3.2

It Helps Promote Urban–Rural Integration and a New “Industrial-Agricultural-Urban–Rural” Relationship

Logistics is an important bridge in the exchange of essential factors, and rural logistics provides an important linkage in the integrated development of the urban and rural areas. Rural logistics construction helps integrate resources, improve circulation efficiency, and promote the two-way movement of essential factors between urban and rural areas: (1) rural logistics construction requires eliminating deficiencies in rural logistics infrastructure, upgrading rural infrastructure, promoting interconnectivity of urban and rural infrastructure, and gradually narrowing the infrastructure gap between urban and rural logistics; (2) rural logistics construction can further build a sound public service system and help communal building and sharing of public service resources, and (3) with increasing collaboration between rural and urban logistics, urban and rural resources are increasingly integrated, which helps to create a fair and competitive environment, and facilitate the socialization of logistics services and the marketization of resource usage.

11.2 Analysis of the Progress and Driving Factors in China’s Rural Logistics Construction Under the Rural Revitalization Strategy Since the implementation of the rural revitalization strategy, rural logistics construction in China has been developing rapidly, helped by multiple factors such as consistently favorable policies, technological progress, and the dual rise in demand. The scale of the rural logistics market continues to expand, and its network is constantly being improved. A rural logistics node system at the “county, township, and village” levels is gradually being formed. At the same time, rural logistics continues to innovate its modes of development, and its degree of specialization has been greatly enhanced, with logistics enterprises now eager to expand into rural areas.

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11.2.1 Progress Made in China’s Rural Logistics Construction Under the Rural Revitalization Strategy 11.2.1.1

Rural Logistics Continues to Expand in Scale

With China’s urbanization, the rise in household consumption, and the widespread use of information technology in rural areas, rural logistics in China is developing rapidly and its market continues to expand. From 2017 to 2019, retail sales of social consumer goods in China’s rural areas continued to grow, with an average annual growth rate of 7.7%, creating a strong domestic demand for rural logistics. Due to the impact of COVID-19, retail sales of consumer goods in rural China fell to 5.29 trillion RMB in 2020, but still grew by 1.71% compared to 2017, as seen in Fig. 11.2. From 2017 to 2020, rural e-tailing in China achieved an average annual growth rate of 13.0%, as seen in Fig. 11.3. In 2020, domestic rural e-tailing was 1.79 trillion RMB, up 8.9% year on year. The e-tailing value of rural physical goods was 1.63 trillion RMB, up 10.5% year on year. Sorted by market segments, the top three sales categories were clothing and footwear, daily necessities, and furniture, with 28.4%, 17.7%, and 8.9% of total sales, respectively. Due to COVID-19, the retail sales of Chinese and Western pharmaceutical products, tobacco and alcohol, communication equipment, food items, and edible oil have grown significantly, with year-on-year growth rates of more than 30%. From 2017 to 2020, the total logistics for agricultural products in China grew steadily at an average annual growth rate of 7.5%, as shown in Fig. 11.4. In 2020, the total logistics value of China’s agricultural products was 4.6 trillion RMB, up 3.0% year on year, with a growth rate of 0.1 percentage points lower than the same period

Fig. 11.2 Retail sales and growth rate of social consumer goods in China’s rural areas, 2017–2020. Source Compiled from the China Statistical Bulletin of National Economic and Social Development (2017–2020), published by the National Bureau of Statistics of China

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Fig. 11.3 Retail sales and growth rate of e-tailing products in China’s rural areas, 2017–2020. Sources Compiled from (i) Online Retail Sales and Growth in Rural China (2015–2019), published by the Foresight Industry Research Institute, and (ii) related data in the Development of Online Retail Market in 2020, published by the Ministry of Commerce of China

Fig. 11.4 Total logistics value and growth rate of agricultural products in China, 2017–2020. Source Compiled from the National Logistics Operations Bulletin (2017–2020), published by China Federation of Logistics and Purchasing

the year before. In 2019, the cold-chain logistics volume for the four agricultural product categories, namely, fruits, vegetables, meat, and seafood products, reached 213.7 million tons, up 24.8% year on year. Furthermore, the rural express industry is growing rapidly. In 2020, more than 30 billion express parcels were delivered to or posted from rural areas. The total value

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of industrial products delivered to rural areas and agricultural products delivered to the cities was more than 1.5 trillion RMB.

11.2.1.2

The Network of Rural Logistics Continues to Improve

As the rural revitalization strategy is being intensively implemented, China’s rural logistics construction has also intensified. The government’s support policies for logistics have favored rural areas, resulting in more resources and essential elements being allocated to rural logistics construction. Every region is striving to enhance rural transport infrastructure, actively construct rural logistics parks, and improve the “last kilometer” outlet pattern. Rural logistics has achieved good results in the construction of networks. The first way it achieved this is by continuously improving the rural transport infrastructure. In 2020, 269,000 km of rural roads were reconstructed, with 2.2 billion RMB used to reconstruct 15,500 km of rural roads destroyed by disasters. As of March 2021, the total mileage of rural roads in China had exceeded 4,350,000 km, an increase of 8.5% compared with 2017, forming a basic network of rural roads reaching into every village and connecting the urban and rural areas. The second initiative is by forming a rational pattern of rural logistics parks and distribution centers for agricultural products. For example, in April 2020, Guigang City in the Guangxi Zhuang Autonomous Region issued the Conceptual Plan for Guangxi’s Guigang Comprehensive (Rural) Logistics Park, proposing to build a multi-functional and comprehensive logistics park. The total planned area is about 81 hectares, and includes an intelligent cold-chain logistics zone and a warehousingand-distribution zone for rural logistics. At the same time, the park can function as a sorting, storage, and distribution center for fresh products, allowing for the physical expansion of rural logistics. Another example is the Anqiu Agriculture and Grain Logistics Park in Shandong Province. This park, included in the province’s key construction projects, is under the national shopping basket program5 and a key project of Weifang City. It has an area of 50.7 hectares, with a total investment of 2.2 billion RMB. It includes a vegetables-and-fruits zone, an agricultural supply-and-tools zone, a storage zone, a cold and fresh seafood products zone, an intelligent logistics zone, and areas with regulated low or constant temperature functions. Another example can be seen in Guangxi’s Shanglin County. This county has accelerated the construction of an agricultural products distribution center. The center has an area of five hectares, with a total investment of about 128 million RMB. It has three functional zones: an agricultural products sorting-and-distribution hall, a warehousing-and-distribution center for cold-chain logistics, and a central kitchen food processing area. The center is committed to building an industrialized, standardized, and large-scale distribution center for agricultural products.

5

The “shopping basket program” was proposed by the Ministry of Agriculture and Rural Affairs in 1998, to address the chronic shortage of food supplies in China.

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The third approach is by quickly improving the terminal outlets of rural logistics infrastructure. In 2020, the Ministry of Commerce continued to support rural logistics infrastructure through “demonstration counties6 ”, with an additional 235 new demonstration counties selected. There are now 1,300 demonstration counties in total. China has built 2,100 county-level public service centers and logistics distribution centers for e-commerce, 137,000 e-commerce service stations in villages, and basically achieved full township coverage. Moreover, in 2020, China made great strides in the construction of cold storage and refrigerated facilities for agricultural products at the production places. It supported 11,000 family farms and farmers’ cooperatives, and built nearly five million tons of cold storage and refrigerated facilities at the places of production that year.

11.2.1.3

Rural Logistics Continue to Innovate Its Modes of Development

As the rural revitalization strategy is being intensively implemented, provincial and municipal governments are encouraging enterprises to innovate their service modes for rural logistics and create diverse business models for integrated development in order to enable resource sharing and boost the organizational efficiency of rural logistics operations. For example, by innovating rural road passenger and cargo transport, Pingdingshan City in Henan Province is actively implementing the urban–rural passenger transport + rural logistics + postal express model to upgrade from “express delivery to the countryside” to “express delivery to the village,” reducing delivery time from “one delivery every other day” to “two deliveries a day”. As of March 2021, Pingdingshan City has built 59 integrated passenger, cargo and postage development lines, three county-level integrated passenger, cargo and postage centers, 43 township comprehensive transport service stations, and 683 village-level service outlets. It operates a fleet of 214 buses and 37 special freight line vehicles, and has delivered a total of 2.48 million postage and express parcels. Another example is the new rural e-commerce + urban–rural integration + solving the last kilometer model pioneered by Shengzhou, Zhejiang Province, which has been included as one of the six innovative rural logistics projects in Zhejiang Province. This model makes use of passenger transport resources, integrating them with the resources of the express industry to realize the joint distribution and management of express mail between villages and remote mountainous areas. At present, there are 293 rural service outlets in Shengzhou, covering four streets, 10 towns and one township, basically achieving 100% express delivery coverage in administrative villages, with an annual delivery volume of more than 100,000 parcels. A further example can be seen in Feng County, Jiangsu Province, which has integrated social resources and is exploring the rural logistics business model of 6

“Demonstration counties” refer to counties with outstanding achievements and distinctive characteristics that serve as exemplary role models.

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“resource sharing”. Specifically, it does so first by opening its urban logistics distribution center to commodity suppliers free of charge. It makes use of the suppliers’ manpower, finances, and facilities to share warehouses, work personnel, logistics vehicles, urban and rural distribution, equipment and facilities, in order to reduce logistics operating costs. It also organically integrates the online and logistics distribution network, forming a common integrated network of passengers and goods. Last, it organically integrates commerce logistics distribution and agricultural distribution, using public buses to distribute small-item packages to cities and villages. It has also opened special logistics lines to transport large items to and from cities and villages, effectively integrating passenger and freight resources.

11.2.1.4

The Degree of Rural Logistics Specialization Has Increased Significantly

Since the implementation of the rural revitalization strategy, new-generation Internet technologies such as artificial intelligence, 5G, and Big Data have been widely used in rural areas. The degree of rural logistics specialization has been continuously enhanced. For example, Huimin County, Shandong Province uses the Xiniao joint distribution system of Cainiao networks for its e-commerce + rural express joint distribution project, creating an intensive and efficient rural joint distribution system. This system utilizes Big Data algorithms, IoT devices, digital intelligence, and e-order distribution technologies to help enterprises transfer and process express information online, thus improving processing efficiency. Another example can be seen in She County, Hebei Province. The county has used information technology to create a rural logistics platform—an integrated “passenger transport + freight” information platform. This platform can handle online transactions, transport data organization, real-time monitoring, settlement and payment, Big Data analysis, and other service functions to promote the high-quality development of rural logistics. In 2019, it was used for 80% of deliveries between the county and township-level outlets, with online appointment booking and real-time monitoring functions. A further example can be seen in Xiushan County, Chongqing. The country has launched a hub-type e-commerce cloud storage system in Xiushan (Wuling) Modern Logistics Park in Southwest China, realizing automated boxing, automated packing, and automated sorting. Its warehouse utilization rate, pallet utilization rate, and picking efficiency have increased by 145%, 42%, and 30%, respectively. The rate of cargo difference and cargo loss has decreased to 0.05%, and the comprehensive logistics cost has decreased by 5% (Liu and Xie 2018). In addition, local governments are also actively promulgating rural logistics standards and raising the level of specialized services in rural logistics. For example, working in collaboration with Hubei Institute of Quality and Standardization, the Hubei Kanghua Intelligent Logistics Park combined the construction and operational experience of Chibi’s rural logistics three-level distribution system, to develop four

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specification guidelines—Specifications for the Three-Level Distribution of Rural Logistics, Service Regulations for County-Level Rural Logistics Warehouses and Operation Centers, Construction Specifications for County-Level Rural Logistics Warehouses and Operation Centers, and Construction Specifications for Integrated Service Stations in Towns and Villages. Based on these standardizations, it strives to achieve the “five unities” in the construction and operation of rural logistics outlets— unity in decorative design, unity in station signage, unity in facility features, unity in service range, and unity in service standards (Jin 2018). The Transport Department of Anhui Province issued the Construction Standards for Anhui Rural Logistics Network Node (for Trial Implementation). These standards stipulate the definitions, functions, site selection principles, station layout principles, facility configuration, and construction and equipment requirements for county-level rural logistics centers, rural logistics service stations, and village-level rural logistics service outlets in the province.

11.2.1.5

Logistics Enterprises Are Expanding Their Networks into Rural Markets

With the emergence of the rural consumer market, Best Express, Deppon Express, ZTO Express, and SF Express have increased their market presence in rural areas, continuously expanding their networks with new business forms to boost the rapid development of rural logistics. They achieved this first by expanding their business layout and exploring new business formats. For example, during the COVID-19 outbreak, Best Express provided live streaming, channel sales, and other professional services under the “Prioritize Farm Products” Assistance Program for farmers. It gave live streaming of pineapples in Xuwen, Guangdong, orah mandarins in Guangxi, and navel oranges in Zigui, Hubei. As of March 2020, the “Prioritize Farm Products” program had facilitated the sale and transport of more than 50 types of agricultural products from over 30 regions across China, with a cumulative agricultural product sales volume of more than 5.3 million kilograms and generating over 43 million RMB in profits. Through its large express delivery and transfer system, Deppon Express provides logistics solutions for Xinjiang’s fresh fruits in timely delivery, secure packaging, transport, and sales. In 2019, through its systematized large-scale operations, the Northwest Agriculture Products Division of Deppon Express increased Deppon Express’s share in Xinjiang’s Hami melon market from 20 to 85%. Second, they increased outlets to raise their coverage rate in townships. As of May 2020, ZTO Express had 190 new township outlets nationwide in 13 provinces and autonomous regions, raising its township coverage rate to 91.3%. Best Express, on the other hand, had more than 20,000 service outlets in townships and rural areas, with a township coverage rate of 93%. This is expected to reach 50,000 by the end of 2022. SF Express has built 35,000 township-level outlets and 28,000 village-level outlets by expanding its rural service network and increasing its outlets. It is expected to construct 100,000 village-level service stations by 2021.

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Third, they innovated models to boost new development. For example, JD Logistics has launched the rural joint distribution mode to build integrated service stations based on joint distribution, in over 700 remote townships with high logistics coverage costs and lengthy delivery times. In July 2019, Cainiao Network launched a smart joint distribution project for rural express logistics, developed around the joint express distribution + agricultural goods selling to different markets model. At the same time, direct sales of agricultural products at the place of origin has been boosted by the construction of upstream logistics centers for agricultural products in core production areas, as well as an integrated “production + transportation + marketing” agricultural supply chain in places of production. As of May 2020, Cainiao has launched its “rural express joint distribution” in more than 1,000 counties nationwide, setting up more than 1,000 county-level joint distribution centers and more than 30,000 township and village-level joint distribution outlets. JD Logistics has launched the rural joint distribution mode to build comprehensive service outlets based on joint distribution in more than 700 remote rural areas with high logistics costs and lengthy delivery times.

11.2.2 Analysis of Factors Driving China’s Rural Logistics Construction Under the Rural Revitalization Strategy 11.2.2.1

Consistently Favorable Government Policies

After the rural revitalization strategy was proposed, the Chinese government introduced a series of supporting policies to promote and guide the rapid development of rural logistics in China. In January 2018, Document No. 1 of the Central Government, Opinions on the Implementation of the Rural Revitalization Strategy, offered the first suggestions in the comprehensive implementation of the rural revitalization strategy, making demands to develop infrastructure and agricultural cold chains. In June, in the document Guiding Opinions of the CPC Central Committee and the State Council on the Three-Year Action Plan to Win the Battle against Poverty, the State Council further proposed to improve rural cold-chain logistics distribution and accelerate the Express Deliveries to the Countryside project, to lay a good foundation for the rural revitalization strategy. In September, the Central Committee of the Communist Party of China and the State Council issued the Strategic Plan for Rural Revitalization (2018–2022) to strengthen planning and direction. In January 2019, Document No. 1 of the Central Government, Several Opinions on Prioritizing the Development of Agriculture and Rural Areas and Doing a Good Job in the ‘Three Rural Issues, made provisions to comprehensively implement the rural revitalization strategy. In the same month, the Ministry of Transport issued the Opinions on Accelerating the Construction of Rural Transport Service Stations and Improving the Rural Logistics Node Network System. It outlines the higher demands

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expected of the coverage rate, modes of operation, and informationization level of rural logistics network nodes. In August, the Ministry of Transport, the State Post Bureau, and the China Post Group Corporation jointly issued Opinions on Further Integrating Transport, Postal and Express Services, to Promote the High-Quality Development of Rural Logistics. The document emphasized the communal building and sharing of network nodes, the shared and complementary usage of capacity resources, unified standards and regulations, and integrated enterprise innovation to promote the integrated development of transport, postal, and express services. In December, the Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Commerce jointly issued the Guiding Opinions on Implementing the ‘Internet-Plus Agricultural Products into the Cities’ Project. It clearly proposed to build a market-oriented agricultural production system, construct more infrastructure at the places of production, further enhance agricultural logistics construction, and improve the agricultural sales network. In February 2020, Document No. 1 of the Central Government, Opinions on Doing a Good Job in the ‘Three Rural Issues’ to Realize a Moderately Prosperous Society as Scheduled, proposed a series of initiatives on rural road construction, network communication coverage, and the pilot projects on “digital villages”. In November, the Ministry of Transport issued the Notice on Doing a Good and Comprehensive Job in Building Rural Roads under the ‘Road Chief Accountability System. The Notice aims to promote “four good in rural roads”7 and to provide strong support in the modernization of agriculture and rural areas. In February 2021, the Central Government’s Document No. 1, Opinions on Comprehensively Promoting Rural Revitalization and Accelerating the Modernization of Agriculture and Rural Areas, made general provisions to comprehensively promote rural revitalization. The Opinion emphasized the need to continue constructing public infrastructure in rural areas, intensively introduce e-commerce into rural areas and agricultural products into cities, and accelerate the construction of cold-chain facilities and logistics bases. In addition, local governments are actively introducing special development plans to promote China’s rural logistics construction. For example, Shandong Province issued the Shandong Province’s Strategic Plan for Rural Revitalization (2018–2022), Henan Province issued the Opinions on Prioritizing the Development of Agriculture and Rural Areas to Intensively Carry Out the Rural Revitalization Strategy, and the General Office of the People’s Government of Tibet Autonomous Region issued the Implementation Opinions on Promoting the Development of ‘Four Good in Rural Roads.

7

“Four good in rural roads” refers to building a good road, managing it well, protecting it well, and operating it well.

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11.2.2.2

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The Widespread Use and Progress of Technology

With the widespread use of the Internet and the emergence of new technologies such as the IoT and drone delivery, the logistics industry is gradually transforming and upgrading from a labor-intensive system to a technology-intensive system. To further promote the use of information technology and new logistics technologies in rural areas, the rural revitalization strategy has set down development requirements and policy plans to achieve the efficient operation of rural logistics. On the one hand, the rural revitalization strategy is actively promoting the use of broadband in rural areas and the concept of “digital villages”. The smartphone and Internet penetration rates in rural areas are increasing, changing the traditional consumption pattern of rural residents and releasing demand that is driving rural logistics. According to the Statistical Report on the Development Status of China’s Internet, as of December 2020, there were 309 million rural Internet users, an increase of 54.71 million from March 2020; and the Internet penetration rate in rural areas was 55.9%, an increase of 9.7 percentage points from March 2020. Farmers are increasingly getting information and making online purchases through smartphones, while agricultural products are also increasingly sold both online and offline. Rural postal and express services and rural e-commerce logistics are developing rapidly. In addition, the rural revitalization strategy is encouraging rural areas to improve their degree of informatization by promoting the application of new-generation information technology in these areas. The improved degree of informatization helps unblock logistics information channels and realize the common sharing of information with regard to supply and demand, modes of transport, and operational efficiency, creating a favorable environment for the rapid development of logistics enterprises. Big Data, cloud computing, the IoT, and other new technologies are beginning to be applied in certain fields of agricultural logistics, agricultural production, and food logistics. The degree of agricultural digitization is improving year by year, which is conducive to rural resource allocation and optimization, integrated planning, and coordinated development. Driven by these emerging technologies, various regions continue to improve their rural information networks and increase their informatization level to build a modern rural logistics system.

11.2.2.3

The Dual Rise in Demand in Urban and Rural Areas

The demand for rural logistics is influenced by the socio-economic development of urban and rural areas, particularly the actual disposable income and consumption patterns of urban and rural residents. In 2020, the per capita disposable income of urban residents in China was 43,800 RMB, up 3.5% year on year. Meanwhile, the per capita disposable income of rural residents was 17,100 RMB, up 6.9% year on year, which has strongly promoted the development of rural logistics. Moreover, with the rising income levels of both urban and rural residents in recent years and the widespread use of online consumption channels in rural areas, urban demand for high-quality agricultural products has been increasing, stimulating rural consumption

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demand, and expanding urban consumer markets into rural areas. This is a key factor driving the rapid development of rural e-commerce, agricultural cold chain, and other logistics. For example, in 2019, the total transaction value of agricultural products on all e-commerce platforms under the Alibaba Group was 20 billion RMB. They easily form the largest domestic conglomeration of e-commerce platforms for such agricultural products. In 2020, the total transaction value of agricultural-related products on Pinduoduo.com exceeded 27 billion RMB, with a year-on-year growth of 98.5%.

11.3 Main Problems and Development Trends in China’s Rural Logistics Construction Although China’s rural logistics has made clear progress, there are still some urgent problems that need to be addressed. For example, China’s rural logistics infrastructure is relatively poor, the rural logistics has nurtured few market players, and the degree of rural logistics informationization still needs to be improved. With the intensive implementation of the rural revitalization strategy, China’s rural logistics infrastructure will be further improved, rural e-commerce logistics will develop rapidly, and new technologies will boost the development of intelligent rural logistics.

11.3.1 The Main Problems Facing Rural Logistics Construction in China 11.3.1.1

A Relatively Poor Rural Logistics Infrastructure

Concerning transportation infrastructure, due to the low-quality rural roads built in the early days of China, their resistance to disasters and stresses is poor. There are issues like disjointed construction, excessive width, and poor road conditions, resulting in the failure of some rural roads to meet modern rural logistics standards. In terms of cold-chain infrastructure, due to the high costs of pre-cooling and cold storage equipment and of cold-chain freight transits, most rural areas lack cold-chain infrastructure, with insufficient specialized agricultural product storage bases to meet the demand for product sales. In terms of information infrastructure, it is relatively backward in some rural areas and the Internet is not yet widely used. According to the Statistics Report on the Development Status of China’s Internet, the Internet penetration rate in China’s rural areas was only 55.9% in 2020. There are problems such as delayed communication and poor sharing of information on rural logistics resources, which have directly affected the degree of informationization in rural logistics.

11.3 Main Problems and Development Trends in China’s Rural …

11.3.1.2

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Rural Logistics is Still Lagging Behind in the Nurturing of Market Players

In recent years, supported by the rural revitalization strategy, Chinese agricultural cooperatives, rural private enterprises, and other market players have been developing rapidly. They have shown diversified development, but still cannot meet the growing demand for rural logistics in China. Except for the postal service, rural supply-andmarketing cooperatives, and large rural e-commerce enterprises, the market players in China’s rural logistics market are largely discrete farmers, cooperatives, and small individual households and enterprises. The overall scale is small, with limited market coverage and strong arbitrariness. Also, the rural logistics market has not yet formed intensive and large-scale logistics operations; in particular, there is a lack of large rural logistics entities and leading enterprises that can integrate transport, storage, loading/unloading, processing, sorting, distribution, and information handling. Rural logistics is still lagging behind in the nurturing of market players.

11.3.1.3

The Informationization Level of Rural Logistics Needs to Be Improved

Informationization is a mainstay in the efficient operations of rural logistics and a prerequisite in building a modern rural logistics system. At present, the following deficiencies exist in China’s rural logistics informationization: (1) Slow promotion of information technology in rural logistics. As the service objects and service demands of China’s rural logistics are discrete, diversified, and small-scale, the collection and collation of logistics information are less efficient. Also, poor Internet signals in remote areas and imprecise GPS positioning make it difficult to provide timely and accurate information to support decision-making, which poses challenges to the promotion and application of logistics information technology in rural logistics. (2) Insufficient rural logistics information platforms. At present, most existing logistics information platforms are launched on a small pilot scale within the country. There are few large-scale, fully functional public service platforms for rural logistics information, resulting in rural logistics being unable to be effectively linked with the supply and demand market. (3) Insufficient attention given to the construction of logistics information systems. Certain cooperatives and small enterprises are still using traditional information methods to carry out logistics activities, paying little attention to the application, improvement, and upgrading of logistics information systems. There is inadequate investment in this area.

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11.3.2 Development Trend in China’s Rural Logistics Construction Under the Rural Revitalization Strategy 11.3.2.1

Rural Logistics Infrastructure Will Be Further Improved

In January 2021, the Central Committee of the Communist Party of China and the State Council issued the Opinions on Comprehensively Promoting Rural Revitalization and Accelerating the Modernization of Agriculture and Rural Areas. It clearly proposed to renovate and upgrade rural postal logistics infrastructure; fast-track improvements in rural logistics at the county, township and village levels; accelerate the construction of cold-chain logistics facilities for the storage and preservation of agricultural products, and promote the construction of small storage-and-preservation cold-chain facilities at the fields, low-temperature direct sale distribution centers at production places, and key national cold-chain logistics bases. At the same time, the government will continue to promote cold-chain logistics in rural logistics and support the use of cold-chain logistics equipment and facilities such as refrigerated trucks that can provide the necessary pre-cooling and storage conditions for agricultural products. In February 2021, the Central Committee of the Communist Party of China and the State Council issued the Outline Plan for Developing a Comprehensive National Transport Network. It clearly proposed to accelerate the construction of key networks and outlets in rural logistics infrastructure; further upgrade the rural transport infrastructure; facilitate linkages within urban–rural (township, village, household) transport, and promote county-rural road connectivity. During the “14th Five-Year Plan” period, China’s rural logistics infrastructure will be further improved, with the intensive implementation of the National Strategic Plan on Rural Revitalization (2018–2022), the Outline Plan for Developing a Comprehensive National Transport Network, and other policies.

11.3.2.2

Rural E-commerce Logistics Will Develop Rapidly

During the “14th Five-Year Plan” period, with the intensive implementation of the rural revitalization strategy, the strategic “digital villages” project, and the comprehensive e-commerce demonstration projects in rural areas, China’s rural e-commerce has maintained a rapid development trend. At the same time, the demand potential of the rural consumer market has been unleashed. The urban consumption demand for agricultural products has also risen, driving the rapid growth of rural e-commerce logistics. With the increasing use of the Internet in rural areas and with the rise in the income level of rural residents, the online retail market is penetrating ever more quickly into the countryside, which will effectively stimulate the demand for rural e-commerce logistics. With the rising disposable income of Chinese urban

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residents, the continuous improvement in agricultural cold-chain logistics infrastructure, and increasing urban demand for agricultural products, the market demand for agricultural logistics will be further stimulated.

11.3.2.3

New Technologies Will Boost the Development of Intelligent Rural Logistics

During the “14th Five-Year Plan” period, as new information technologies such as Big Data, the IoT, cloud computing, and artificial intelligence mature, rural logistics will further develop toward informationization, intelligentization, and specialization. Enterprises will make full use of information resources to build platforms that can directly serve consumers through Big Data analysis. At the same time, the maturity of unmanned technology and the widespread use of smart logistics facilities and other infrastructure will provide technical support for agricultural products selling to the rest of China. The Civil Aviation Administration of China has clearly stated that it will expand the flying spaces of pilot logistics distribution zones during the 14th Five-Year Plan period, to help develop smart rural logistics in support of the rural revitalization strategy.

11.4 Summary The rural revitalization strategy is a major strategic policy proposed by the central government of China in 2017. This chapter discusses the progress and development trend of rural logistics construction since the implementation of the rural revitalization strategy. It defines rural logistics as the physical movement of goods dispatched from or received in rural areas, a composite logistics system serving agricultural production and rural living through diverse logistics activities. Rural logistics shows strong characteristics in seasonality, time sensitivity, discreteness, diversity, and complexity. Since the implementation of the rural revitalization strategy, China’s rural logistics construction has been developing rapidly, helped by multiple factors such as consistently favorable policies, technological progress, and the dual rise in demand. In terms of development status: (1) With China’s urbanization, the rise in household consumption, and the widespread use of information technology in rural areas, rural logistics in China is developing rapidly. Its logistics market continues to expand; (2) each region continues to construct more rural transport infrastructure, actively building rural logistics parks and improving its “last kilometer” outlet pattern; (3) local governments are encouraging enterprises to innovate their modes of rural logistics. Rural logistics development models are developing and replacing one another in quick succession; (4) artificial intelligence, 5G, Big Data, and other newgeneration Internet technologies are now widely used in rural areas, and the degree of rural logistics specialization is being improved constantly, and (5) Best Express,

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Deppon Express, ZTO Express, SF Express, and other enterprises have expanded their networks into rural areas, exploring new business forms and improving their coverage rate of townships. In terms of future development trends: (1) Rural cold-chain logistics and delivery logistics will renew and upgrade their facilities. Rural transport infrastructure will be further improved; (2) the online retail market will penetrate further into the countryside. Urban demand for agricultural products will increase, and rural e-commerce logistics will usher in a new period of rapid development; and (3) emerging information technologies such as Big Data, the IoT, cloud computing, and artificial intelligence will boost the development of intelligent rural logistics.

References He D, Zha Y, Li J, Hong T, Zhu S, Chen Q, Liu G (2013) China rural logistics development report. China Cooper Econ 09:8–30 Hong T, Hong Y (2017) Development review of China’s agricultural products e-commerce in 2016 and prospect of 2017. J Commer Econ 12:88–92 Jin S (2018) Establishing a standardized three-level distribution system for rural logistics. Xianning Daily (07) Liu Z, Xie J (2018) Xiushan’s rural e-commerce moves into the ‘fast lane’, as the income of poor households increases steadily. http://www.moa.gov.cn/xw/qg/201807/t20180730_6154910.htm. Accessed 30 Jul 2018