High costs and out-dated management hinder Chinese logistics development

CHINA's logistics costs are double those of developed countries while management techniques are 20 year behind, which together restrict Chinese logistics development, according to Cai Jin, vice chairman of the China Federation of Logistics and Purchasing (CFLP).

Speaking at a recent national logistics summit, Mr Cai pointed out that China's logistics cost takes up 17.8 per cent in the GDP, while Europe's and US' take up only eight to 10 per cent, reported Xinhua.

"If China's logistics cost can be reduced to the same level as in the developed countries, a collective sum of over CNY4 trillion (US$628 billion) cost can be saved every year, bring huge benefit to the whole society," he said.

Mr Cai also noted that China has not been able to make it as a top player in the world's logistics market was partly because of the out-dated management style which only focuses on the distribution of cargo. In comparison, the counterparts in developed countries focus on the whole supply chain from the upper end to the lower end.

Mr Cai said China's logistics industry should shift from an emphasis on expansion in scale to the enhancement of quality, putting more into optimising logistics flow and connectivity. "We should also improve the management practices of the logistics industry," he said.