Longer-Term Logistical Limits in China

Citing a compound annual growth rate of 33% until 2007, the summary also warns that “major structural problems” exist, and those logistics firms that want to “grab market share” in the immediate economic boom would do well to plan for the middle and long term, when serious readjustments will be needed.

Endemic issues of energy supply, bureaucracy, communications infrastructure, and a poorly educated workforce, aside, China’s half-century history as a Communist state means that many state-owned enterprises must be restructured into the private sector, while rising labor costs will pressure public sector companies, all in competition with foreign companies. Result: an almost-certain economic “hard landing” in the medium term. Logistics companies investing in China now will ignore this possibility at their peril.

A list of ten challenges for the Chinese logistics industry includes: poor infrastructure, regulation, bureaucracy and culture, poor training, information and communications technology, undeveloped domestic industry, high transport costs, poor warehousing and storage, regional imbalances, and domestic trade barriers.

An electronic version of “China Logistics Report 2004” is available in its entirety from Armstrong & Associates for $995 at http://www.3PLogistics.com