Freight & Logistics Market in China - Segmented by function (Freight Transport, Freight Forwarding, Warehousing, Courier, Express, and Parcel), By End User (Construction, Oil & Gas and Quarrying, Agriculture, Fishing, and Forestry, Manufacturing & Automotive, Distributive Trade, Telecommunications, Others (Pharmaceutical and F&B)) - Growth, Trends, and Forecast (2020 - 2025)

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Automotive Industry is a Major Driver of the Freight and Logistics Market in China

Along with the Chinese economy’s extraordinary success, China’s freight and logistics industry is growing at a rapid pace. With the growth in the automotive sector, there is a need for stable logistics and transport structures. More than 29 million passenger and commercial vehicles were manufactured in China in 2017. To supply factories with components and assemblies at the scheduled time, complex transportation and logistics structures have been put into place. International OEMs have established a high degree of globalization, in terms of production mainly driven by the need to geographically diversify, to avoid manufacturing crises either through expansion or partnerships. Drivers, such as increasing purchasing power and demand from the consumers. Manufacturing is mainly concentrated in six regions, namely, Shanghai, Guangzhou, Changchun, and Beijing on the coast, inland Wuhan, Chengdu, and the capital of Sichuan in Western China. Many manufacturers from Germany and the United States are expanding their manufacturing networks in China, especially in the western and southern regions. Delivery distances between the component supplier plants have increased significantly (up to 2000 km). Logistics providers are improving their capacity and flexibility, as well as punctuality, to be able to satisfy the just-in-time (JIT) and just-in-sequence (JIS) requirements of the automotive manufacturing companies, which led to increased competition in the market.

                                             Freight & Logistics Market in China


Due to volatile infrastructure costs between lesser developed and better developed manufacturing regions, logistics costs have been rising. Lack of upgraded road networks outside the metropolitan cities and rail networks have been affecting the transport of cargo, in terms of time taken for transportation. In case of contract logistics companies, they usually establish their supply centers in the vicinity of the manufacturing centers, in order to be up to date on the organizational changes of their individual customers. For example, German manufacturers in China have been facing cooperation issues with local logistics companies, due to fears about transfer of knowledge, which has made it difficult for local companies to gain contracts.

Growing Retail and Consumer Market to Require Increased Logistics services

China is also one of the biggest markets for procurement of goods by German manufacturers in the retail and consumer sector. More than 80% of the retail and consumer markets source their goods from China. The main import goods are electrical and electronic equipment, furniture, jewelry, toys, and clothing. Since 2014, the Chinese retail market has grown by at least 10%. It is anticipated that the new five-year plan is will strengthen domestic consumption, due to increasing incomes of a huge chunk of the population currently living below middleclass standards, and boost annual consumer spending by approximately EUR 70 billion. In the retail food business in China, international retailers, such as Carrefour, Metro Group, Tesco, and Wal-Mart have revolutionized logistics by independently establishing their respective cold chains, which has allowed them to lay the foundation for modern food retailing.

The new five-year plan aims to modernize agriculture, which is expected to bolster the development of logistics processes in the food industry. This is further expected to stimulate the demand for specialized warehousing services and increased hygiene requirements. One of the drawbacks with this, is that, the retailer and consumer goods manufacturers prefer non-Chinese logistics service providers who stick to international quality standards.

Opportunity in China’s Cold-Chain Logistics Market

Growing income has been one of the factors, due to which Chinese consumers have been demanding higher standards with regard to safe and healthy food products. However, there is a growing concern for food and drug safety, especially with fresh produce e-commerce sector seeing a huge growth. Cold-chain logistics form the foundation for supply of perishable products, such as fresh fruits and vegetables, meat, dairy, aquaculture products, fresh flowers; medical products, such as drugs, re-agents, and vaccines which have strict temperature, humidity, and other environmental requirements. The cold-chain industry in China is expected to be valued at USD 60 billion by 2020, with transportation, cold storage, and other services making up 40%, 30%, and 30% of the marke. Despite this forecast, the market is still in its infancy and also extremely fragmented. Some major hurdles in this market include the unreliability and ‘breakage’ of the cold chain as the ownership of different stages of the cold chain, such as warehousing, ground transportation, air freight, airports, distribution, etc., are very fragmented. The lack of a standard end-to-end process control causes a widespread mismanagement in logistics processes.

Key Industry Players: Some of the key players in the market are C.H. Robinson, DB Schenker, Deutsche Post DHL, FedEx Corp., Worldwide Logistics Masters, Dah Chong Hong Holdings Limited, SF Express, ZM Logistics, and Xianyi Co. Ltd, among others.

Freight & Logistics Market in China Recent Developments:

July 2018: Bottlenecks on the Silk Road as Chinese freight hits Europe

Reasons to Purchase Freight & Logistics Market in China Report:

  • Current and future outlook of the Freight and Logistics market in China
  • Analysis of various perspectives of the market with the help of Porter’s five forces analysis
  • The segment that is expected to dominate the market
  • Regions that are expected to witness fastest growth during the forecast period
  • Identify the latest developments, market shares, and strategies employed by major market players.
  • 3-month analyst support, along with the Market Estimate sheet in excel.

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