Market Trends of china full-truck-load (ftl) Industry
E-commerce logistics flourished in China, with the index rising to 104.3 points in 2022, fueling industry supply chain
- China is the world's largest logistics market, propelled by favorable logistics prospects and strong business fundamentals. The Chinese government allocated a significant investment of CNY 181.6 billion (USD 24.94 billion) in 2021 toward the logistics sector. This substantial backing has translated into a doubled market value for China's logistics industry, soaring beyond CNY 335 trillion (USD 46.02 trillion) in 2021. This expansion is intricately tied to the thriving domestic and cross-border e-commerce activities currently surging in the country.
- E-commerce logistics in China experienced a rebound in May 2022, with the index increasing by 2.1 points to 104.3 from April. This improvement was driven by various policies implemented by China, including efforts to eliminate transportation bottlenecks and ease the operational challenges faced by logistics companies. Shanghai, in particular, initiated an action plan aimed at accelerating economic recovery. The plan includes measures to stabilize industrial and supply chains in the Yangtze River Delta region and enhance the efficiency of domestic and international logistics and transportation networks.
- The transportation and storage sector in China experienced a significant decrease in YoY growth, dropping from 19.32% in 2021 to 2.58% in 2022. This decline was primarily attributed to a 40% reduction in China's manufacturing orders, which had a notable impact on the demand for transportation and storage services. Therefore, China has prioritized enhancing transportation and logistics to maintain business operations and economic stability, with the Industrial and Commercial Bank of China's Shandong branch disbursing over USD 1.19 billion in loans to support the logistics sector in 2022.
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Crude oil demand in China is expected to decline slightly owing to strong demand for EVs
- China's retail diesel and gasoline prices are set to soar to historically high levels following a surge in global crude oil benchmarks amid the Russia-Ukraine War. Under China's pricing system, retail fuel prices are assessed every ten working days to reflect global crude oil benchmarks if the benchmark prices move between USD 40 and USD 130. Outside that band, retail prices do not change or only move marginally. Chinese oil refiners, both state-backed and independent, are lowering operational rates to cope with high oil prices and ebbing fuel demand in the country due to the mobility restrictions during the COVID-19 pandemic.
- Unlike Japan and South Korea, both looking for ways to battle runaway oil prices via subsidies and tax cuts, China raised its ceiling prices for gasoil and gasoline in keeping with its domestic oil pricing mechanism. It has no plans to lower consumption tax as consumers shrug off higher transportation fuel costs. The National Development and Reform Commission raised the country's ceiling retail price for gasoline and gasoil by USD 31.3 per ton and USD 29.84 per ton, respectively, in 2022. China's crude oil demand is expected to decline, as strong demand for electric vehicles weighs on gasoline demand.
- China is unlikely to reduce the consumption tax on gasoline and gasoil during its net-zero journey. Operational rates in Shandong province, China's oil refining hub, fell to a two-year low of 57.09%. China's daily oil throughput in the first two months of 2022 fell to its lowest since December 2020. Oil prices rose in the first half of 2022 due to a fear caused by Russia's invasion of Ukraine and concerns that sanctions against Russia would lead to shortages.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- China strives toward smart manufacturing under the Made in China 2025 Strategy
- Chinese e-commerce is set to retain its dominant position and is expected to register a CAGR of 12.17% during 2023-27
- China climbs to the 19th rank in 2023 LPI, boosted by major investments and a thriving e-commerce sector
- China reigned as the leading automobile exporter in the world in the first half of 2023, led by a robust domestic car production market
- Economic recovery, reduced toll tariffs, and reduction in fuel prices expected to reduce truck operational costs and overall trucking demand
- Despite scrapping the national subsidy, the EV market is expected to witness an upward trend, reaching around 300,000 units in 2023
- Road freight rates in China increased despite a slowdown in demand and ample supply of transport capacity
- Marginal PPI rise due to price controls and significant CPI rise witnessed due to increase in food prices
- The oil and gas industry, along with manufacturing, registered the highest GDP growth rate from 2017 to 2022
- New energy vehicles (NEVs) are expected to account for about 35% of the Chinese domestic market by 2025
- China drives economic recovery with extensive highway investments and road and highway development plans
- China remained highly reliant on agri-food imports in 2022, with Brazil and the United States as top suppliers
- China's truck sales are hitting new records, with demand for heavy weight trucks sustaining the highest growth
- Growing trade volumes despite a decline in domestic production of manufacturing industry leading to growing road tonnage
- Infrastructure investments under the BRI initiative by the government are increasing to facilitate a rise in freight volumes across all modes of transportation
