The Involution Phenomenon in the Logistics Industry and Its Countermeasures

This paper discusses the involution phenomenon faced by the logistics industry and the resulting industry problems. It proposes a four-step strategy involving customer industrialization, industry solution formulation, solution productization, and product modularization to address competition and enhance service quality. Through case analysis, it clarifies how logistics companies can ensure profitability while achieving healthy and sustainable development, ultimately finding their niche in the market.

In recent years, with the continuous development of the global economy and the rapid rise of e-commerce, the logistics industry has become increasingly prominent as a vital component of national economies. Particularly during the pandemic, the accelerated growth of online shopping has further boosted demand for logistics services. However, this growth has been accompanied by a concerning trend of intensifying competition within the industry.

This phenomenon, often referred to as "industry involution," describes a situation where companies engage in excessive competition, constantly lowering costs and enhancing services—sometimes at the expense of quality—in a bid to capture market share, ultimately making it difficult to achieve genuine profitability and sustainable development.

For instance, recent media reports exposed an incident where Sinograin used unwashed oil tankers to transport edible soybean oil directly. This event has understandably sparked widespread public concern about food safety and prompted reflection on the responsibilities of logistics as a critical link in supply chains. The frequency of such incidents raises questions about their connection to the broader pattern of industry involution.

The Logic Behind Industry Involution

An analysis of this phenomenon in the logistics sector reveals several root causes. On one hand, market saturation and cutthroat competition play a significant role, while on the other, inherent regulatory gaps and low industry barriers contribute to the problem. Faced with an ever-growing number of competitors, major logistics firms often resort to price wars to secure customers. However, continuous price reductions inevitably lead to compromised service quality, negatively impacting consumer experience and brand loyalty.

While many logistics companies recognize the importance of service quality, they frequently encounter structural conflicts between high operational costs and slim profit margins, compounded by weak market constraints. In this environment, involution becomes an unfortunate necessity, evolving into a widespread industry practice.

Strategies to Counter Involution

To escape this vicious cycle, logistics companies must develop effective countermeasures. Based on current market analysis, we propose a four-step strategy: "Industry-Specific Customer Approach, Solution-Oriented Industry Services, Productized Solutions, and Modular Products."

1. Industry-Specific Customer Approach

This strategy involves understanding and addressing the unique needs of specific industries when serving clients. For medium and large customers in particular—who often serve as market benchmarks—this approach can significantly enhance a logistics provider's professional image and attract more business.

Take the furniture industry as an example: large furniture manufacturers have complex logistics needs spanning line-haul transportation, warehousing, and distribution. By developing specialized expertise in this sector, logistics companies can position themselves as industry specialists, thereby gaining competitive advantage.

2. Solution-Oriented Industry Services

This step emphasizes developing proven logistics solutions by accumulating experience with specific industry clients. Customized approaches that account for industry characteristics can dramatically improve operational efficiency while reducing errors.

In furniture distribution, for instance, varying home layouts require different delivery strategies. Companies that can develop effective, tailored solutions create significant competitive advantages.

3. Productized Solutions

This concept involves standardizing customized solutions, drawing inspiration from successful models like container shipping. By integrating related services (like delivery and installation) into standardized service chains, companies can boost efficiency while reducing costs.

For furniture logistics, developing standardized modules that combine transportation, last-mile delivery, and installation services creates value-added offerings that enhance customer satisfaction and loyalty.

4. Modular Products

The final step breaks down logistics services into modular components—like line-haul transportation, warehousing, distribution, and reverse logistics—that can be flexibly combined according to customer needs. This modular approach optimizes resource allocation, improves efficiency, and enables rapid response to market changes.

Unlocking the Logistics Industry's Potential

As competition intensifies, the logistics sector must chart a course toward value-driven optimization. By implementing industry-specific services, scientific solution design, standardized offerings, and modular approaches, companies can navigate today's challenging market environment successfully.

Technological advancements and market evolution will continue presenting both challenges and opportunities. Rather than succumbing to involution, forward-looking logistics firms must focus on service quality and innovative models to thrive in an increasingly diverse, collaborative marketplace.

Conclusion

In today's globalized economy, logistics serves not just as a conduit for goods, but as a crucial bridge connecting consumers with products. To overcome the challenges of industry involution, logistics companies must employ strategic management to enhance competitiveness while ensuring service quality and efficiency. Only by clarifying their market position and strengthening industry responsibility can logistics providers successfully navigate this complex environment and seize emerging opportunities.

The future promises continued growth and greater economic contributions from this vital sector.