In today's increasingly competitive global economy, controlling logistics costs has become critical for both corporate and national development. China, as the world's second-largest economy, has seen its logistics sector flourish in recent years, injecting vitality into economic growth. However, logistics costs currently account for 16.6% of China's GDP—5 percentage points higher than the global average—revealing systemic inefficiencies that demand urgent solutions.
The Bottlenecks in China's Logistics System
China's logistics sector faces multiple challenges that contribute to higher costs. First, the conditions for multimodal transport remain underdeveloped, with limited integration between different transportation modes. Second, redundant organizational structures in transportation lead to significant resource waste. Third, low standardization and containerization levels create operational difficulties and inefficiencies across supply chains. Finally, inadequate digitalization results in slow responses to market demands.
These factors collectively drive up costs in transshipment, loading/unloading, and organizational processes, ultimately reducing the competitiveness of Chinese goods in global markets. The 16.6% GDP share of logistics costs—compared to about 11% in developed economies—highlights the pressing need for reform.
Pathways to More Efficient Logistics
Industry experts widely agree that integrated transportation and logistics development offers the most effective path to reducing China's logistics costs. This transformation would not only boost corporate profits but also support sustainable national economic growth. Achieving this requires a multi-pronged approach:
1. Building End-to-End Logistics Systems: Optimizing the layout of transportation hubs and logistics nodes through scientific planning can ensure faster, smoother cargo flows. Implementing "single-document" processing for entire logistics chains would significantly improve operational efficiency, reducing both administrative burdens and resource waste. This innovation could achieve the crucial integration of information, capital, and goods flows.
2. Creating Shared Logistics Platforms: Developing resource-sharing platforms would enable better allocation of logistics assets, faster data exchange, and improved cross-border logistics integration. Such platforms would help companies find partners more efficiently, create synergies, and increase supply chain transparency while reducing uncertainties and risks.
3. Adopting Innovative Models: The sector must embrace digital transformation, combining online and offline logistics hubs while leveraging modern technology. Wider adoption of standardized container equipment and stronger technical standards would ensure efficient operations across all transportation modes. These innovations would help the industry better adapt to market changes and maintain competitive advantages.
Creating an Enabling Environment
Reforming market access policies, lowering entry barriers, and restructuring transportation companies are essential for establishing integrated customs clearance mechanisms. Increased government support through tax incentives and favorable policies would encourage broader participation in logistics modernization efforts.
Special attention should focus on pilot projects for rail containerization and multimodal transport , particularly along major national logistics corridors. Accelerating infrastructure development for separating passenger and freight flows in high-density areas would also yield significant benefits.
Digital technologies like big data and cloud computing must be deeply integrated into logistics operations to enable precise management and efficient scheduling. This digital transformation could enhance delivery services (including same-day and next-day options) while meeting growing market expectations.
By systematically improving logistics efficiency, China can lay a solid foundation for supply-side structural reforms. The coming years may see China's logistics sector enter a new developmental phase—reducing corporate operating costs, enhancing competitiveness, and providing sustained momentum for national economic growth.
