The era of rapid logistics growth has passed; a restructuring of business models is now required.
Release date:
2020-08-10
Author:
Jinhua Logistics
At the annual conference, a reporter from the Daily Economic News learned that this shift stems not only from changing market demand in the logistics sector but also from profound transformations in the industry itself—ranging from the diversification of collaborative models and the blurring of competitive boundaries to the marginalization, invisibility, and increasing complexity of profit‑making strategies. Emerging operational paradigms such as cloud platforms, big data, and the Internet of Things are all driving the logistics industry toward greater consolidation.
Economic transformation is driving a major shift in the logistics sector.
In fact, Li Guanpeng’s assessment is far from unfounded. He emphasizes that the seismic shifts in the logistics sector are first and foremost driven by economic transformation and adjustments to the national economy.
At present, the global economic recovery remains sluggish, with downward pressures continuing to mount, and China’s economic growth has also slowed. In the first three quarters, GDP grew 6.9 percent year on year, marking the first time since the second quarter of 2009 that annual growth fell below 7 percent. Moreover, according to forecasts from several institutions, China’s economic growth over the next five years is expected to hover around 6.5 percent.
In Li Guanpeng’s view, China’s profound economic transformation manifests in two key ways: one is deceleration, and the other is structural adjustment—essentially, a dual recalibration of both the pace and the mode of economic growth.
On the one hand, traditional manufacturing is shrinking, while emerging industries are growing rapidly. From January to September this year, industrial output above designated size increased by 6.2% year on year, a slowdown of 2.3 percentage points compared with the same period last year; electricity generation rose by only 0.1%. Meanwhile, crude steel, cement, and railway freight volumes declined by 2.1%, 7.4%, and 10.9%, respectively. In contrast, new‑type sectors such as smart mid‑range equipment and high‑speed rail locomotives posted growth rates exceeding 40%.
On the other hand, consumption growth remained steady, investment growth slowed, and exports declined. Correspondingly, from January to September, retail sales of consumer goods rose 10.5% in real terms, roughly on par with last year, while online retail sales surged by 39.2%; fixed‑asset investment increased by 10.3%, a year‑on‑year deceleration of 5.8 percentage points; and imports and exports fell by 15.3% and 1.9%, respectively.
These macroeconomic shifts have not only steered logistics demand away from production‑oriented services for the primary and secondary sectors toward consumer‑focused, lifestyle‑oriented services. “Against the backdrop of the national economy transitioning from rapid to moderate growth, the era of breakneck expansion in the logistics sector has come to an end. Consequently, the metrics used to assess logistics development are shifting from aggregate indicators such as total volume and capacity to quality‑based measures,” said Li Guanpeng.
In addition, the manufacturing Purchasing Managers’ Index (PMI) for October, released in early November, stood at 49.8, remaining below the 50‑point threshold that separates expansion from contraction for the third consecutive month. The ratio of total social logistics costs to GDP was 15.2 percent, down 0.4 percentage points from the same period last year, indicating an improvement in logistics efficiency.
He Liming, President of the China Federation of Logistics and Purchasing, believes that “a comprehensive analysis indicates that while the growth rate of logistics has slowed, it is stabilizing; structural adjustments are accelerating, and efficiency is improving. This will set the overall tone for the logistics sector’s performance in 2015 and for the foreseeable future.”
The logistics industry will move toward agglomeration.
The evolution of the logistics sector is first and foremost driven by the disruptive changes brought about by “Internet Plus” to the industry.
“We’re seeing many e‑commerce companies make a major push into the logistics sector, making it increasingly difficult for logistics firms to distinguish whether they’re trading enterprises or traditional players. Meanwhile, new business models—such as park‑based brands, road‑freight brands, and logistics‑finance brands—founded on internet‑centric thinking are flourishing in a dazzling array of forms,” said Li Guanpeng. He added that, as a result, logistics‑collaboration models are becoming ever more diversified, while the lines between competitors are growing increasingly blurred.
Meanwhile, the price‑arbitrage business model under the “Internet Plus” framework is facing significant challenges. Logistics profitability is shifting toward low margins, invisibility, and diversification, while market competition has become increasingly fierce. To survive and thrive, logistics companies must restructure their business models and innovate their service offerings.
A set of relevant data cited by He Liming has likewise drawn intense attention from the industry. According to He Liming, market competition is set to intensify: based on performance in the first ten months of this year, the logistics firms’ capital turnover index has declined, and the main‑business profit index remains below 50 percent, signaling substantial operational pressures. Looking ahead, market concentration is expected to rise gradually, with resources and factors of production increasingly gravitating toward leading enterprises. Consequently, companies that rely solely on external infusions while lacking robust internal growth capabilities will face mounting survival challenges.
Li Guanpeng further stated that, as factors of production such as land and labor become increasingly scarce, only by widely deploying intelligent technologies—such as robotics (stock code 300024, buy), automated storage systems, and information technology—and driving a core technological revolution that replaces human labor with machines can logistics operating costs be effectively reduced and a competitive edge be secured.
Meanwhile, emerging operational models such as cloud platforms, big data, and the Internet of Things are driving consolidation in the logistics industry. Logistics firms must integrate their smaller networks and localized supply chains into the broader networks and larger cycles of social logistics platforms to ensure long-term viability. Competition among logistics enterprises will increasingly shift toward collaborative operations, aligning with the evolving rules of the market.
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