The Zhitong Finance App learned that on February 7, the China Federation of Logistics and Purchasing released an analysis of logistics operations in 2023. In 2023, China's economy recovered from fluctuations, stabilizing factors continued to accumulate, the logistics operation environment continued to improve, and the overall recovery of the industry improved. The total amount of social logistics in the country in 2023 was 352.4 trillion yuan. At comparable prices, the year-on-year increase was 5.2%, and the growth rate was 1.8 percentage points higher than in 2022. On a quarterly basis, the first quarter, the second quarter, the third quarter, and the fourth quarter grew by 3.9%, 5.4%, 4.7%, and 5.4%, respectively, showing a steady recovery trend from the previous low, medium high, and back. The overall upward trend was positive throughout the year.

The original text is as follows:

Logistics recovery to better quality and efficiency - analysis of logistics operation in 2023

China Logistics Information Center

In 2023, China's economy recovered from fluctuations, stabilizing factors accumulated, the logistics operation environment continued to improve, and the overall recovery of the industry improved. The recovery in the scale of market demand has accelerated, and new momentum fields such as high-end manufacturing and online consumption have clearly rebounded. The quality of logistics supply has been steadily improving, and collaborative and efficient logistics services such as multimodal transport and air freight have been developed comprehensively. Unit logistics costs have been declining steadily, and the industrial chain cycle is basically smooth. Logistics companies have increased their internal drive to reduce costs and increase efficiency, and the pace of strategic transformation of leading enterprises has accelerated, leading the industry in the direction of standardization, refinement and digitalization.

1. The economic structural transformation process is accelerating, and logistics demand is working together

(1) The scale of logistics demand has recovered steadily, and basic areas have been consolidated

The total amount of social logistics in the country for the whole year was 352.4 trillion yuan. At comparable prices, the year-on-year increase was 5.2%, and the growth rate was 1.8 percentage points higher than the full year of 2022. On a quarterly basis, the first quarter, second quarter, third quarter, and fourth quarter grew by 3.9%, 5.4%, 4.7%, and 5.4% respectively, showing a steady recovery trend from the previous low, medium high, and back. The overall upward trend was positive throughout the year.

Looking at the structure, logistics demand in the agricultural products, industry, consumption, and import sectors has been growing steadily, and the recovery is better than last year. Among them, the logistics demand for agricultural products has maintained a good development trend. The total annual grain output was 695 million tons, and pork, beef, lamb and poultry production reached a record high of 96 million tons, with year-on-year increases of 1.3% and 4.5%. The total logistics volume of agricultural products was 5.3 trillion yuan, an increase of 4.1% over the previous year, maintaining a good development trend. Demand for industrial logistics has been picking up steadily. Annual raw coal production is 4.6 billion tons, metallurgical manufacturing exceeds 3.3 billion tons, automobile production exceeds 30 million vehicles, chemical production is nearly 1 billion tons, and the growth rate of industrial production is picking up. The total amount of industrial goods logistics for the year was 312.6 trillion yuan, up 4.6% year on year, and the growth rate was 1.0 percentage point higher than the previous year. Each quarter showed a continuous upward trend. In particular, there was a marked recovery in the fourth quarter. The growth rate in November and December was over 6%, setting a new high growth rate during the year. Consumer logistics demand for people's livelihood is steady, moderate, and improving. The total logistics volume of units and consumer goods for the year was 13.0 trillion yuan, an increase of 8.2% over the previous year, and the growth rate was 4.8 percentage points higher than the previous year. The recovery in the restaurant, retail and other sectors increased markedly. Logistics demand related to restaurant and department store retail changed from decline to increase, increasing by 20% and 8.8%, respectively; logistics demand related to convenience store retail increased by 7.5%, and the growth rate rebounded somewhat. The scale of import logistics demand has continued to expand rapidly. The total amount of imported logistics for the year was 18.0 trillion yuan. The growth rate changed from decline to increase by 13.0% year-on-year, and the growth rate remained above 10% in every quarter. Among them, commodity import logistics flows have been further expanded. Imports of energy products such as crude oil, natural gas, and coal were 1.16 billion tons, up 27.2% year on year; imports of metal ores such as iron and aluminum were 1.46 billion tons, up 7.6% year on year.

(2) Industrial transformation and upgrading are progressing steadily, and logistics in the field of new kinetic energy are picking up at an accelerated pace

The restructuring of logistics demand is accelerating, and the growth momentum is shifting towards high-end, intelligent, and green. Looking at the industrial sector, equipment manufacturing logistics maintained a good upward trend throughout the year. The growth rate was 2 percentage points higher than total industrial logistics. In particular, the total logistics growth rate in the fields of automobiles, smart devices, etc. was more than 10%, which is faster than the previous year. Looking at the industrial format, new business formats such as e-commerce logistics and online services have maintained relatively rapid growth. The average e-commerce logistics index for the whole year was 110.1 points, and online retail sales of physical goods increased by 8.4% year on year, all faster than the previous year. Looking at the industrial cycle, green production methods are being formed at an accelerated pace, recycling systems such as recycling, sorting, and distribution of renewable resources are gradually being improved, and the scale of logistics demand for related industries continues to expand. Total logistics for renewable resources increased by more than 17% year-on-year throughout the year.

2. Optimizing the logistics development environment and accelerating the pace of industrial upgrading

The logistics infrastructure network system has been further improved, and modern logistics has accelerated its transformation to high-quality development, providing a solid foundation for the smooth circulation of the industrial chain.

(1) The logistics infrastructure network is becoming more and more complete, reaching the world's advanced level

The construction of logistics infrastructure is progressing steadily, and shortcoming areas are constantly being strengthened. Investments in logistics-related fixed assets such as transportation, warehousing and postal services increased by more than 10% year-on-year throughout the year, and the logistics infrastructure guarantee system was further improved. Thirty new national logistics hubs were built throughout the year, and a total of 125 logistics hub systems covering the whole country were formed, providing strong support for the integrated development of industry and logistics. More than 1,000 county-level delivery and distribution centers and 303,000 village-level integrated delivery and logistics service stations have been built throughout the year. The rural logistics network is becoming more and more perfect, and shortcoming areas are gradually being strengthened. The number of refrigerated trucks is 431,000 throughout the year, and the total amount of cold storage is 228 million cubic meters. The logistics infrastructure in the specialized field has maintained steady growth.

In the “2023 Global Logistics Performance Index Report” recently released by the World Bank, China's overall logistics performance ranking rose from 26th place in 2018 to 20th place. Among them, logistics infrastructure and international freight capacity rank in the top 10% of the world, reaching the international advanced level. The infrastructure ranking surpassed developed economies such as the United States and France, 6 places higher than in 2018; international freight capacity was 4 places higher than in 2018, and China's fleet size reached 250 million tons, an increase of about 10% over the previous year. However, it is also important to note that there are still certain gaps in international logistics customs clearance management and freight tracking capabilities, which is the focus of improving China's international logistics performance in the future.

(2) The revenue scale of the logistics industry has grown steadily, and the steady operation of the industry has improved

The total revenue of the logistics industry for the year was 13.2 trillion yuan, an increase of 3.9% over the previous year, and the scale of logistics revenue continued to expand. The year-on-year growth rate of basic logistics revenue such as transportation, warehousing, handling, etc. was around 3%, supporting the steady growth of the logistics market.

Segments such as air transport, multimodal transport, and express delivery are picking up momentum. Among them, supported by the upgrading of the upstream industry and the recovery of cross-border e-commerce, aviation logistics revenue changed from decline to increase by more than 20% year-on-year; with policy promotion and port adaptation capacity, multimodal transport revenue increased by more than 15% throughout the year; the express delivery market entered a stage of steady growth, and express logistics revenue increased by about 14% throughout the year. The driving effect of the high-end logistics market increased, and the total revenue of the animal logistics industry increased by about 1 percentage point.

The level of prosperity improved throughout the year, and the operation of the industry resumed steadily. The annual average of China's logistics industry sentiment index was 51.8%, up from 3.2 percentage points last year. Most months were in a high boom range of 51% or more. The average fluctuation in monthly business volume and new orders index narrowed compared to the previous year, indicating that the industry is running well and improving its steadiness, and the ability of logistics supply to adapt and respond to changes in demand has increased.

The warehousing and logistics business is active, and the turnover continues to be efficient. The average business volume index in China's warehousing index for the whole year was 52.4%. Since February, each month has been in a high boom range. The utilization rate of facilities and warehousing turnover efficiency have increased month by month, indicating that the activity of the warehousing business has increased and the industry is running more efficiently, helping to reduce social inventory levels and supporting the smooth upstream and downstream circulation of the industrial chain.

The e-commerce logistics business is improving, and e-commerce is booming in rural areas. The average e-commerce logistics business volume index for the whole year was 120.3 points, showing a continuous upward trend for many months. Among them, the rural e-commerce logistics business volume index averaged 124.2 points, up 8.7 points from 2022, showing a booming development trend.

3. The efficiency of logistics operation continues to improve, and unit logistics costs are steadily declining

The ratio of total social logistics costs to GDP was 14.4%, down 0.3 percentage points from the previous year. The first quarter, first half year, and first three quarters were 14.6%, 14.5%, and 14.3%, respectively, showing a continuous downward trend. In terms of structure, the ratio of major logistics costs has declined. The ratio of transportation costs to GDP is 7.8%, the ratio of storage costs to GDP is 4.8%, and the ratio of management expenses to GDP is 1.8%, down 0.1 percentage points from the previous year. It shows that the overall efficiency of logistics operation has improved throughout the year, the proportion of static links such as warehousing and storage has declined steadily, capital flow and logistics are shifting to dynamic links, and the flow of logistics factors tends to be active.

The economic structural upgrade provides strong external conditions for reducing costs and increasing efficiency. From an industrial perspective, the economic structure has been optimized and upgraded, and the growth momentum of the service sector has clearly rebounded. The share of the service sector has rebounded to 54.6%, an increase of 1.2 percentage points over the previous year. In terms of products, the physical added value of logistics has been steadily increasing. Industrial products, which account for nearly 90% of the total logistics volume of society, continue to shift to high-end. The logistics volume per unit of GDP and freight volume per unit of GDP have all declined. The annual logistics demand coefficient per GDP and the freight volume coefficient per GDP have dropped to 2.8 and 4.3, respectively. They are all low levels in recent years, and industrial logistics costs have declined accordingly.

Organizational management upgrades are an important driving force for reducing logistics costs and increasing efficiency. Storage and transportation matching has improved markedly, and the level of production and marketing connectivity has improved. At the end of the year, the product sales rate of industrial enterprises rose to 98.4%, and the number of inventory turnover days for finished products decreased by 0.1 days compared to the end of October. Transport organization management is moving towards efficiency and collaboration. The air cargo scale recovered at an accelerated pace, with annual cargo and mail traffic volume of 7.35 million tons, up 21% year on year; from January to November, port “fragmentation” operations and container iron and water intermodal traffic increased by 19.6% and 15.7% year on year, respectively, and the share of iron and water intermodal transport increased 0.3 percentage points year on year; overall annual average transportation distance declined, and long-distance transportation gradually moved to railway and water transport. The average road distance was 183 km, down 1.7% year on year. The transportation structure was optimized.

The optimization of the logistics policy system provides institutional guarantees for cost reduction and efficiency. A number of policies were introduced throughout the year to improve logistics quality, increase efficiency, and reduce costs. For example, the long-term mechanism for differentiated charging on highways has been continuously optimized and improved. It is estimated that the annual preferential reduction of vehicle tolls will exceed 140 billion yuan; preferential urban land use tax policies for land used for commodity storage facilities will continue to be implemented, the cost of land used for storage and logistics of raw materials and primary products has been steadily reduced, and the logistics cost reduction and efficiency system guarantees have been improved.

Overall, the decline in logistics cost levels is an inevitable result of high-quality economic development. It is also a concentrated expression of the comprehensive effects of logistics organization and management models and macro-industrial policies.

4. The competitive pattern in the logistics market has intensified, and the internal drive of enterprises to reduce costs and increase efficiency has increased

The competitive landscape in the logistics market has intensified. Judging from the number of market players, there are nearly 600,000 legal entities in the transportation, warehousing and postal industry in China, with more than 5.8 million individual operators, and more than 6 million logistics-related market players. The market entry threshold in some fields is low, and the number of enterprises is generally large. Judging from the market concentration, logistics enterprises are relatively small. The number of small and micro enterprises in some fields is huge, and the market concentration is still low. Although the logistics business revenue of the top 50 logistics companies increased in 2023, it is still less than 20% of the total revenue of the logistics industry. Judging from corporate order demand, although the main macroeconomic indicators of logistics have rebounded to varying degrees, phased and structural contradictions still exist, and there are obvious differences in the feelings of individual enterprises among logistics market players. Research data shows that enterprises have a strong sense of weak market demand, reflecting that logistics companies account for more than 30% of market orders, and that small and medium-sized enterprises account for nearly 50%. Judging from price competition, the phenomenon of low price competition is prominent in some fields, and “price for volume” is still the main means of competition in some functional logistics service industries. The service price index in the logistics sentiment index is below 50% each month, and the annual average is 48.3%, reflecting the overall low level of service prices in the logistics industry. In terms of water transportation, the annual average value of the coastal (bulk) comprehensive freight index published by the Shanghai Shipping Exchange was 1014.9 points, down 9.7% year on year; the annual average value of China's export container freight index was 937.3 points, down 66.4% year on year; in terms of express delivery, the average price drop during the year was also around 4% year on year. In this context, the profits of micro enterprises are clearly under pressure. Preliminary summary data from the annual key survey shows that nearly 30% of logistics companies lost money throughout the year, and the average profit margin hovered around 3%, which is significantly lower than the average of 5% in normal years.

In the face of increasingly fierce market competition, logistics enterprises continue to increase their internal drive to innovate and develop, reduce costs and increase efficiency.

The trend of service upgrading is obvious, and the process of industrial integration is accelerating. Logistics companies actively promote the transformation of services to integrated supply chains, accelerate the process of industrial integration, increase the layout of emerging fields, and expand business space. Preliminary summary data from the annual key survey showed that the number of supply chain contract orders for key logistics companies increased by 24% year on year, revenue from integrated logistics business increased by nearly 30%, the share of integrated logistics businesses such as supply chain logistics management and integration increased steadily, and integrated supply chain services in professional segments such as fresh food and clothing had good potential for growth. Research shows that leading logistics companies such as Sinotrans are accelerating industrial integration, stabilizing cooperative relationships, extending the scope of services, increasing service stickiness, helping customers optimize costs, and the logistics cost rate level of upstream industrial and commercial enterprises is steadily declining.

Digital transformation is accelerating, helping the supply chain system to gradually improve efficiency. Logistics companies actively promote industrial collaboration, help share information, and optimize resource allocation. Research shows that in recent years, leading companies such as JD Logistics and SF Express have increased their investment in digital-related fields by more than 50%. Explore the application of digital methods such as big data models and intelligent algorithm analysis to achieve full-process logistics monitoring and scheduling based on internal enterprise management and customer service, to help improve efficiency and optimize services.

The level of collaborative development is improving, and enterprise management is moving towards standardization. Under the influence of factors such as policy guidance and industry consensus, the development of various segments of logistics has been further regulated, and the level of cross-sector collaboration has improved. The express logistics sector has intensively introduced national standards, focusing on service quality, green packaging, etc.; the civil aviation freight sector formulates informatization standards and technical specifications to speed up the establishment of an information system docking standard system; the standardization process of logistics units has accelerated. Preliminary summary data from the annual key survey shows that the proportion of enterprises own standardized trays has risen to more than 70%, and leading logistics companies have reached 85%. Logistics enterprises in various fields actively promote the standardization process, promote the standardized development of the industry, promote the upgrading of industry service quality, and reduce operating costs and improve the efficiency of business operations. The overall cost of key enterprises per 100 yuan of operating income has stabilized and slowed down throughout the year, down 0.3 yuan from the previous year.

Overall, the current advantages of China's hyperscale market are still obvious, and the logistics market has great potential. As the policy is gradually implemented and effective, the willingness of micro players to invest is steadily increasing, and market expectations are basically improving. Future logistics operations are expected to continue the steady and positive development trend. However, we also need to see that China's economy still needs to face challenges such as domestic structural adjustment and weak international demand. Logistics demand will also shift from scale expansion to stock restructuring. The logistics market needs to be optimized and upgraded. Logistics companies must adhere to innovative development concepts, deeply integrate into the supply chain service chain of the real economy, and help high-quality economic development with efficient logistics services.

This article was edited by “China IoT”, Zhitong Finance Editor: Ye Zhiyuan.