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China’s Growing Logistics Business Says More Than Smoother Shipping

Expanding business volume, rising new orders and faster capital turnover, China’s logistics market, a herald of closely watched economic activity, is heading back into the boom zone after being weighed down by the COVID- 19.

The country’s logistics market performance tracking index came in at 52.1% in June, topping the 50% boom-bust for the first time after remaining in the contraction zone for three months, according to the China Federation of Logistics and Purchasing (CFLP). .

The business volume, new orders, capital turnover and employee sub-indices all posted strong rebounds as the scope and efficiency of logistics delivery continued to improve.

Chinese authorities, led by the Ministry of Transport, have stepped up efforts in recent months to resolve logistics bottlenecks to help the economy recover from the impact of COVID-19 outbreaks.

Echoing the smoother transportation network, another index that tracks the country’s warehouse sector showed that average inventory turnover ended a roughly six-month downward trend by rising 8.4 points. percentage to reach 53.9% in June.

Hu Han, a researcher at the China Logistics Information Center, also attributed the resumption of logistics activities to the growing demand from the industrial and consumer sectors.

Industrial goods logistics accounts for about 80% of China’s total social logistics value, which in May reversed the downward trend.

The latest data from the CFLP showed that industrial goods logistics recorded 0.7% year-on-year growth in May, compared with a 2.9% decline in April.

“It was a turning point from autumn to boom,” said CFLP Deputy Director Cai Jin. “It sent the signal that the economy is restoring growth on the supply side.”

Consumer logistics also remained active. The country’s e-commerce logistics business further consolidated its rebound in June with a related CFLP index climbing 2.8 percentage points from May.

During the mid-year shopping festival, major Chinese e-commerce platforms saw year-on-year transaction growth, with sales surging in cellphones, home appliances and cosmetics.

The recovery of the Chinese logistics sector and the economy as a whole is expected to continue. A survey of logistics companies showed that optimism about continued market growth rose 1.2 percentage points from the previous month, reaching a four-month high.
Source: Xinhua