According to the 2022 Agility Emerging Markets Logistics Index, China has the largest logistics market in the world, based on logistics opportunities and business fundamentals. Much of this is attributed to the country’s growing logistics infrastructure; an extensive network of warehouses, and storage facilities paired with advanced IT services. Over the last decade, the Chinese government has substantially invested in the country's logistics industry, amounting to 181.6 billion yuan (approx. 29 billion U. S. dollars) in 2021. The corresponding market value of China's logistics industry has doubled in this period, surpassing 352 trillion yuan in 2023. Such rapid growth is closely linked to the currently booming domestic and cross-border e-commerce business. The e-commerce logistics industry has expanded swiftly, with its 2021 revenue exceeding 850 billion yuan. Notably, the outbreak of the COVID-19 pandemic provided an opportunity for the e-commerce logistics industry’s accelerated growth. However, the government’s dynamic zero-COVID policy has affected the manufacturing and exporting hubs, putting constraints on the global supply chain. Reduced shipping capacity due to container congestion at ports caused a significant spike in container freight rates. Since the start of 2023, China's logistics industry prosperity index (LPI) showed that the country’s logistics industry rebounded from its poor performance during the COVID-19 pandemic.
Belt and Road Initiative (BRI) strengthening China's global logistics leadership
First announced in 2013 as China's global connectivity strategy, the Belt and Road Initiative (BRI) has already invested a significant amount in transportation and logistics infrastructure worldwide. This massive project has not only propelled China to become a global logistics leader but also a provider of logistics infrastructure and technology to others. Enhanced logistics performance can lower logistics costs for the BRI countries and enable them to access international procurement networks. This is particularly beneficial for low-income countries.
BRI has ushered in a new era of trade, where China's imports and exports with countries participating in the BRI project have grown around 1.5 times since March 2015, as reflected by the Belt and Road Trade Index. Two Chinese logistics giants, namely Xiamen Xiangyu Co., Ltd. and COSCO Shipping Holdings Co., Ltd., ranked in the Forbes list of the top 10 global transportation companies. In addition, China State Railway Cor., Ltd. and COSCO Shipping Holdings Co., Ltd. were included in the list of top 10 global freight forwarders in 2022.
Next-generation logistics headed toward smart logistics
With digitalization and the development of technologies, such as artificial intelligence and cloud computing, China's logistics industry has been transferred from labor-intensive to autonomous and upgraded from traditional mode to smart logistics in many areas. As of 2022, the market size of China’s smart logistics industry grew to 699.5 billion yuan. 52 billion yuan of funding was added to the smart logistics sector in 2021, of which automated or unmanned driving technology received the highest investment amount of 25.6 billion yuan.
Smart Logistics mainly operates on three pillars: third-party (3PL) logistics, freight forwarding, and heavy transport. It transforms the way the logistics industry operates by improving efficiency and reducing inventory. Amid the rising trend of online shopping, smart logistics helps the courier sector deliver parcels faster while reducing costs and improving safety and security. Known as the market "intelligent logistics brain", Alibaba's Cainiao logistics services earned over 55 billion yuan in income in the fiscal year 2023.
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