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Alan McKinnon – Professor of Logistics

THE 
LOGISTICS BLOG

Current issues in logistics and transport

Reflections on Chinese Logistics

Few nations are as dependent on logistics as China. As the workshop of the modern world and with by far its largest population, it has to move, store and handle a bewildering amount of stuff. According to my calculations, based on Chinese government data, the country’s transport system moves around 32 tonnes of freight per person per annum. Multiply that figure by the 1.38 billion people who live in China and you get a sense of the country’s logistical challenge. It generates around 25 times more freight movement per $ of GDP than the UK, reflecting both its much greater size and very different economic structure. Given this high level of freight transport intensity, it is hardly surprising that logistics expenditure accounts for around 16% of China’s GDP, roughly twice the equivalent US figure.

On a recent visit to China I gave a speech on logistics skills at a conference organised by the Chinese Federation of Logistics and Purchasing in Nanjing. The CFLP had just published its annual report on logistics education in China. This indicates that in 2015 a total of 979 logistics courses were offered by 785 universities and colleges across the country. A total of 85,438 students were enrolled on these courses! The vocational and higher education systems have clearly geared up to supply the vast number of qualified managers that will be required to run China’s bourgeoning logistics system.

Capacity building in logistics education is paralleled by the growth of Chinese research on supply chain management. In a newly published paper, Prof Xiaohong Liu and I examine the theoretical foundations of this research in a review of 150 articles on Chinese supply chains published in sixteen journals between 2000 and 2014. This revealed a heavy reliance on Western business theories and limited evidence of China-based researchers ‘attempting to customise them to the Chinese context or to construct new ones’.

This is a pity as there are distinct features of Chinese business practice, most notably Guanxi (networks of personal relationship and social influence), which differentiate the management of Chinese supply chains from that of Western countries. Guanxi may be conducive to the adoption of new models of collaboration in the logistics sector which will be needed to achieve a step-change in asset utilisation. It has been estimated that 40% of truck-kms in China are run empty, creating a big opportunity to cut the amount of truck traffic generated by the 6 trillion tonne-kms of freight movement on Chinese roads each year. Given the huge scale of Chinese logistics, seizing this opportunity would yield enormous economic and environmental benefit.

This is one of the ambitions of the growing green freight movement in China. From humble beginnings in a World Bank-funded green freight scheme in Guangdong in 2008 a nationwide China Green Freight programme has developed. This is funded by the national government and backed by NGOs, such as Clean Air Asia and the Smart Freight Centre, and by foreign development agencies like GIZ. In its Intended Nationally Determined Contribution (INDC) statement to the UN COP21 Climate Change conference in 2015, the Chinese government committed to ‘accelerate the development of smart transport and green freight transport’. The pressure is now on to deliver on this promise.

Posted in Discussion | 3 Comments

3 Responses to Reflections on Chinese Logistics

  1. Paul Brooks says:

    Alan, thanks for the blog notes (as always). How do you see the empty truck-kms improving from 40%. Given my days at Exel (now DHL of course) we had c30% empty running in 1996 and 57% of total capacity under-utilized – and we were good!
    We were recently in Suining with CILT and then Macao and HK looking at next year’s CCTA and CILT conferences. Our qualifications have pushed over 100,000 in 10 years so I believe we are trying to help!
    Keep up the good work.

  2. John perry says:

    Hi Alan
    Just wanted to make contact to let you know we are active in China and are setting up a team based in Suzhou. Of particular interest are two Supply Chain Best Practice Forums with logistics Benchmarking that we are building in two sectors – Automotive and Electrical. On our last visit we had a great reception on collaboration and our first Forums are being held straight after Chinese New Year. There are certainly some major challenges in the internal market but in many respects technology there is making step changes.

  3. Chuanwen says:

    very interesting!
    Guanxi is indeed the special chemical that cannot be avoided in China. This post also inspires me to think – maybe there exists other interesting distinct features in the area of passenger transport – considering the density of the population

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© Professor Alan McKinnon 2017

Kuehne Logistics University
Hamburg
Germany

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© Professor Alan McKinnon 2017

 

Kuehne Logistics University
Hamburg
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