Flow of services in Logistics

TWO examples of the infrastructure that has helped make China a mighty trading power can be found on the outskirts of Shanghai: Yangshan, the world’s busiest container port, and Pudong airport, the world’s third-biggest handler of air cargo. Radiating out across the country are more than 100, 000km (62, 000 miles) of expressways and a comparable length of railways. Given all this new infrastructure, you might expect China to have a world-class logistics industry, too. It does not.

Logistics covers transportation, warehousing and the management of goods. Its Chinese translation, wu liu, literally means “the flow of things”. But that flow within the country is costly and cumbersome. Much of the investment in infrastructure has gone to lubricate exports. Now, as China’s government shifts its focus to consumption at home it is finding that the domestic logistics industry is woefully inefficient.

Logistics spending is roughly equivalent to 18% of GDP, higher than in other developing countries (India and South Africa spend 13-14% of GDP) and double the level seen in the developed world. Li Keqiang, the prime minister, recently echoed industry’s complaints that sending goods from Shanghai to Beijing can cost more than sending them to America.

Most warehouses are old and unmechanised. Goods are transferred up to a dozen times from vehicle to vehicle as they make their way across the country. There are no cargo hubs that help link freight from rail to road. The decrepit and overloaded lorries that ply the new highways are unable to find a return cargo on more than one third of their trips.

China has over 700, 000 trucking operators, most of them one-man outfits. (America has about 7, 000.) Scale is essential to the business, but the top 20 firms together make up barely 2% of the market. Nancy Qian of KXTX, a logistics firm, observes that companies compete so fiercely on price that most barely make any money, and so lack the funds needed to modernise or achieve economies of scale.

The industry is carved into niches, making it hard for integrated service providers to emerge. Sleepy state-owned enterprises such as Sinotrans and China Post control the markets for air freight and domestic post. Foreign express-delivery firms are salivating over the market but FedEx and UPS, for example, have been granted only limited licences for domestic delivery. More importantly, foreign firms are burdened with high costs that make it hard to compete for frugal customers against lean local rivals.

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Q&A

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What are the best logistics companies and freight forwarding service providers in India?

Wanted to know about the logistics companies in India and the freight forwarding sevice providers especially in Mumbai

PSAFL is one of the best & economical, you can also try with om logistics, blue dart penta freight.