Logistics in China

105390 Resource 94086 93210 94146 1129881772054 1201209479318 Controlled China Inter-modal Gridlocks

Inter-modal Transportation Constraints in China

There are significant multi-modal/inter-modal gridlock challenges in China. Multi-modal transport networks for moving goods from China’s underdeveloped interior to the coast requires a set of transport modes offering connections between origins and destinations. The efficiency of such a network mainly resides in the transshipment capabilities of transport terminals. In addition, inter-modal and multi-modal transport necessitates a revolution in China’s organization and information control. At the heart of modern inter-modal and multi-modalism are data handling, processing and distribution systems that are essential to ensure the safe, reliable and cost effective control of freight movements being transported by several modes. However, in China infrastructure and logistics is managed at a regional level. Documentation and regulation vary by region, creating higher levels of complexity. Regional protectionism and illegal charges are still widespread at the local level. These problems produce a transport system that is segmented and un-integrated. Rail Transportation Constraints <ul><li>Weak inter-modal links </li><li>Break-bulk oriented, not export containers</li><li>Low volume capacity </li><li>Express service costs ~50% more than truck </li><li>Can’t guarantee space with express service Standard service has long lead time, hard to book space </li><li>No IT infrastructure for tracking shipments Delivery timeframes measured in weeks  </li></ul> Inland Waterway Transportation Constraints <ul><li>Little container cargo is fed to or from inland container ports by rail</li><li>Inter-modal operations not efficient (quality and safety problems, ie. accidents)</li><li>Inland waterways currently underutilized for long distance bulk commodity transport</li><li>Freight traffic accounts for about 15% of total domestic freight volume and ~60% of total freight turnover (tonnage x distance)</li><li>Difficulties related to traversing shallow waters</li><li>Capacity constraints in transport and handling facilities</li><li>Lack of standardized vessels leads to low utilization rates</li><li>FCL costs are high on some inland routes such as <st1:city w:st="on">Chongqing</st1:city> to <st1:city w:st="on"><st1:place w:st="on">Shanghai</st1:place></st1:city></li><li>Transit time inconsistent and longer than truck for long distance shipment</li><li>Waterway tariffs discriminate on basis of vessel or cargo ownership </li></ul> Ocean Transportation Constraints <ul><li>Bureaucratic customs processing leads to delays </li><li>Ports operating over capacity – demand for container facilities outstrips supply </li><li>Theft and damage rates tend to be higher than average for LCL cargo </li><li>Bottlenecks - in infrastructure, cranes, container yards, etc. </li><li>Difficulties achieving efficiencies in ship navigation and scheduling, berthing, cargo off loading, inspection, security, etc. </li></ul> Ground Transportation Constraints Transportation costs can represent as much as 75 percent of a company's total logistics costs in China, where ~20% of a products price is eaten up by logistics costs. Relative logistics costs in China can reach up to 50% higher than the US. China road transportation constitutes over 70% of domestic transportation, thus it is important to gain an understanding of costs and service levels of this mode of transport. <ul><li>Regulatory issues with trucking across provinces Finding reliable carriers </li><li>Fragmented cross-country truck service (with millions of trucking companies) </li><li>Majority of trucking companies are small scale operators </li><li>Lack of LTL service with broad reach </li><li>High deadhead rates (Miles and hours that a vehicle travels when out of revenue service) </li><li>Inefficient material handling </li><li>Higher damage rate due to poor packaging </li><li>Overloading of trucks to reduce unit transportation cost </li><li>Lower freight visibility/lack of tracking </li><li>Inefficient load/unload. (Palletizing and forklifts are uncommon. Manual process takes longer time.)</li><li>Multimodal transport difficult since only about 1/5th of heavy duty vehicles are containerized </li><li>Up to 40% of the price of a long distance haul consists of toll charges (20%-40% of a haul) </li></ul> 9 application/xml false china inter-modal china intermodal china logistics china multimodal china shipping china sourcing china supply chain global logistics global sourcing global supply chain Logistics in China GSX Worldwide Partner Group http://www.gxs.com/aboutUs_newsEvents_pr_08292005.htm Setting up the Supply Chain in China - Challenges and Changes UPS Presentation at Eyefortransport 2nd European 3pl Summit Nov 25th 2004 http://www.ups.com Transportation in China US Commercial Service http://www.buyusa.gov/china/en/transportation.html China Logistics Inbound Logistics Article http://www.inboundlogistics.com/articles/3plline/3plline0704.shtml On the Edge: The Changing Face of Supply Chain Management in China Accenture November 2002 Article http://www.accenture.com/xd/xd.asp?it=enweb&xd=services%5Cscm%5Cscm_thought_facechina.xml Logistics Inside China: The Next Big Supply Chain Challenge Global Logistics and Supply Chain Strategies September 2005 http://www.glscs.com/archives/09.05.china.htm?adcode=90 Mozilla/5.0 (Windows; U; Windows NT 6.0; en-US; rv:1.8.1.11) Gecko/20071127 Firefox/2.0.0.11 127.0.0.1 127.0.0.1 Establish 208.105.4.154 false true false false true 187565 false false true false false false true 94086 blog blogsite/ChinaSupplyChain/web