The 2015 Logistics and Transportation Vehicles Summit, organized by the Automotive Committee of China Council for the Promotion of International Trade (CCPIT-Auto), was held on November 13 in Wuhan, Hubei Province. Experts and executives from truck manufacturers and logistics companies shared their perspectives on recent development and future trends of the logistics industry. Below are highlights from the event. – Editor
Dai Dingyi: Logistics finance new growth point
China’s economic development has entered into a demand-orientated era, according to Dai Dingyi, executive vice director of China Society of Logistics. Cross-border business and logistics finance have emerged with statistics service a significant component of the business of logistics companies, including risk control, perfection, prediction and data products, etc. Mass customization will be the next round of industrial revolution. Logistics finance has become the real business of many enterprises, and Dai suggested they not lose their main business focus: logistics transportation.
Cai Weiyang: logistics transportation to become more like express delivery
Express delivery and logistics industry will become more comprehensive, professional and city integrated, according to Cai Weiyang, strategy director of Feng Wang Investment Co., Ltd., whose stakeholders are five executives from the top 6 express delivery companies in China. Larger business scale and falling profit will reduce the number of logistics companies as consolidation speeds up.
The logistics industry growth pattern will transfer from extensive to intensive. Logistics companies will move up in the value chain and upgrade into technology and capital intensive model. According to Cai, large logistics companies will turn into comprehensive ones, medium enterprises will transform to professional ones, while personalization will become the key word of small companies.
China will have 6-8 major express delivery and logistics companies in the future with the top 8 companies taking up 85 percent of the market shares, predicted the director.
Cai also believes that China’s logistics industry will become more like express delivery in the future with features like door-to-door, time-definite express services, and value-added services. Business volume of express delivery will grow 25 percent on average annually, while that of logistics industry will rise only 10 percent, said Cai.
Feng Wang conducted a truck usage survey of four major private express delivery companies, namely STO, YTO, ZTO and Yunda. Dongfeng brand trucks are of the highest usage rate, while Foton Auman and Jiefang trucks rank second. The top 3 influencing factors in the choice of trucks for truck drivers are cost, safety and reliability, and engine power, according to Cai.
Around 70 percent of YTO express delivery trucks and 90 percent of ZTO trucks are Auman branded, while Dongfeng branded trucks dominate the usage of Yunda and STO fleets at 90 percent and 60 percent respectively, indicating a different development strategy of companies.
Cai Zhen: asset-light strategy to become mainstream
Cai Zhen, general manager of central China business department of Xinbang Logistics Co., believes that an asset-light strategy will go mainstream in tomorrow’s logistics industry. “Most vehicles in the future will come from the society with few self-owned vehicle investment,” said Cai. The industry can integrate effective social and human resources through benefit and risk sharing. The core management function will then change from parent management to partner management model.
Gao Lizhong: time-share rentals to emerge
City commercial vehicles are confronting four challenges, namely stricter emissions standards, increasing purchase cost, higher operational cost and complicated vehicle scheduling, said Gao Lizhong, general manager of special-purpose vehicle department, Dongfeng Automobile Co., Ltd. Electric vehicles are able to connect energy source, and information network with vehicles and gradually form the new energy city logistics transportation model with logistics companies as entities. Logistics companies would team up with financial institutions to purchase vehicles, acquire subsidies, and develop relevant software in promoting logistics operation model focusing on rentals. “The core of the internet is sharing,” said Gao, “The right of use and ownership can be separated. The boom of new energy vehicles is around the corner because they are adaptive to centralized and intelligent scheduling.”
At a panel discussion on the future of commercial vehicle and logistics transportation industry, Fan Ruiwei, president assistant of Sinotrans & CSC, shared an example that a commercial vehicle manufacturer has grown 30-50 percent this year to date despite the overall 40 percent decrease thanks to the rising sales of quick delivery vehicles and cold chain transportation vehicles of the company. The recipe of success, according to the manufacturer, is to apply small engines and big carriages on quick delivery vehicles and large power engines and small carriages on cold chain vehicles, because the former need more delivery volume while the latter requires larger engine power to drive refrigerator and cooling system. This example shows that mass production and mass customization are of key importance and is able to bring real benefits to the manufacturers, according to Fan.
Guo Xizhou, central China sales general manager of CIMC said that sales of refitted vehicles plunged 60 percent compared with the previous year and that of logistics vehicles dropped 23-27 percent. The logistics industry in northwest China has been heavily hit with a decline of 37 percent, higher than the industry average. Oil tankers have seen large increase in northwest region this year because of the secondary processing to coal requested by the government, which made aluminum alloy liquid tank the largest growth segment. “Transformation of the logistics industry should abide by government policies, and refitted products should transform in line with the logistics industry,” commented Guo.
Ma Changdong, marketing director of Nanjing-IVECO, believes that electrification is the only way out for city light-duty trucks. According to Ma, there is a wide gap between China’s road planning and transportation requirement. Road requirements are different in all provinces, which urged certain enterprise to develop 10,000 models even with only 100,000 units of annual production. “Only electric vehicles can solve the problem and realize all refitted demands for chassis,” said Ma. “Internet+ and e-commerce are the next steps for China’s logistics industry and EVs will change the lifestyle of human beings for sure.”