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The following is the Interpretation of the recovery degree and future growth trend of China’s logistics industry From Mckinsey recommended by recordtrend.com. And this article belongs to the classification: logistics, Mckinsey .
The global epidemic is rampant, but China has taken the lead in getting out of the shadow of the epidemic and stepping into the “new normal” of epidemic prevention and control. In this context, different forms of logistics show a variety of recovery forms, and are also facing new trends. Logistics enterprises should deeply analyze the macro-economy, industry trends and enterprise response level of enlightenment, grasp the new growth opportunities.
Return to growth: China’s economy recovers rapidly
China’s GDP growth reached 4.9% in the third quarter of 2020, which is at a high level in 2020, and the overall GDP growth in the first three quarters has turned from negative to positive. Specifically, there are three driving forces of economic growth
Trade of the troika: in the third quarter of 2020, the trade volume rebounded due to the recovery of demand, especially the significant increase of export growth. The trade volume between China and ASEAN, EU and the United States has maintained a steady growth and remained China’s top three trading partners. Although the trade volume between China and the United States decreased by 10% in the first three quarters of 2019, it will stop falling and rise by 2% in 2020. Affected by the rebound of trade, the domestic container trade throughput will reach a high level in October 2020. According to the statistics of China Port Association, the container throughput of the eight major hub ports in China in October increased by 11.1% year on year, showing a strong momentum. While the demand is strong, the shipping companies adjust their deployment rapidly. Compared with the response to the sluggish demand and reduced capacity at the beginning of 2020, a large number of capacity has been put on the market, especially to the U.S. routes. With the volume and price rising, the shipping industry ushered in the best profit cycle in recent years. At the same time, China Europe trains also benefit from the trade between China and Europe. In 2020, compared with last year, the growth rate is relatively high, with more than 1000 trains per month, becoming an important business card of China’s trade.
Consumption of the troika: if GDP is the barometer of national economy, then consumption is the barometer of GDP. Consumption is an indicator that all people can feel. In October 2020, the total retail sales exceeded 4% in the same period of last year, reaching 3.9 trillion yuan. What is gratifying is that the consumption of catering, which is an important part of the total retail sales, has reached a positive growth in October, and consumers are willing to enter restaurants, which directly shows their confidence in the economy and the prevention and control of the epidemic. Boosted by consumption, the express delivery industry has been on top of the dust. From the “contactless consumption” concept at the beginning of the epidemic to the “return to normal consumption” after the epidemic is gradually under control, and then to the “consumption feast” on the 11th and 12th of the lunar new year, the express delivery volume has increased by about 30%. Road transport and storage also rebounded driven by consumption. In recent months, road transport volume exceeded 7-8% of last year’s, and the storage industry index also exceeded the boom and bust line.
Investment in Troika: driven by real estate and infrastructure investment, fixed asset investment recovered to a better level; and private enterprise investment also showed strong vitality in the third quarter. In the transportation industry, in 2020, the state will introduce the construction of 22 new logistics hubs, which is not only a continuation of the national logistics hub strategy, but also a new vitality for the post epidemic construction.
Seize the opportunity: the new trend of China’s logistics industry under the “new normal”
After the epidemic, China’s economic development is showing a strong resilience. The logistics industry also has two important trends.
The trend of Logistics: break the bottleneck, improve efficiency and realize the smooth flow of double circulation logistics channel
The security and stability of logistics supply chain is becoming an important national development strategy. The logistics industry will usher in the great pattern of the modern logistics operation system of “channel + hub + network” constructed by the state, and form a new development pattern with the domestic large circulation as the main body and the domestic and international double circulation promoting each other. Under the new situation, we think that the key to realize the double cycle lies in two aspects:
1、 Break through the physical bottleneck: especially the comprehensive transportation capacity of railway, waterway and highway at important nodes such as physical hub and physical channel. At the beginning of reform and opening up, the slogan “to get rich, build roads first” represents the importance of roads for logistics and economy. Up to now, the transportation bottleneck in most areas of China has been improved, and the promotion of transportation mode for the economy no longer only depends on the highway, but also depends on the increase of multi-dimensional transportation capacity, which includes the railway, highway, waterway and other dimensions and the project connection between these transportation modes. (see Figure 1)
In fact, in 2018, the state proposed the construction of six types of logistics hub network to realize the smooth flow of logistics, cost reduction and the development of multimodal transport system; in 2020, the construction of new 22 logistics hubs will contribute to the coordinated development of regional circulation and cross regional circulation around Beijing Tianjin Hebei, Yangtze River Delta and Dawan district. According to the estimation of McKinsey Research Institute, these three regions will contribute 45% of GDP growth and 41% of population growth by 2028, which will be the top priority in the future and determine the future supply and demand market pattern. (see Figure 2)
2、 Improve the efficiency of management and logistics: through the seamless connection management of transportation modes, promote the efficiency of cross transportation modes, especially the multimodal transportation represented by rail water transportation and rail transportation. In the past decade, the proportion of social logistics cost in GDP in China has been declining, but the unreasonable overall transportation structure is the main reason for the high logistics cost. Take the United States as an example, the average transportation distance of American railway is 1600 km, which completes the long-distance and economic transportation form well, while the average transportation distance of Chinese railway is only about 730 km; the market share of American railway is nearly 40-50%, while that of China is only about 25%, which means that there is great potential for efficiency optimization based on transportation structure, especially for long-distance railway and waterway transportation Combined transport of rail and water, road and rail, etc. In order to optimize the transportation structure, we need to open up the whole chain transportation logistics system and establish a digital platform for resource sharing. (see Figure 3)
The trend of Logistics: expand the boundary to meet the needs of client-to-end integrated services
Customer demand has evolved from one or several modes of transportation to end-to-end service demand.
1、 Take the b-end as an example: many traditional b-end customers are putting forward diversified service requirements. In addition to the existence of traditional offline customized logistics services, many online one-stop end-to-end integration needs are emerging in the industry; they are eager to find a connection point to meet their main business needs. This is particularly obvious in the traditional maritime business transportation. In order to solve the problem that many importers and exporters need to connect with multiple stakeholders, in the maritime industry, some maritime platforms are adopting the mode of online platform and offline integrated service to provide three important differentiated services
1) Competitive product price: by directly signing a package agreement with the shipping company to lock the shipping space, avoid multiple forwarders to handle, and ensure the price is competitive;
2) Convenient and transparent online system: realize online real-time quotation and real-time tracking of goods (connect data nodes such as port, shipping company, warehouse and trailer to realize the whole logistics visualization from the place of departure to the destination);
3) Perfect offline service network: combined with terminals, warehouses and other resources, build a perfect network of domestic and foreign logistics suppliers on key routes (such as Latin America, Africa, Southeast Asia) to ensure the end-to-end service capability.
Similarly, in some iron and steel e-commerce platforms, they inject new vitality into traditional industries by integrating online and offline resources, providing online transactions, offline logistics distribution, technical services, big data analysis and financial value-added services. Through this mode, a leading iron and steel e-commerce platform has achieved more than 90% growth and more than 200 million tons of trading volume.
2、 Take the C-end as an example: the epidemic has become a new catalyst for e-commerce logistics, which makes e-commerce logistics further flourish. The logistics demand of enterprises has changed from the traditional single structure of online or offline to the service demand of online, offline and end-to-end integration. China’s urban retail sales will exceed 35 trillion yuan in 2019, maintaining an average annual growth rate of 11% in the past decade. What is more remarkable is that the rise of China’s middle class and the upgrading of urban consumption drive the rapid growth of high-end products, fresh products and other sub industries. The fast pace of life of consumers makes them pursue the most convenient and convenient way of consumption, which also intensifies the competition in the industry This pattern creates the integrated service demand of the consumer side for logistics enterprises (see Figure 4), and also puts forward higher requirements for the last kilometer distribution of the city.
How to deal with the new trend of logistics enterprises
Under the new normal, logistics enterprises can consider “new normal” from the following three aspects and grasp the growth opportunities.
1、 Upgrade the network and grasp the macro opportunities. One belt, one road, one should be built up. The logistics industry should take the pulse of the national strategy and upgrade the network, further improve the service network of domestic and foreign logistics enterprises, especially the opportunities emerging in key national strategies, such as the construction of “one belt and one road”, the new pattern of double cycle development, the coordinated development of Beijing Tianjin Hebei, the development of Yangtze River economic belt, the construction of the Gulf of Guangdong, Hong Kong and Macao, the integration of Yangtze River Delta region, and the new land transportation in the West. And so on. With the expansion of Chinese enterprises at home and abroad, more and more local enterprises have become international models. Logistics enterprises need to meet their service network at home and abroad, and provide reliable and high-quality cross-border integrated supply chain services.
2、 Optimize strategy and upgrade solution. Logistics enterprises should upgrade from simple logistics service providers to one-stop end-to-end supply chain solution partners: provide customers with integrated end-to-end solutions of goods flow, business flow and capital flow, establish an integrated platform, upgrade services and capture the profit margin of the value chain by cooperating with multi stakeholders in the ecosystem such as customers and suppliers Price. Of course, when expanding the boundary of the value chain, logistics enterprises need to grasp the general direction of “1 + n”, that is, a strong core: logistics enterprises need to first establish their own core competence, so that customers can generate loyalty and N cross boundaries based on the core competence; after establishing their own core competence, they need to expand upstream and downstream of the value chain to provide cross transportation mode, cross line online and offline, and cross value chain The integrated services of (see Figure 5)
3、 Temper the ability to build an intelligent logistics system. With the rapid development and popularization of new technology, domestic logistics enterprises have basically completed the informatization transformation, while leading enterprises continue to consolidate their competitive advantages by fully using digital transformation and automation application; to win in the future competition, we should deepen the understanding of customers and reshape customer marketing and management through digitization, and even innovate products and decision-making process to build intelligent logistics The system is expected to become a new normal for the iterative development of the logistics industry. This process undoubtedly needs talents and efficient organizational empowerment support in line with business and digitalization, as well as the far sighted decision-making and strong encouragement and guidance to innovation and subversion of logistics CEOs.
China’s logistics industry never lacks opportunities, but also contains challenges. In the “new normal”, only by grasping the new trend and constantly refining their own capabilities and solutions can logistics enterprises be invincible in the general situation.
McKinsey: the next decade of China’s private banking The proportion of China’s Internet economy in GDP has surpassed that of the United States McKinsey: 12 subversive technologies expected to appear in the world in 2025 McKinsey: development and obstacles of artificial intelligence McKinsey: meeting 2020 Chinese consumers McKinsey: Chinese medicine in the digital era McKinsey: how to realize the big data of automobile in the future McKinsey: 2016 McKinsey: luxury e-commerce is expected to account for 18% of total sales in 2025 China’s new China incapable of action: how covid-19 is going to speed up China’s global economic report: 2020: how to speed up the five major economic trends in the new crown epidemic? (McCoy): the white paper on China’s cross border Electricity Market Research (download): McKinsey: will traditional car companies look at themselves being subverted and powerless?
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