Strategic Vision for Modernizing China'sLogistics Infrastructure
China has launched an ambitious nationwide initiative tooverhaul its freight transportation and logistics systems, targetingsignificant cost reductions and efficiency improvements by 2027. The ActionPlan for Reducing Costs and Improving Quality and Efficiency in Transportationand Logistics, co-issued by China's Ministry of Transport and the NationalDevelopment and Reform Commission in November 2024, establishes clear pathwaysto optimize freight movement, promote intermodal transportation, enhance infrastructurenetworks, and increase overall supply chain efficiency. This comprehensivestrategy aims to reduce the ratio of social logistics costs to GDP from thecurrent 14.4% to approximately 13.5% by 2027, representing a continuedimprovement from the 18% ratio recorded in 2012.
Quantifiable Targets Signal BoldTransformation Goals
The action plan establishes several concrete objectives tomeasure progress over the next three years. Beyond reducing logistics costs asa percentage of GDP, the initiative aims to increase ton-kilometers of railwayfreight by approximately 10% and grow rail-waterway intermodal transportationof freight containers at ports by an average of 15% annually. Additionally, theplan targets having more than 80% of port cargo transported by environmentallyfriendly means, including rail, waterways, enclosed belt conveyors, and newenergy vehicles. These metrics reflect China's determination to create a morebalanced, efficient, and sustainable freight transportation ecosystem that cansupport the country's economic development while reducing environmental impacts.
RailwayReform Takes Center Stage in Cost Reduction Strategy
A cornerstone of the action plan involves implementingsubstantial reforms in key areas of railway transportation, which has beenidentified as critical to achieving the desired logistics efficiencyimprovements. The plan calls for establishing a more market-oriented pricingsystem for railway logistics services and reforming the organizationresponsible for railway transportation and goods dispatch. These changes aim toaddress long-standing strategic positioning issues that have limited therailway sector's contribution to freight logistics. By increasing the share ofrailway freight volume and railway freight turnover to 11% and 23%respectively, China hopes to leverage rail's inherent efficiency advantageswhile reducing reliance on more costly and less environmentally friendlytransportation modes.
DigitalTransformation and Technological Innovation Drive Efficiency
The action plan emphasizes the critical role ofdigitalization and technological innovation in modernizing China's logisticslandscape. It calls for enhanced openness and interconnectivity of logisticsdata, improved integration of public resources from transport and customssectors, and accelerated development of smart infrastructure. The planspecifically promotes the development of new facilities such as smart roads,ports, logistics hubs, and parks. Additionally, it encourages the adoption ofemerging logistics models that integrate with the platform economy,low-altitude economy, and autonomous driving technologies. The use of unmannedvehicles, boats, drones, and warehouses is highlighted as a pathway toachieving greater operational efficiency and cost reduction across thelogistics value chain.
Supportfor New Energy Export Industries Highlights Strategic Focus
Recognizing the growing importance of emerging industriesto China's economic future, the action plan includes targeted measures tosupport exports of new products such as electric vehicles, lithium batteries,and photovoltaic equipment. The initiative aims to reduce logistics costsspecifically for these strategic sectors while ensuring the security andsmoothness of their supply chains. This focused approach demonstrates China'scommitment to fostering the prosperity of emerging industries that align withits broader economic and environmental goals. By optimizing logistics for thesehigh-value export sectors, China hopes to strengthen its competitive positionin global markets while advancing its transition toward a more sustainableeconomic model.
Integrated Development Between Manufacturingand Logistics Sectors
The action plan recognizes that addressing low supply chainlogistics efficiency requires promoting integrated development between thelogistics and manufacturing industries. This integration includes optimizingthe physical layout of these sectors to reduce transportation distances andimprove coordination. The plan calls for advancing railway lines into portareas, industrial parks, and factory zones to enhance the combined efficiencyof comprehensive transportation networks. This approach acknowledges thatlogistics efficiency is not solely about transportation infrastructure but alsoabout the strategic positioning of manufacturing facilities relative tologistics hubs. By fostering closer physical and operational integrationbetween these sectors, China aims to reduce unnecessary movement of goods andcreate more streamlined supply chains.
International Supply Chain EnhancementSupports Global Trade
While focusing on domestic logistics improvements, theaction plan also addresses China's role in global supply chains. It includesmeasures to optimize international supply chain operations, such asestablishing warehouses and ports abroad and improving the scheduling andcapacity allocation mechanism for China-Europe freight trains. Theseinitiatives aim to enhance cross-border transport efficiency and help Chineseproducts reach international markets more quickly and cost-effectively. Theplan also mentions avoiding double taxation as part of its strategy to improveChina's participation in global trade. These international dimensions of theaction plan reflect China's understanding that domestic logistics efficiency isincreasingly interconnected with its ability to participate effectively inglobal supply chains.
EconomicZone Development Centered Around Logistics Hubs
The action plan proposes spurring the development ofairport- and port-related economic zones, relying on the construction ofseveral national logistics hub economic zones. This approach recognizes thecatalytic role that well-designed logistics hubs can play in regional economicdevelopment. By concentrating economic activity around these strategic nodes inthe transportation network, China aims to create clusters of complementarybusinesses that can benefit from proximity to efficient logistics services. Thishub-centered development strategy aligns with international best practices inlogistics-driven economic development and could help create more balancedregional growth across China's diverse geography.
KeyTakeaways:
• China aims to reduce social logistics costs from 14.4% ofGDP to approximately 13.5% by 2027 through optimizing transportationstructures, strengthening national logistics hub systems, and modernizingservice networks.
• The action plan targets a 10% increase in railway freightton-kilometers and 15% annual growth in rail-waterway intermodal containertransport at ports, with more than 80% of port cargo to be moved byenvironmentally friendly means.
• Digital transformation plays a central role in thestrategy, with emphasis on smart infrastructure development, data integrationbetween transport and customs sectors, and adoption of technologies likeunmanned vehicles, drones, and automated warehouses.
