Share prices of Chinese Logistics Companies surged on Thursday after the Central Government said it would develop a modern distribution system to bolster economic development, with experts expecting more upswings after detailed measures are announced.
Speaking at the Eighth meeting of the Central Committee for Financial & Economic Affairs on Wednesday, President Xi Jinping said; Coordinated efforts are needed to advance the construction of a modern logistics system to provide strong support for a new development pattern. He also said the distribution system plays a fundamental role in the national economy, and constructing the modern logistics system should be seen as a strategic task.
Zhangjiagang Freetrade Science & Technology Group Co Ltd shares surged by the daily limit of 10 percent, while SF Holding Co Ltd shares rose by 1.53 percent. Sinotrans Ltd rose by 1.6 percent while CTS International Logistics Corp Ltd gained 0.31 percent.
“The President’s remarks underscored the development of logistics as a national strategy. The creation of a modern transportation system and the other national development schemes as well as the Belt and Road Initiative will foster a new round of economic advancement in the nation,” said Lin Guolong, director of the Logistics Research Center at Shanghai Maritime University.
Xie Xiaowen, a researcher with the China Society of Logistics, considers the logistics sector to be a basic, strategic and leading industry that supports national economic growth. The modern logistics system is based on science and technology, advanced scientific theories and extensive logistics practices, all of which seek to integrate the processes and factors related to distribution and supply chains.
Xie said that building a modern logistics system will be a significant change that can speed up the transformation and upgrade of the traditional logistics sector in the country and foster high-quality development.
Logistics is already playing a substantial role in Chinese people’s daily life, and it is fundamental to maintaining stable supply chains. More efforts should be focused on balanced development, enhancement of technology inputs, as well as terminal distribution improvements, said Lin from the Shanghai Maritime University.
A statement released after the meeting said that cargo capacity on high-speed railways and international flights must be increased so as to build a safe, efficient logistics network connecting internal and external markets.
Yang Daqing, a logistics industry expert, said improving the facilities and service capabilities in the modern logistics system will help reduce supply chain costs of enterprises and enhance their core competitiveness, as well as open up the huge potential in the domestic consumption market.
Kuang Peiqin, an industrial analyst with Zheshang Securities, expects detailed guidelines to support the growth of Chinese express courier firms both at home and abroad.
Compared to their global peers, domestic logistic firms are currently ahead in terms of network, efficiency and quality. But the international distribution business of Chinese companies still lags behind the established global players like FedEx, UPS and DHL, according to Kuang.
Major Chinese courier firms have been constantly expanding their overseas network and are slowly seeing a growth in their overseas business.
Best Inc is one of the Chinese express delivery companies that is actively exploiting the overseas logistics and supply chain network despite the COVID-19 epidemic effect. The Hangzhou-based company has formed express delivery networks in Thailand, Vietnam, Malaysia, Cambodia and Singapore.
The firm has also charted plans to team up with more partners to build a global logistics and supply chain network, said Jonny Chou, founder and chairman of Best Inc.
China will also develop a number of globally competitive businesses in the distribution sector and promote their capabilities in transformation and integration with digital and smart technologies.
JD Logistics, the logistics unit of Chinese e-commerce giant JD, has already ramped up efforts to adopt innovative automation technologies that range from automated sorting to unmanned warehousing and robots to enhance its logistics capacity and capability.
In addition, JD launched the country’s first 5G-powered smart logistics park in Beijing last year that enables real-time monitoring and analysis, and intelligent decision-making to increase operational efficiency.