Distribution is becoming more coordinated with the supply chain thanks to the application of automation and artificial intelligence
In the past several years, the accelerated development of China’s smart logistics has propelled an industry revolution in China. After the “Double Eleven” shopping spree on Nov 11, 2017, 100 million parcels were delivered within 2.8 days, quicker than the 3.5 days needed in 2016 and three times faster than in 2013. Express companies used big data to sort orders, increasing the speed by 2 to 3 seconds per order and making warehouse sorting 50 percent more efficient. China’s e-commerce logistics have now reached a first-class level in terms of timeliness and technological capacity. The rapid development has been particularly evident in rural areas and cross-border e-commerce logistics and the cold chain for fresh products. As e-commerce is entering and expanding in rural areas, supporting logistics and delivery services are accompanying it, improving service quality and lowering logistics costs in these areas. Smart cross-border logistics has facilitated Chinese logistics companies going into the global market. Chinese companies have put forward the strategic goal of reaching anywhere in the world with their service within 72 hours. Meanwhile, cross-border logistics are becoming more transparent.
The application of automation technologies and artificial intelligence are making logistics more automated and intelligent. Logistics are becoming more secure and environmentally friendly. Rates of error, damage and accidents have dropped dramatically and energy efficiency in the industry has increased, thus lowering the environmental cost. At the same time, however, there are still problems facing China’s logistics industry, such as unbalanced and inadequate development and low service quality. The current system cannot meet the needs for the development of smart logistics. While resources are fragmented in transportation, warehousing, delivery and information, leading to poor service capability. Traditional logistics are not able to meet the demand in both quality and quantity raised by various kinds of e-commerce and the fast-changing business model.
The bottleneck problems are becoming more acute in the face of the boom in online retailing and local delivery needs. First, express services in some special and important sectors are still in their infancy, such as cold chain logistics and the delivery of medicines. Second, logistical infrastructure for e-commerce is extensive and not well coordinated. There is an urgent need to make systematic plans for the redundant and idle logistics parks and warehouses. Some storage companies fail to understand market needs and need to diversify their business.
Third, there is a lack of competent professionals, which is the main obstacle for the development of the logistics industry. People working for this industry are often considered temporary workers in low-end jobs, and are not recognized and valued. And due to the lack of systematic and long-term training, their overall competence and capability lag far behind the fast expansion of their industry; while the tough working conditions, long hours and little vacation time lead to a large turnover of workers in this industry. Fourth, traditional logistics companies that have not yet embraced digital technologies will face huge challenges for survival. Data security, data monopoly and privacy protection will become new focal points. Looking ahead, smart logistics will speed up the modernization of China’s logistics industry and usher in a revolution. Smart logistics will step from the initial stage of rapid increase to the higher stage of high-quality development. Logistics will become more coordinated with the supply chain in terms of systems, functions, spatial layouts and market players. First, digital infrastructure will improve the service quality. In particular, further application of electronic receipts, big data, cloud computing, the internet of things and artificial intelligence will make smart logistics the direction of the industry.
Second, the railway, highway, waterway, air and postal cargo operators will strive to integrate with the internet, digital and intelligent technologies and platforms to boost their own transformation and development. Third, the development of crossborder e-commerce will enhance Chinese logistical companies’ international competitiveness and localization capabilities in host countries. Whether logistics companies can fully integrate local resources, provide tailored services to local customers and ensure the same profit rate as local companies will decide the success of their international drive and sustainable development.
The logistics industry in China is embracing major changes. The fragmented model of the past will be replaced by a new logistics service system that is interconnected and shares resources. Online and offline resources of production, circulation and consumption will be combined and integrated, giving birth to a batch of global logistics companies and a strong, intelligent and green nationwide logistics service system. The author is the director of research department of industrial economy under the Development Research Center of the State Council. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.