Exclusive interview with Wei Jigang: Do a good job in "road to rail" and "road to water" to effectively reduce logistics costs
2024-08-17
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Focus on the series of comments on the Third Plenary Session of the 20th CPC Central Committee
From July 15 to 18, 2024, the Third Plenary Session of the 20th Central Committee of the Communist Party of China was held in Beijing. The meeting reviewed and passed the "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization", and the full text was announced on July 21.
The Third Plenary Sessions of the CPC Central Committee have always focused on reform and development, and are conferences that attract the attention of the whole country and even the world. Historically, many major reform measures and guidance on development directions have been initiated at the Third Plenary Sessions. The Third Plenary Session of the 20th CPC Central Committee is no exception. The "Decision" reviewed and adopted at this plenary session has drawn a new blueprint for the future development of China's economy and society.
Starting today, the Beijing News Commentary Department will launch a series of commentaries to provide in-depth interpretations of all aspects of the "Decision" that concern the national economy and people's livelihood for the benefit of readers.
▲Researcher Wei Jigang. Photo provided by the interviewee
Expert Business CardWei Jigang is the deputy director of the China International Development Knowledge Center and a researcher at the Development Research Center of the State Council. He is a well-known industrial economist, development strategy expert, logistics expert, academician of the International Logistics and Transport Society, and concurrently vice president of the China Logistics Society.
Logistics is an important part of the modern circulation system. Therefore, logistics cost and logistics efficiency have a significant impact on circulation cost and circulation efficiency.
Data from the National Development and Reform Commission and the China Federation of Logistics and Purchasing show that in 2023, the total social logistics costs will be 18.2 trillion yuan, a year-on-year increase of 2.3%. The ratio of total social logistics costs to GDP is 14.4%, down 0.3 percentage points from 2022.
Despite this, there is still a big gap compared with the requirement of the "14th Five-Year Plan for Modern Logistics Development" that the ratio of total social logistics costs to GDP should drop to 12.7% by 2025. In particular, compared with some countries, this figure is not only much higher than that of the United States and the European Union, but also significantly higher than the approximately 10% of the 10 ASEAN countries.
Research by relevant institutions shows that in developed countries, logistics costs account for an average of 10%-15% of the final cost of products, while the logistics costs of Chinese manufacturing companies are sometimes as high as 30%-40% of production costs. The high logistics costs have also become a bottleneck that restricts the manufacturing industry from becoming bigger and stronger and solving the "three rural issues".
Therefore, how to reduce logistics costs has become an important issue that needs to be tackled in my country's economic and social development in recent years. The central government has also attached great importance to this.
For example, the Central Economic Work Conference held in December 2023 proposed to effectively reduce the logistics costs of the whole society. The fourth meeting of the Central Finance and Economics Commission held in February 2024 once again emphasized the need to effectively reduce the logistics costs of the whole society and regard it as an important measure to improve the efficiency of economic operation.
The "Decision of the CPC Central Committee on Further Comprehensively Deepening Reform and Promoting China's Modernization", which was released in full on July 21 this year, once again clearly stated that "we should improve the circulation system, accelerate the development of the Internet of Things, improve the integrated circulation rules and standards, and reduce the logistics costs of the whole society."
So, how can we effectively solve the long-standing problem of high logistics costs and provide strong support for unblocking the national economic cycle and promoting high-quality development? To this end, the Beijing News interviewed Wei Jigang, deputy director of the China International Development Knowledge Center and researcher at the Development Research Center of the State Council.
Multiple factors affect the high logistics costs
Beijing News:How do you view the current problem of logistics costs accounting for a relatively high proportion of GDP in my country? What are the main reasons for this problem?
Wei Jigang:There are many reasons why logistics costs in my country are relatively high.
First, in terms of the system, the main problems include the fact that the comprehensive transportation system has not yet been fully formed, the logistics service system is not yet sound, the "large-scale, intensive, and efficient" modern circulation system has not yet been formed, the supply chain management system is lacking, the logistics standard system is not sound, the logistics information service system is not perfect, the international logistics system is weak, and the emergency logistics service system is seriously lagging behind.
The second reason is the industrial level. Among the three industries in my country, the proportion of the primary and secondary industries is much higher than that of developed countries. In the industrial structure, heavy industry accounts for a large proportion, and the energy structure is mainly fossil energy such as coal, oil, and natural gas. This makes the logistics volume generated per unit GDP large, and the proportion of logistics costs to GDP is relatively high.
At the enterprise and factor level, most of my country's production and distribution enterprises are either "big and comprehensive" or "small and comprehensive", and third-party logistics enterprises are not of high level, with low levels of professional, refined and systematic services, especially lacking the ability to provide a package of services. In addition, there are also factors at the institutional and policy levels.
my country's logistics market system is not yet perfect. A unified, open, fair, competitive, standardized and orderly logistics market system has not yet been formed. Problems such as market segmentation, monopolistic behavior, and lack of integrity are prominent. Administrative segmentation between regions and lack of overall planning have not yet formed a development synergy, and factors such as logistics, express delivery, and distribution vehicles are difficult to flow efficiently.
At the same time, the influence of natural geographical factors cannot be ignored. The complex geographical environment will undoubtedly increase the investment in funds, manpower and materials for logistics infrastructure, and the requirements for construction technology are also correspondingly higher. The natural geographical environment affects the spatial scope of logistics activities and also affects the cost of logistics activities.
Optimizing logistics and transportation structure is simple and effective
Beijing News:In the process of promoting the optimization of the logistics system, what are the main measures that you think can effectively reduce transportation costs? At present, what are the challenges and opportunities in the specific implementation of multimodal transport solutions such as "road to water" (road to waterway) and "road to rail" (road to rail)?
Wei Jigang:Effectively reducing transportation costs is a systematic project. High-quality development of logistics first requires the promotion of logistics networking.
It is necessary to improve and optimize the logistics infrastructure network, organizational network, operation network and information network, and build a modern logistics service system that effectively connects different levels and functions, including international and domestic, eastern, central and western, coastal and inland, urban and rural, provincial, municipal, county and township, and socialized and self-operated.
Judging from the statistical data, accelerating the adjustment of transportation structure has certain effects on improving logistics efficiency and reducing transportation costs.
It is estimated that for every 1 percentage point increase in the proportion of multimodal transport in my country, the total logistics cost can be reduced by about 0.9 percentage points, and the social logistics cost can be saved by up to 100 billion yuan. Therefore, it is particularly urgent to strengthen the "road to rail" and "road to water" mode of transport of some goods from road transport to rail transport and water transport.
The challenges faced in its implementation mainly include unbalanced infrastructure development. For example, the connection between railways and ports is currently achieved through some "reverse short transportation" methods, which results in inefficient loading and unloading and turnover.
For example, some regions have insufficient railway collection and distribution capabilities, especially a shortage of dedicated railway lines. The poor connection between railway transportation links increases the number of transshipments, and the "last mile" problem is prominent.
In addition, road, rail and water transport lack standardization and coordination mechanisms, information sharing is not smooth, each mode of transport planning and construction is self-contained, cross-mode connection lacks overall planning, information resource sharing is insufficient, and institutional standards and norms are not unified. At the same time, price issues are also an obstacle to "road to rail".
Road transport has problems such as overloading and excessive competition to varying degrees, which has led to low road freight rates and reduced the price advantage of rail transport. Therefore, it is necessary to further standardize freight charges, reduce the level of "door-to-door" railway freight rates, strengthen the service charge management of railway and port enterprises, and increase fiscal and financial support.
In addition to effectively reducing logistics costs, doing a good job in "road to rail" and "road to water" also plays an important role in promoting the realization of the "dual carbon" goal. Because in this regard, railways and waterways have more advantages.
Transportation is one of the main areas of greenhouse gas and air pollutant emissions in my country. The energy consumption intensity per unit of freight turnover in railway transportation is 1/7 of that in highway transportation, and the pollutant emission intensity is 1/13 of that in highway transportation. The energy consumption intensity per unit of water transportation is even lower than that in railway transportation.
Continuously optimizing the transportation structure and promoting the "road to rail" and "road to water" transportation of bulk materials is one of the most effective ways to help achieve carbon peak and carbon neutrality.
Promote the refinement of the logistics industry, meet the needs of the increasingly stratified, decentralized and refined market, closely follow the needs of user experience, industrial upgrading and consumption upgrading, apply intelligent technology, and realize all-round connection of logistics resources and smart logistics services.
Integrate with industries and regions to promote the coordinated and interactive development of the logistics industry with various sub-industries and regional economies. At the same time, promote continuous innovation in logistics management so that the logistics industry can create more value to meet the needs of economic and social development.
Smart logistics has become the engine of logistics reform
Beijing News:We noticed that you also published a monograph in June this year, "Towards a Logistics Power", which discusses the systematic reform and high-quality development of my country's logistics industry. In the digital age, what specific role can the smart logistics services you mentioned above play in the reform and high-quality development of my country's logistics industry?
Wei Jigang:Logistics is a network system that connects producers, sellers and consumers, and plays an increasingly important role in the modern economy. The construction of smart logistics has become an important engine for promoting supply-side structural reforms in the logistics industry. I also specifically talked about this in my book Towards a Logistics Powerhouse.
The essence of smart logistics is the informatization, digitization, onlineization and intelligence of logistics resources, factors and services, and the realization of efficient allocation of logistics resources and factors through the connection, flow, application and optimal combination of data, so as to promote the improvement of quality and efficiency of logistics services, and the virtuous interaction between logistics, the Internet and related industries.
In other words, smart logistics is promoting my country's logistics revolution by recombining and efficiently connecting logistics elements, resources and markets, and will also significantly reduce the logistics costs of the whole society. In particular, the application of modern information technologies such as big data and cloud computing will greatly improve logistics efficiency, thereby reducing costs and increasing efficiency.
Stimulated by the huge demand for e-commerce in my country and supported by information technology, business models are constantly innovating. Coupled with China's huge team of couriers and delivery personnel, this is China's unique comparative advantage, enabling logistics to move towards efficiency, precision, visualization, and sharing, greatly improving logistics operation efficiency and service levels.
For example, the “Double 11” package receipt time is advanced year by year because after the express delivery company started using big data routing and order splitting, the order splitting speed was increased by 2-3 seconds per order and the warehouse sorting efficiency was increased by more than 50%.
Beijing News:What role do you think the Internet of Things plays in modern logistics? What prospects and development directions can further promote the reduction of logistics costs in the future?
Wei Jigang:The Internet of Things realizes the interconnection of people, objects, and services within an enterprise, as well as between enterprises, between enterprises and users, and between users, the integration of online and offline, and the coordination of resources and factors.
Therefore, the Internet of Things is not only a new mode of production, organization, operation, and resource allocation, but also a new infrastructure. It is the product of the deep integration of the new generation of information network technology with agriculture, industry, and service industries. Accelerating the development of the Internet of Things will help improve the efficiency of production and circulation operations and smooth the supply chain.
For example, promote the integrated development of hardware, physical infrastructure, software, digital infrastructure, etc., enhance the resilience, flexibility and market responsiveness of the industrial ecosystem, and promote intelligent production, flexible production, lean production, large-scale personalized customization, and green production.
The Internet of Things can also empower the company's inspection and testing system, judge the operating status of products and equipment based on leading indicators, prevent malfunctions from occurring, and at the same time realize automatic product detection, full traceability and visualization, implement intelligent quality inspection, and improve quality management.
Faced with the rapid development of technology, the ever-changing market and the complex international environment, the Internet of Things enables enterprises to connect to the market more widely and deeply, perceive changes, respond to needs quickly, provide better quality and more appropriate products and services, and continuously promote the upgrading of the modern circulation system.
“Soft connectivity” needs to be smooth as soon as possible
Beijing News:In terms of improving the circulation system, what specific suggestions do you have to achieve the goal of reducing logistics costs? How can we improve logistics efficiency by improving integrated circulation rules and standards?
Wei Jigang:If logistics infrastructure is a "hard connection" measure for building a new development pattern, then the integrated connection of rules and mechanisms is a "soft connection" measure for building a new development pattern. At present, the degree of modernization of my country's circulation system is still not high, and there are still many weak links. This is mainly reflected in two aspects:
On the one hand, the free flow of domestic goods and factors still faces hidden barriers, market access discrimination still exists, regulatory rules in different regions are still not unified, local protectionism still exists, and the construction of rules and standards systems is relatively lagging, which restricts the establishment of a unified national market.
On the other hand, there are still shortcomings in the integration of domestic and foreign trade. The integrated regulation system is not perfect enough, the ability to coordinate the use of two markets and two resources is not strong enough, the integration and development of domestic and foreign trade is not smooth enough, and it cannot fully meet the needs of building a new development pattern.
Therefore, improving the integrated circulation rules and standards is the foundation for building a unified national market. How to improve it? This requires formulating circulation rules and standards that are suitable for my country's national conditions, giving full play to the positive role of intermediary organizations, industrial technology alliances, and backbone core enterprises, and increasing the application of rules and standards in the circulation field.
At the same time, we will improve the circulation market access and fair competition system, optimize the "one-stop service" and "one-stop service" business processes, deepen the "separation of licenses and certificates" reform, significantly reduce the number of pre-administrative licensing intermediary service items in the circulation field, study and formulate a list of general qualifications in the circulation field, and improve the level of commercial services.
In addition, we must strengthen anti-monopoly and anti-unfair competition law enforcement, implement the fair competition review implementation rules, and maintain fair competition order in the market.
To solve the shortcomings of the integration of domestic and foreign trade, the first thing we need to do is to promote the connection between domestic and foreign trade standards, benchmark against international advanced levels, establish and improve a working mechanism for tracking and transforming international standards, transform a batch of advanced and applicable international standards, and continuously improve the conversion rate of international standards.
Secondly, it is necessary to promote the connection between domestic and foreign trade inspection and certification, encourage inspection, testing and certification agencies to provide "one-stop" services, and promote international cooperation on inspection and quarantine electronic certificates with more countries.
At the same time, it is necessary to promote the coordination of domestic and foreign trade supervision, strive to break down all forms of local protectionism and market segmentation, accelerate the construction of a unified national market, promote the smooth flow of domestic and foreign trade resources and factors, and promote fair competition between domestic and foreign-funded enterprises.
In addition, we must strengthen the protection of intellectual property rights of domestic and foreign trade enterprises, implement the e-commerce platform's responsibility to review the qualifications and products of online operators, improve the complaint and reporting handling system, and promptly correct and stop online infringements.
Finally, it is necessary to improve the construction of the credit system for domestic and foreign trade enterprises, encourage domestic and foreign trade enterprises to use credit tools such as credit reports, insurance, and factoring to prevent market sales risks, promote e-commerce platforms, industrial clusters, etc. to carry out pilot projects for credit system construction, and create a credit environment that is conducive to the smooth flow of domestic and international markets.
Mechanism reform reduces costs and increases efficiency in the logistics industry
Beijing News:At the policy and institutional level, which institutional mechanisms do you think need to be further optimized to better support cost optimization in the logistics industry?
Wei Jigang:I believe that this requires building good systems and mechanisms from several aspects.
In terms of standardizing freight charges, we must simplify the railway transportation pricing mechanism, further cancel and merge railway freight charges, promote the reduction of local railway freight rates, promote the reduction of local railway charging standards that implement government guidance prices and government pricing, reduce the railway "door-to-door" full-journey freight rate level, and strengthen the service charge management of railway and port enterprises.
We will increase financial and taxation funding support at all levels, and adopt the approach of "moderate fiscal subsidies + moderate railway price reductions + moderate burden sharing by cargo owners" to enhance the competitive advantage of railway transportation.
For example, the central and local governments will arrange special funds for transport structure adjustment to support the development of "road to rail", "road to water" and multimodal transport. Railway transport companies should also continue to maintain preferential freight rates to ensure that the effects of tax and fee reductions are passed on to cargo owners and increase their enthusiasm for using rail transport.
Logistics enterprises with obvious advantages are encouraged to actively engage in mergers and reorganizations to cultivate large-scale, networked, branded and modern logistics enterprise groups.
Encourage large logistics enterprises and small and medium-sized logistics enterprises to give full play to their respective advantages and achieve win-win cooperation. Advocate small and medium-sized logistics enterprises to strengthen information communication and improve service capabilities, quality, professional level and characteristics through mergers and reorganizations.
Deepen the reform of state-owned logistics enterprises, support them in improving mechanisms, reorganizing businesses and optimizing governance structures. Promote the strategic reorganization of state-owned logistics enterprises, and encourage private logistics enterprises to actively participate in the reform and reorganization of state-owned logistics enterprises through various forms such as equity participation, controlling shares and asset acquisition.
In this process, we should also welcome the entry of social capital from outside the industry, and encourage production, distribution companies and logistics companies to carry out joint reorganization to jointly promote the prosperity and development of the logistics industry.
Promote strategic cooperation and business collaboration among logistics companies, manufacturing companies, e-commerce companies and related stakeholders, form efficient supply chain cooperation, and promote the full electronicization and visualization of the supply chain. In particular, encourage manufacturing, distribution and logistics companies to jointly carry out joint distribution, increase vehicle load rates and resource utilization, and reduce repeated transportation.
At the same time, we must also support logistics companies in building integrated information platforms, strengthen supply chain design, systematically plan the structure of business flow, logistics flow, information flow and capital flow, promote the synchronization, integration and integration of supply chain operations, promote supply chain resource integration and channel integration, and meet consumer needs with the best supply chain services and more value-added services.
It is also necessary to strengthen the supervision and inspection system for transport structure adjustment, incorporate the implementation of transport structure adjustment by local government departments and key industrial and mining enterprises, port enterprises, and railway enterprises into the relevant inspection content of air pollution prevention and control and carbon peak, and at the same time improve the incentive and punishment mechanism.
Only by advancing in this way in a systematic and long-term manner can we scientifically and effectively reduce the logistics costs of the entire society, significantly improve logistics operation efficiency and service levels, and provide strong support for unblocking the circulation of the national economy and promoting high-quality development.
Written by Beijing News reporter Xiao Longping
Editor/ He Rui
Proofreading/Liu Yue
