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New guideline targets logistics

By Zhao Qian (Global Times)

08:15, February 27, 2013

Seven Chinese ministries co-released a guideline Tuesday aimed at setting up a more efficient and high-tech urban logistics system within five years in China, raising doubts among experts about whether the goal can be realized in such a short time, as the issue has always been a tricky one and urban distribution is still in the early stages of development.

The government will offer more support to the construction of urban distribution centers, as well as upgrading current freight hubs, according to the guideline released by seven ministries including the Ministry of Transport and the Ministry of Industry and Information Technology.

This is the first time the seven ministries have worked together to target improving the country's urban freight distribution system, though no detailed measures were released in the guideline.

Urban distribution refers to the last but most important step in nationwide logistics, when the product is finally delivered into the hands of the consumers. But in China it is still in its early stages.

Pang Shiming, general manager of E-trans Information Development Co, affiliated with China Merchants Logistics, doubted that the ministries' working target will be realized within five years as "the issues of the logistics industry are too complicated."

"Few logistics and transportation companies want to do the business of urban distribution because of its small profit margin," Pang told the Global Times Tuesday.

"Urban distribution is where accidents tend to happen," Pang said, giving examples such as traffic jams causing temperature-sensitive goods to spoil. Logistics companies can also be penalized by manufacturers if they deliver goods late.

To avoid traffic jams in downtown areas, the ministries encouraged logistic companies to rent and share third-party distribution centers.

The guideline also asserted that comprehensive and unified laws and regulations related to urban distribution will be launched within five years.

Currently, different ministries have their own regulations for logistics, "which has caused a lot of trouble for the distribution companies," Pang noted.

Yang Zhiping, owner and chairman of the private Henan Changtong Logistics Co, told the Global Times that "ministries are always planning a bright future for the industry, but local governments always have a hard time achieving it."

Although insiders have their concerns, the share prices of some logistics and distribution companies rose Tuesday, buoyed by the guideline.

Shenzhen-listed Xinning Logistics rose by 3.44 percent, closing at 9.92 yuan ($1.59) per share. Shenzhen Feima International Supply Chain Co climbed by 2.16 percent, closing at 5.21 yuan per share.

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