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Logistics suffers slowdown

By Song Shengxia (Global Times)

08:25, June 26, 2013

China's logistics sector saw a slowdown in growth in the first five months year-on-year, with both logistics service prices and shipping prices experiencing a decline in May, official data showed Monday, underlining the impact of a slower economy on the country's logistics sector.

The total value of the goods dealt with by the country's logistics services rose by 9.2 percent year-on-year to 75.1 trillion yuan ($12.26 trillion) in the first five months, compared to growth of 9.4 percent during the first four months and down from the 10 percent year-on-year growth in the same period of 2012, data released by the China Federation of Logistics and Purchasing (CFLP) showed Monday.

Affected by slower growth of demand, the logistics service price index stood at 49.9 percent in May, 2.8 percentage points down from April and below the 50 percent threshold that divides expansion from contraction.

The China Coastal Dry Index, an indicator of the ups and downs of the logistics sector, fell by 8.6 percent year-on-year in the first five months, 0.2 percentage points greater than the drop seen in the period between January and April.

The Baltic Dry Index (BDI), a measure of shipping costs for dry-bulk commodities, dropped by 11.6 percent year-on-year in first five months to 823.9 points.

A BDI of below 2,000 points indicates that shipping companies will find it hard to break even.

"The weak growth of the logistics sector was partly a result of the macroeconomic slowdown. As the government has a greater tolerance for a slowing economy, the trend of slower economic growth may persist for a long period," Yan Shujun, director at the Logistics Statistics Department of CFLP, told the Global Times.

"With tight bank liquidity and no sign of a quick recovery of the economy, it is too early to tell whether the growth of the logistics sector has hit the bottom," Yan said.

China's economic growth stumbled to 7.7 percent in the first quarter, down from 7.9 percent in the fourth quarter of 2012, falling short of expectations for a strong rebound.

"There has been no turnaround in the real economy, so there is no strong driver for growth in the logistics sector," Wang Xianqing, director of the Research Institute of the Circulation Economy at Guangdong University of Business Studies, told the Global Times.

"It will take a long time, not months but years, for the sector to get through the hard times," Wang said.

But there are some positive signs in the development of the logistics sector.

Total costs in the sector rose 9.0 percent year-on-year to 3.7 trillion yuan in the first five months, a decline of 0.4 percentage points from the January-April period and down 3 percentage points from the same period of 2012, CFLP's data showed.

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