Is China's logistics cost really high?

The concept of "high logistics costs in China" has a long history. The most widely quoted data from this argument is that China's logistics costs account for 18% of GDP, while the United States and other developed countries are 8-9%, and China is twice as much as the United States.

Is China's logistics cost really high? The cost of logistics in a country is not high. Should it be measured by the ratio of logistics costs to GDP?

Producing the same dollar of GDP, the amount of freight generated in different economic structures is not the same. We give an example. A pharmaceutical company and a food company also transport 100 kilograms of goods from Shanghai to Beijing. The freight rate is also 200 yuan. However, the retail price of 100 kilograms of drugs is 20,000 yuan, and the retail price of 100 kilograms of food is 5,000 yuan. . From the point of view of these two companies, the proportion of freight for this ticket to revenue is: 1% for pharmaceutical companies and 4% for food companies.

From the perspective of the cost of transporting single kilograms, the two types of companies are the same, but the difference is four times as much as the proportion of freight to revenue.

The GDP of the United States is roughly equivalent to that of China, but the cargo volume is only less than a third of that of China. The U.S. needs only 7.7 tons of cargo per 10,000 U.S. dollars of GDP, while China needs 48.7 tons of U.S. dollars, and the U.S. is equivalent to about one sixth of China's. This conclusion is believed to surprise many people. We simply understand this gap from a macro perspective in two main reasons.

The first is the economic structure. According to 2011 statistics, the output value of the US secondary industry (industry-oriented) is 19.2% of GDP and 46.6% of China, and the major industries that generate freight are the industries, agriculture, and service industries. The freight volume is relatively small. China's economy is dominated by infrastructure and manufacturing. The United States has entered the post-industrial era and has formed economic characteristics centered on services and finance. For example, China’s steel output reached 720 million tons/year, while the United States has only about 100 million tons. In addition, China's annual coal production accounts for 40% of the world's total, and its cement production accounts for 50% of the world's total. These are bulk supplies that require large amounts of transportation.

The second is the value of the goods determined by the economic level. The same one kilogram of goods, because the value of a single kilogram of goods will have a great impact on GDP. For example, the figure below shows the average value per ton of different types of goods in the United States. It can be seen that the difference is very large. The value of one ton of coal and one ton of tobacco can differ by 100 times. With a ton of goods, the higher value corresponds to a higher GDP. In addition to the large volume of cargo in China, the category of goods is more biased towards the bulk of materials such as coal, steel, cement, and sand, and its value per ton is also reduced accordingly. Moreover, the per capita GDP of the United States is much higher than that of China. Even if the value of the same type of goods is on average higher than that of China, it will also cause the same volume of cargo generated by GDP. It is a pity that the National Bureau of Statistics of China did not count this data, so an exact comparison cannot be made.

The huge differences between the Chinese and U.S. economies are believed to have emerged from these data. The difference in this indicator has also created one of the biggest obstacles for us to understand the ratio of logistics costs to GDP. If we do not understand this difference in the economic structure between China and the United States, we will inevitably conclude that the cost of logistics in China is higher than that of the United States.

2, the average distance

The average transportation distance is not particularly different between China and the United States. China is 425 kilometers, the United States is 552 kilometers, and the United States has 30% more than China. This result should be understandable. The geographic area of ​​China and the United States is quite large, and the cities are equally vast.

As for why the United States has 30% more than China, this question is difficult to quantitatively answer. One reason I can guess is that China's Yangtze River Delta Economic belt and Pearl River Delta Economic Belt carry about half of the Chinese economy, and a large amount of logistics flows within these two regions, driving down the average transport distance. But this is only a personal guess, no data confirmed.

3, the total cost of ton-kilometer logistics

This last indicator is an objective measure of the level of logistics costs. The total logistics cost of China's tonne-kilometres is US$0.09, while that of the United States is US$0.21, which is about twice that of China. It should be noted that this data is the result of apportioning all total logistics costs (including transportation, warehousing, management, and other value-added services) to the turnover volume. It is not a simple transportation ton-kilometer cost, so this figure may seem to be better understood by those in the industry. The numbers will be high.

From this indicator, the cost of logistics in the United States is far higher than China's.

1. It is an oversimplified method to measure the cost of logistics based on the ratio of logistics costs to GDP. It is likely to be interfered by other factors such as the country’s economic structure.

2. China's logistic cost accounted for twice as much of GDP as that of the United States. The main reason is that the same GDP China needs six times the amount of cargo shipped to the United States, which is determined by the economic structure of China and the United States.

3. Comparing the total logistics cost of unit turnover, according to official exchange rate statistics, China is only about half of the United States. The cost of logistics in China is far lower than the United States.

- You see, the conclusions drawn from different data indicators are different. Which do you think is more convincing?