NEWS AND MARKETS road transport companies accounted for less than 2 % of the market share. Indeed, most transporters are SMEs and they tend to operate in single or nearby cities. To find more business opportunities, they compete with each other on price, instead of other value adding services. By contrast, domestic as well as foreign large-scale logistics service providers (LSPs) provide in-town transportation along with all-round logistics services and solutions. Foreign LSPs poses sophisticated logistics technology, funding, professional expertise, as well as a comprehensive international network. They offer significant advantages when providing international logistics and express delivery services. Also, they have the capabilities to fulfill specific logistics demands, including automobile and cold chain logistics. As compared with local LSPs, foreign LSPs prove to be superior in providing value-added logistics services to meet international requirements of clients in China. Having said that, overseas players are not able to dominate all logistics market segments, particularly highly-regulated rail cargo and pharmaceutical logistics, and the newly-emerging e-commerce segments. Since China’s state-owned logistics enterprises also have a comprehensive network across the country and close cooperation with the state itself, they have advantages in highly-regulated logistics segments. By contrast, domestic, private-owned enterprises can provide cheap and efficient delivery services that are acceptable to price-sensitive clients. These firms dominate the domestic e-commerce logistics market. Production logistics demand growing in China’s interiors Over the recent years, a steep hike in labor and production costs in the traditional manufacturing belt across China’s coastal areas has prompted industries to migrate their factories to inland, lower-tier cities. Many enterprises, such as Foxconn, Flextronics, Dell, HP, and Pfizer, have established new plants or relocated their facilities. This scattering and relocation of factories is now reshaping the industrial supply chain, as many of these relocated enterprises outsource their logistics activities to regional LSPs in lower-tier cities, which poses regional know-how and the cooperation with local regulatory authorities. However, service quality and logistics competence may not always be up to standard; very often, the local LSPs fail to comply with expected requirements. Due to the mixed performances of LSPs in lower-tier cities, many of the relocated enterprises need to re-assess their inventory policies and schedule additional buffer times for production and distribution. Data from the National Development and Reform Commission (NDRC), shows that more than 85 % of industrial enterprises outsource only the traditional logistics functions such as transport and distribution. For those logistics functions that requires more sophisticated skills and techniques, such as advanced warehousing, inventory management and logistics system design, the outsourcing rates were less than 15 %. The figures reflect the reluctance of industrial enterprises to outsource high value-added logistics services to LSPs. Having said that, some regional LSPs, which are capable of fulfilling sophisticated production logistics demands, have now emerged as stronger and competent players in the region. A number are such logistics firms have been derived from the large parent manufacturing groups. For example, Annto Logistics in Anhui province and Zhongpin Logistics in Henan province used to be the logistics arms of an home appliance group and an agricultural food processing corporation, respectively. They turned into independent logistics entities, serving their parent clients and handling outside orders as well. Scope and challenges in e-commerce sector Scope: Over the last few years, China’s e-commerce market has been growing by more than 25 %, which is twice the growth rate of the whole retail economy in China. E-commerce now represents around 15 % of the total retail sales in the country. In 2016, It generated revenues more than 5 trillion Yuan. The majority of items Chinese people order online consist of tangible goods, worth roughly around 4 trillion Yuan with digital goods making up the rest. Along with Tier 1 and 2 cities such as Beijing, Shanghai and Shenzhen, there continues to be large potential for online sales particularly in Tier 3 and 4 cities as well. E-commerce penetration is close to 90 % in Tier 1 and 2 cities, but only around 60 % in Tier 3 and 4 cities. The population base of online shoppers in Tier 3 and 4 cities is more than 200 million, offering a serious market potential. Challenge: Unlike major cities, many lower-tier cities and towns are remotely situated across the country, with dispersed populations. So, for e-commerce companies, it becomes a costlier affair to extend their distribution networks to lower-tier cities. Without economies of scale and sufficient order volumes, companies generally avoid investing heavily in sophisticated logistics infrastructure in these remote areas. Low transaction volumes and large distances make inventory management and product fulfillment across the length and breadth of the country a great challenge. To fulfill orders across the country, companies commonly adopt a hybrid approach, with their own logistics facilities and teams serving in major cities and for more remote areas, they outsource their logistics services to LSPs and express delivery companies. In May 2013, Jack Ma, founder of the ‘Alibaba’ group, together with some logistics partners, developed the China Smart Logistics Network (CSN) system, which aims to support seamless information transfer between vendors, online operators and LSPs. The CSN is now working with an aim to provide nationwide 24-hour delivery in the coming years. China’s warehousing issues Most of the warehouses owned by local LSPs in China are relatively sub-standard. Furthermore, a poor warehouse layout design and insufficient material handling equipment affects the efficiency of warehousing operations. Poor warehousing and inventory management have led to long average inventory periods. According to the survey by the NDRC in 2011, more than half of the industrial and commercial enterprises held their inventories for more than one month. In addition, a lot of warehouse operators do not adapt to warehouse management systems and in turn fail to synchronize the inventory data with their stakeholders in a timely manner. Without transparent flow of information, warehouse operators cannot respond quickly enough to their clients. Stringent regulations hinder logistics growth Licensing applications is one such area that causes hindrance for logistics companies from growing. Logistics companies have to apply for various operating licenses to set up nationwide businesses. However, licenses are issued by different provincial governments, with application procedures varying from province to province. Due to the complexity in dealing with numerous parties, some logistics companies lose their impetus when attempting to develop inter-regional business. In addition, some local governments impose specific requirements on logistics operations. For instance, they adopt stringent rules over in-town trucking services, due to considerations of city traffic control and environmental issues. Also, the quota for the number of in-town trucking licenses granted to firms are fixed. Those logistics operators who failed to get proper licenses could either have to pay higher costs to hire licensed trucking firms to convey the goods, or operate without licenses – with a risk of being fined. Photographs: Fotolia WORLD OF INDUSTRIES – INTRALOGISTICS & DISTRIBUTION 5/2017
Advanced controls to suppress the vertical rotational sway in Cranes B&R, the automation specialist, is providing a new function for crane control. Cranes that transport payloads suspended from sling systems can be particularly sensitive to rotation about the vertical axis. If left unchecked, this can lead to uncontrollable sustained oscillations. The new mapp Crane solution suppresses this rotational sway. The new function also allows a controlled rotation, which can be helpful in cases where a payload needs to be positioned at a specific angle. With simultaneous control of both pendulum and rotational oscillation, payloads can be brought to their destination with maximum speed and precision. The ‘mapp Crane’ also offers automatic path correction, which adjusts for changes to the end position while the crane is in motion. This is an especially challenging task with regard to path planning, because the recalculations must account for the system’s oscillation dynamics in addition to its axis boundaries. With mapp Crane, this function can now be implemented with very little programming. www.br-automation.com Level sensors that can distinguish between 2 different liquids or media The LMC sensor family from ifm electronic reliably monitors levels, e.g. in machine tools or wastewater management, or protects pumps from running dry. It provides an extremely high deposit suppression and its rear installation permits flexible and applicationspecific installation. The LMC sensor can be set to almost any liquid or viscous medium as well as to bulk materials. Permanent medium temperatures up to 100 °C or a heavy build-up are no problem as well. With its switch point setting feature, it can distinguish between two media. The parameters can be easily set via IO-Link and the USB interface. The new unit also provides reliable and maintenancefree level detection where other devices reach their limits. Moreover, the unit that is sheathed by a robust stainless steel housing is shock and vibration resistant. Default setting at the factory allows for simple “plug & play”. With IO-Link, the user also is well prepared for Industry 4.0. Saws. Storage. And More. KASTO offers more than high productive sawing machines and storage systems for bar stock and sheet metal: More incentives, more responsibility, more ideas, more reliability, more future for our customers. KASTO is operating worldwide with subsidiaries in Germany, USA, United Kingdom, France, Switzerland and Singapore. More about KASTO: www.kasto.com www.ifm.com Saws. Storage. And More.