China to build 150 advanced logistics hubs by 2025

China is planning to build 30 logistics hubs by 2020 and 150 by 2025, according to a new plan jointly released by the country’s top economic planning agency, the National Development and Reform Commission (NDRC), and the Ministry of Transport.

According to the plan, China is to build six types of logistics hubs—inland harbor, cargo port, airport, service-oriented port, commerce and trade-oriented port, and inland border port.

Some 127 cities were named as qualified locations for the project, including Shenzhen, Beijing Tianjin, Nanjing, Shanghai, Guangzhou, Zhenzhou, Foshan, Xi’an, and Fuzhou. Logistics hubs will be encouraged to build automatic ports and smart warehouses and use unmanned vehicles, robots, and drones to increase efficiency, according to the report.

The government also aims to establish high-efficiency logistics services, which includes boosting parcel-delivery capabilities. The plan also calls for the development of express capabilities for air, high-speed rail, cold-chain, and e-commerce, and cross-border delivery will be encouraged. Strengthening e-commerce logistics capabilities and rural e-commerce are also part of the plan. Companies are encouraged to develop new logistics businesses such as fresh produce e-commerce and cold-chain delivery.

In the first 10 months of 2018, China’s logistics sector carried about RMB 231.5 trillion ($33.3 trillion) worth of goods, according to China Federation of Logistics and Purchasing, or 6.6% year-on-year growth.

Even though the logistics cost to GDP ratio has been declining over the past few years in China, the ratio is still significantly higher than in many developed countries and even some developing economies.

“The logistics sector is the groundwork of strategic importance for the development of market economy,” Chinese Premier Li Keqiang said at a State Council meeting last year. He added that lowering logistics costs and raising the efficiency should be a priority.

One of the targets for the new logistic hubs is to lower the cost of logistics to GDP to about 12%. That number was 14.5% in 2017.

The government also sees lowering cost and increasing efficiency in logistics as a way to create a more favorable environment for the development of real economy, and has pushed out more favorable measures such as reducing tax to lighten the burden on companies.