China opens its doors to foreign investment and logistics expertise

It's home to the world's busiest port (Shanghai). And its government has built more than 20,000 miles of expressways in the last 20 years. Yet China still has a long way to go when it comes to developing the kinds of logistics capabilities you'd expect of a world economic power. That was the consensus of speakers at the "Driving the Global Economy through China" conference held in Shanghai in late October.

Right now, China's logistics industry lags well behind the country's expanding economic output and surging foreign trade, conference delegates agreed. And the country will have to act fast just to keep the gap from widening. As China's factories continue to pump out low-cost toys, electronics, autos and shoes, freight volumes will soar. The U.S.-China marine trade alone is expected to increase 12 to 15 percent annually. By 2010, 35 percent of the world's containers will be shipped from China. And the volume of freight transported by land is expected to see similar growth.

"Modern supply chain management is needed to consolidate resources and optimize the efficiency of the circulation of goods in China," says Liu Zhi, general director for Industrial Policy at China's National Development and Reform Commission.

China's government has been scrambling to address the problem. "China's 11th five-year plan gives top priority to the development of the logistics industry," says Qian Yongchang, former Minister of Transportation and current chairman of the China Communications and Transport Association. But progress has been uneven so far across the large, fragmented market. As Qian sees it, China's best bet is to open its door wider and solicit foreign investment and expertise. "We need to learn from foreign countries," he says. "Cooperation between domestic and foreign transportation and logistics companies will be beneficial for both—a real 'win-win' situation."

Chris Lofgren of Schneider National agrees. "China's logistics industry has clearly reached an inflection point, where advances in both infrastructure and the demands of the market require a higher level of cohesion among global players in the supply chain," says Lofgren, who is Schneider's president and CEO.

The three-day conference was sponsored by Schneider National and The Logistics Institute at Georgia Tech. For those wondering about Schneider National's interest in logistics in China, that's easily explained. Though best known as a truckload carrier, Schneider National is also a player in the global transportation business, and thus has a stake in the growing China trade. Schneider offers end-toend international logistics solutions through its wholly owned subsidiaries Schneider Logistics, American Port Services and American Overseas Air Freight.