articles

Pilar Dieter InterviewJanuary 2008Shanghai Business Review

2007 was a bumpy year for logistics in China. Quality control scandals plagued much of the manufacturing sector and the China supply chain in specific was often made out to be the culprit. “Whether it was industrial goods, toys, toothpaste, or food the overarching issue points to supply chain quality control”, said Pilar Dieter. One the other hand, massive investment in infrastructure improvements might brighten some logistics insiders’ memories of the past year. In fact, in 2007, China hit a milestone in port capacity – there are no ten 100-million-ton ports in China. “Similarly, the central government is now allowing, indeed encouraging, greater foreign investment in transportation and warehousing which should lead to improvements”, added Dieter.

Increased investment in infrastructure will not only continue, but expand in scope. “ China is well aware that its developed port infrastructure alone is not sufficient to make China the world’s trading capital”, said Dieter. “Further development to improve intermodal ramps, inland waterways, and domestic and international rail networks will continue through 2008 with involvement of international capital and operating talent”. But, like quality control last year, environmental issues could be the scourge of the industry this year. This time, however, logistics professionals are being proactive. “Green logistics is growing priority for shippers, and sophisticated logistics providers are seeking ways to offer their services in a way that minimally impacts the environment.”

Due to rising global energy prices, 2007 saw record turnover in the logistics sector. In the first half of the year, aggregated turnover totals RMB 26.8 trillion, up 15.3% on the same period in 2006. The main focus of 2008 for most logistics providers will be maintaining the break-neck success, especially on the stock exchanges, where several of then have recently gone public. “Indeed given the seemingly pending downturn in China’s key export sectors, the market’s ability to sustain this economic boom will certainly be an area to follow in 2008.”

By Pilar Dieter