According to Steffen Schiottz-Christensen, managing director of Maersk Logistics (China) Ltd, by 2008 China will account for more than 10% of global trade. China’s logistics market is already the third largest worldwide in terms of spending.

But the country also has inefficient goods distribution and transportation, especially compared to countries such as Singapore, Germany and France.

Generally, logistics costs are disproportionately high in Asia. Therefore, the competitive advantages to be gained by reaching international benchmarks for costs are substantial.

In 2000, the total amount spent on logistics costs in China was 20% of the GDP value. In 2004, it had increased to 21.6%. In the United States, the cost hovers around 10%.

Steffen Schiottz-Christensen said:

‘The distribution efficiency in China is relatively low, and there are a lot of opportunities to improve on this. A lot of investments are now being made in additional infrastructure by the government which Maersk Logistics regards as very positive.

‘Yet, the infrastructure for rail is insufficient. Commercial rail traffic in China is still in the developing stages. The network of tracks is not sufficient at this point in time and the trains are being used for other priorities. Passengers, military and bulk goods are being moved on rail, with containers getting the lowest priority.

‘In a country of this size, containerised rail transportation offers a cheap, efficient and even environmentally friendly way to move cargo. But a large part of China’s long-distance cargo is moved by truck, which again requires a lot of fuel and is costly. The cheaper but very slow solution is river transport with domestic barges or feeder carriers on, for example, the Yangtze River.

‘Going west has been a longstanding priority of the Chinese government. Maersk Logistics monitors where our volumes are going which provides us with a good indicator of the economy. Our results are that a lot of cargo is moving north. East China and north China are now growing faster than the traditional dynamo, Guangdong, and cargo is moving up rather than in.’