China has used its low-cost advantage to become a world leader in manufacturing. What happens if it sets its sights on distribution, too?

Larry Ravinett, senior vice president of logistics and supply chain solutions for National Retail Systems, a third-party logistics provider, said, ‘Among the things we do is freight consolidation, and 90% of the product we consolidate is coming from China. So we asked: What’s the purpose of bringing all of this stuff to the U.S., touching it three or four times to send it to a distribution center and put tickets on it, only to ship it back to stores?’

NRS has launched SinoNRS, a joint venture with China’s Sinotrans Group, the country’s largest integrated logistics provider with some 60 million square feet of warehousing space.

SinoNRS plans to offer retailers a solution to reduce distribution expense in the States.

Larry Ravinett says SinoNRS is working to develop Western-style DC’s with a degree of information technology and materials handling automation that is not presently being used in China. He said, ‘The new buildings we’re building are based on U.S. designs. We will have information technology, automated cross-docking and conveyor-driven distribution centers that are comparable to what we have in the United States.’

These distribution centers are not yet up and running but some retail clients have already committed to the program.

Larry Ravinett said, ‘When we’re done, we’ll have the capability to bypass a DC and deliver price-ticketed items directly to stores. Or, I’ll be able to take product that has 80% of the work done and send it to a regional DC where it can be stored for replenishment later.’

Some experts believe there are still timing and communication hurdles to overcome before China is a serious threat to the U.S. distribution industry. Experts said the same about China when talking about manufacturing.