On March 16, 2023, Prologis China and Yunlian co-hosted the Industrial Restructuring for Symbiosis Forum in Wuhan, Hubei, which brought together 100 industry experts and leaders.
Innovation in response to intense competition
In her opening speech, Ms. Chu Fanghong, chairman of Yunlian noted that despite the fading impact of the pandemic, the economy has not recovered well, with intense market competition becoming a heavy burden for many businesses. However, competition provides the impetus for innovation to flourish. Innovation comes from inside and outside of an organization. The current times call for refined management practices within organizations as well as symbiotic industrial restructuring externally.
“As we move forward, it will be crucial to break boundaries, foster synergies, and find optimal solutions to lower costs and improve efficiency on a larger scale. In order to thrive, it is essential to go beyond competition and embrace co-competition, by establishing deeper division of labor and fostering wider collaboration,” stated Chu.
Logistics infrastructure is the bedrock for industrial upgrading
The conference offered a detailed interpretation and discussion on the future survival and development of logistics companies under industrial restructuring.
Dallas Zhang, Vice President, Regional Director of East China at Prologis China, discussed Prologis' extensive cooperation in recent years with leading companies in various sectors, such as biomedicine, smart manufacturing, e-commerce, new energy vehicles, smart cold chain, consumer goods, and artificial intelligence. He highlighted how Prologis has been helping these firms reduce costs and increase efficiency in their supply chains.
Zhang emphasized that Prologis will persist in prioritizing customer demands and offering flexible and diversified solutions supported by Prologis’ best-in-class facilities and high-standard operation services. Prologis aims to contribute towards enhancing supply chain efficiency under the current trend of industrial restructuring.
Mr. Kevin Kong, General Manager of China Government-enterprise Logistics and Retail System Department, HUAWEI, emphasized that as the logistics industry transitions from traditional warehousing to intelligent integrated logistics hubs, there is a growing demand for high-standard warehousing facilities. However, many facilities in operation are outdated and lack operation efficiency. With the increasing integration and networking of industrial systems, infrastructure is thriving as it adapts to meet the diverse needs of the industry. At present, it is prominent for the logistics industry to collaborate on building a digital intelligence platform which will facilitate digital transformation.
A transition from traditional to modern warehouses
The management of modern warehousing has become an integral part of the entire logistics chain. For many companies, warehouse management plays a crucial role in determining overall logistics costs. As such, upgrading from traditional warehouses to modern warehouses requires synergy between players upstream and downstream in the value chain.
According to Tang Zhenyu, Vice General Manager of Zhuoyan Supply Chain Management, the COVID-19 pandemic has accelerated the growth of e-commerce logistics. As a result, e-commerce companies are placing a greater emphasis on stability, safety and timely delivery. Many e-commerce platforms prefer integrating warehousing and distribution services to ensure the efficient circulation of their goods. The evolving needs of customers in the logistics industry have translated into a demand for end-to-end services, which in turn motivates service providers to build up exclusive e-commerce warehouse management systems. These systems must be able to quickly achieve centralized management and local coordination of customers' warehouse networks, which are often distributed across the country.
Huo Qingmei, Chairman of Leader CT Systems Corp., highlighted the strong growth of demand for cold chain logistics in the market. She laid out the potential for further expansion in the following ways: Firstly, the scale of China's cold chain logistics market has been steadily growing, with an average annual compound growth rate of more than 12% over the past four years; secondly, the industry is currently fragmented, small, and scattered, with a low degree of concentration, presenting opportunities for rapid growth; finally, China’s per capita cold storage capacity (0.15 m³) and cold chain circulation rate (20% – 40%) still lag behind developed economies, indicating ample room for further growth and improvement.
According to Huo, the use of technology to drive automation and intelligent upgrades can help to minimize the impact of workforce factors on the entire logistics system. This can be achieved through top-level design that integrates all the key levels within the enterprise into the overall smart supply chain architecture, as well as through alignment with common platforms and the sharing of big data resources. By doing so, logistics companies can increase their ability to respond quickly and efficiently to changes in the external market.
The approach for contract logistics to break though
In recent years, an increasing number of major players are expanding into the contract logistics sector, and companies in the upstream and downstream of the industrial chain have also improved their logistics capabilities. This has created a more competitive landscape for traditional contract logistics providers. As a result, the contract logistics market is facing its bottleneck and encountering various challenges.
According to Li Zhongxin, Executive Director of the Yunlian Research Institute, contract logistics players need to create a development system from the perspective of the overall supply chain, and their value lies in the ability to provide both solutions and resource management. He believed that the key to organic growth in contract logistics lies in a company's ability to effectively segment the market.
The panel discussion on the theme of “The Future of Contract Logistics” was hosted by Jackie Zhang, Director of Global Customer Solutions and Business Development at Prologis China. In general, the competition in the contract logistics market remains intense. However, there is still significant potential for companies to add value in this crowded marketplace.
Today, the industrial restructuring is an inevitable trend. In an environment that is intertwined with both certainty and uncertainty, it is important for logistics enterprises to identify the right direction and firmly grasp new opportunities, which becomes essential for successful transformation and continued growth in this rapidly changing landscape. The ability to continuously strengthen themselves through numerous battles may be the secret to the invincibility of logistics enterprises in competitive markets. It allows them to achieve stable and sustained business growth whilst riding broader trends.
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