Lessons for China from a comparison of logistics in the U.S. and China

Abstract

Logistics efficiency is low in China. In 2008, total logistics costs accounted for 18.1% of gross domestic product (GDP) in China, which was almost twice that of the United States. Increasing logistics efficiency can save an enormous amount of money, hence is worthy of study. Since the U.S. is similar to China in many areas and its logistics efficiency is high, I study the U.S. and compare with China, then draw lessons from the comparison. Five aspects of logistics in both countries are analyzed: 1) logistics history, 2) transportation infrastructure, 3) logistics structure, 4) logistics IS/IT, and 5) logistics governance. Lessons from the comparison conclude: 1) railways should receive a higher priority for infrastructure investment, 2) logistics market is too fragmented, consolidation among logistics operators should be encouraged, and 3PL market needs government support to grow, 3) I/IT application in logistics is still in its infancy stage. Standardization of IS/IT in logistics and public information platform should be supported, and 4) logistics governance plays an important role in eliminating local government protectionism and easing imbalance between inland and coastal regions in China.