Analysis of China's Cross-Border Logistics Market

Industrials Author: Boying Ji Aug 31, 2023 03:29 PM (GMT+8)

The cross-border logistics industry in China has experienced tremendous growth in recent years and hit new heights in 2022 despite facing headwinds from the ongoing COVID-19 pandemic and global economic uncertainties.


The cross-border logistics industry in China has experienced tremendous growth in recent years and hit new heights in 2022 despite facing headwinds from the ongoing COVID-19 pandemic and global economic uncertainties. Cross-border logistics refers to the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information between a point of origin and a point of destination fulfilling the requirements of cross-border traders. China's status as the world's manufacturing powerhouse means cross-border logistics plays a vital role in the country's foreign trade sector by facilitating both exports and imports.


According to data released by the General Administration of Customs of China, the total value of China's international trade in goods reached $6.94 trillion in 2022, representing a year-on-year growth of 7.1%. Exports increased by 5.2% to $3.36 trillion while imports rose by 9.9% to $3.58 trillion, signaling continued recovery from the pandemic. Cross-border logistics services are essential for transporting these goods across international borders efficiently and reliably. The total supply and demand volume within the cross-border logistics industry reflects China's importance as a global trade powerhouse.

Statistics from the China Federation of Logistics & Purchasing (CFLP) show that in 2022, the total business revenue of China's cross-border logistics industry grew 12.2% year-on-year to RMB 2.56 trillion. During this period, cross-border logistics services continued benefiting from the booming foreign trade sector and supply chain upgrades taking place within China. Various segments within the cross-border logistics industry also witnessed rising business volumes, underscoring the sector's pivotal role in supporting China's large-scale imports and exports. For example, the business revenue of cross-border express delivery services reached RMB 113.2 billion in 2022, an increase of 13.3% over the previous year.

Cross-border e-commerce continues fueling growth. China's cross-border e-commerce imports and exports exceeded USD 1 trillion for the first time in 2022, demonstrating its increasing importance in international trade. This provided a strong tailwind for the development of cross-border logistics. According to China's State Post Bureau, the total volume of cross-border parcels handled by China Post in 2022 exceeded 1.06 billion, rising 19% annually. Cross-border logistics companies are actively expanding their global networks and service capabilities to capture opportunities arising from the booming cross-border e-commerce sector in China. For instance, SF Express, China's largest express delivery firm, reported total cross-border parcel volume handled rose 25.9% year-on-year to 457 million in 2022.

The post-pandemic recovery in global trade has buoyed cross-border logistics demand from major trading partners. Data from China's General Administration of Customs showed China's total trade with the Association of Southeast Asian Nations (ASEAN) countries expanded 13.7% to $847.5 billion in 2022, making ASEAN China's largest trading partner. China's cross-border trade with European Union countries increased 7.8% to $826.1 billion while trade with the United States grew 11.6% to $817.1 billion. The surge in cross-border trade flows between China and its key overseas markets contributed significantly to higher business volumes for logistics companies involved in China-related cross-border transportation and distribution services.

Domestically, China's comprehensive transportation infrastructure continues developing rapidly to facilitate efficient cross-border logistics. In 2022, China added over 14,000 kilometers of rail lines to its national railway network, bringing total length to over 150,000 kilometers. This supports land transportation of cross-border cargo via container block trains between China and its major trade partners like Europe and Southeast Asia. Port infrastructure expansion also progressed with the throughput of China's coastal ports exceeding 27 billion tons in 2022, up 5.7% year-on-year. New port commissioning in coastal provinces boosted handling capacity for maritime transportation in China's cross-border trade. For example, throughput at Qianwan Container Terminal, one of the world's busiest container ports based in Shenzhen, surpassed 20 million TEU in 2022.  Improved railway, highway, and port infrastructure significantly enhances logistics connectivity within China and between China and the rest of the world.

China's regulatory environment for cross-border logistics has become more facilitative in recent years. A series of policies issued since 2022 aim to reduce trade and logistics barriers such as border clearance procedures and inspection requirements. For example, China has significantly streamlined customs clearance processes by expanding the “Green Channel” for expedited inspections while strengthening intellectual property protection enforcement. Export/import licensing rules have also been simplified. Chinese customs is modernizing clearance systems through digitalization initiatives including the “Single Window”, which integrates the submission of trade and transport documents from a single portal. These reform efforts are geared towards building an enabling policy framework for an efficient cross-border logistics sector.

On the operational front, cross-border logistics companies in China have accelerated digital transformation since 2022 to enhance service capabilities, driven by strong market demand and government support. Big data, cloud computing, and other advanced technologies are being leveraged to optimize transportation planning, improve warehouse management efficiency, and customize customer experience. For instance, major logistics providers like S.F. Holding and YTO Express established digital operation command centers applying technologies like IoT, GPS tracking, and route optimization algorithms. This enhances service responsiveness, truck utilization, and cargo security. Blockchain is being explored for transparent cross-border trade documentation and trade financing. Warehouses are automating and introducing robotics for order picking. Such digital innovations will propel the Chinese cross-border logistics sector into its next stage of high-quality growth.

Challenges still exist, however. China's evolving pandemic containment measures have at times disrupted cross-border logistics flows. For example, port shutdowns resulted from periodic COVID-19 outbreaks in major Chinese coastal cities like Shanghai and Ningbo in 2022. Global supply chain issues associated with factory production halts, shipping delays, and port congestions also negatively impacted international trade and logistics. Geopolitical tensions have the potential to undermine Sino-foreign relations and cross-border connectivity in the long run if not well managed. Rising fuel costs and labor market tightness additionally squeeze logistics company profits. Environmental protection mandates require cross-border transportation to transition toward green and low-carbon operations over the medium term as well.

Going forward, the cross-border logistics industry in China is expected to maintain strong growth momentum underpinned by the country's persistent foreign trade expansion. As China continuously participates more deeply in global industrial and supply chain cooperation, cross-border logistics will remain a crucial service sector facilitating China's growing international economic engagement. Key opportunities for the industry include capturing rising demand from cross-border e-commerce, serving the Belt and Road Initiative, developing cold chain logistics, and strengthening overseas network connections. Digitalization and supply chain integration trends will reshape cross-border logistics models toward higher efficiency. With continuous support from China's comprehensive opening-up policies, the cross-border logistics sector is well-positioned to make further contributions to the country's long-term growth prospects.

In summary, China's cross-border logistics industry demonstrated resilience and posted solid growth in 2022 despite macroeconomic headwinds. Significant increases were seen across key market metrics like total business revenue and parcel volumes handled owing to vigorous foreign trade activity and the e-commerce boom. Infrastructure advancements within China synergistically boosted connectivity for cross-border cargo flows. Regulatory streamlining efforts created an enabling environment. Logistics companies accelerated digital upgrades raising service standards. Still, pandemic impacts, global uncertainties, and rising costs pose challenges. However, cross-border logistics is anticipated to maintain vigorous development assisted by China's ongoing integration into the global economy. Expanding opportunities exist across diverse trends from BRI to the cold chain. This analysis illustrates how cross-border logistics underpins China's role as a pivotal trade powerhouse and continues evolving vigorously.