Logistics costs remain high in China

Almost one in every five dollars of China's gross domestic product (GDP) was spent on transporting goods in 2012, an industry report showed Friday. The country's logistics costs climbed 11.4 percent year on year to reach 9.4 trillion yuan (1.51 trillion U.S. dollars) last year, according to a report by the China Federation of Logistics and Purchasing (CFLP). Although the growth rate shed seven percentage points from 2011, total logistics costs accounted for 18 percent of the nation's 51.93-trillion-yuan GDP in 2012, compared with 17.8 percent in the previous year. The costs for the economy will remain quite high in 2013, the CFLP forecasted, without elaborating. However, it attributed high expenditure in 2012 to rising costs for labor, fuel and tolls of roads and bridges. Labor costs surged 15 to 20 percent on average. Fuel prices tripled from that in 2000, while road charges made up one third of the total logistics costs, the report said. Meanwhile, the country moved goods worth of 177 trillion yuan in 2012, up 9.8 percent from the year before. The growth rate slipped by 2.5 percentage points compared with 2011. The sector's output reached 3.5 trillion yuan last year, up 9.1 percent from 2011. It accounted for 6.8 percent of the country's GDP and 15.3 percent of China's service industry. The government has stepped up measures to address the high logistics costs that have weighed on the country's slowing economy. The State Council, or China's cabinet, announced a range of measures last December to cut costs and improve efficiency. The measures include improving the statistical system of logistics costs and introducing preferential tax policies for the sector. Earlier this week, Chinese Premier Wen Jiabao reiterated the role of logistics in expanding domestic demand during an inspection tour to the Ministry of Commerce. He also called for logistics to be streamlined to cut fees.