Monday 27th May 2019 - Logistics & Supply Chain

Logistics growth slows in China

Slower growth in demand for logistics services and a slowdown in inventory turnover meant that the China Logistics Prosperity Index fell to 52.4 in July from 53.1 in June.

Although eight of the 12 sub-indices stayed in the expansionary zone in July, four were down: inventory turnover, logistics service charges, operating profit and employment.

More than 300 Chinese logistics enterprises are surveyed for the index which is published by the China Federation of Logistics and Purchasing while the Fung Business Intelligence Centre is responsible for the English LPI report.

The new orders index was 52.3 in July, down by 2.3 points from the previous month, indicating slower growth in demand for logistics services.

The business volume index was 56.9 in July, up from 55.5 in June, suggesting a steady growth in logistics activities.

The employment index dropped by 1.3 points from the previous month to 49.7 in July, marginally below the critical 50-mark, showing a slight drop in employment.

On the other hand, the capacity utilisation index rose by 0.2 points from the previous month to 51.5 in July. More logistic enterprises saw enhanced utilisation of their facilities.

The July survey also reflected a slowdown in inventory turnover and an increase in inventories. The average inventory index fell from 53.1 in June to 51.3 in July.

Logistics service charges remained subdued with index, at 48.1 in July, staying below the 50-line for three consecutive month. However, the operating cost index increased by 3.6 points from the previous month to 61.7 in July. Consequently, the operating profit index went down from 56.1 in June to 48.1 in July.

The business expectations index dropped sharply from 60.5 in June to 57.2 in July, showing that industry players have become less optimistic about the business outlook in the next three months.

The China Logistics Prosperity Index contains 12 indicators: Business Volume, New Orders, Average Inventory, Inventory Turnover, Cash Flow, Capacity Utilization, Logistics Service Charges, Operating Profit, Operating Cost, Investment in Fixed Asset, Employment and Business Expectations.


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