Promote economic efficiency by reducing logistics costs

This article is reprinted from: Economic Daily

The overall social logistics cost continues to decline, marking a substantial improvement in the efficiency of China’s economic operation. This change is not only a milestone in the development of the logistics industry but also a key signal of quality and efficiency improvements in the real economy.

Among macroeconomic indicators, the total social logistics cost is an easily overlooked yet highly representative data point. Recent data released by the National Development and Reform Commission shows that by 2025, China’s total social logistics expenses as a percentage of GDP will drop to 13.9%, falling below 14% for the first time. This figure has decreased by 0.8 percentage points compared to the end of the 13th Five-Year Plan period, reaching the lowest level on record.

The continued decline in social logistics costs signifies a real enhancement in the efficiency of China’s economic operations. This change is not only a milestone for the logistics industry but also a critical signal of quality and efficiency improvements in the real economy—meaning that for every 100 yuan of GDP created, logistics expenses have fallen to 13.9 yuan. For a large economy like China, with a gross domestic product of 140 trillion yuan, this equates to saving over 100 billion yuan annually in logistics costs.

Policy initiatives, industrial upgrades, and technological innovation work together to drive down social logistics costs. In particular, ongoing optimization of logistics structures and accelerated technological innovation have jointly contributed to the reduction of social logistics expenses.

Policy-driven efforts have propelled the achievement of these goals. In November 2024, the General Office of the CPC Central Committee and the State Council issued the “Action Plan for Effectively Reducing Social Logistics Costs,” which aims to bring the ratio of total social logistics costs to GDP down to about 13.5% by 2027. The plan includes comprehensive measures such as deepening reforms of the integrated transportation system, promoting the integration of industrial and supply chains, and improving national logistics hubs and corridor networks. Relevant departments have established working groups to coordinate across sectors and break down institutional barriers. Just by addressing monopolistic practices on freight platforms, significant growth in rail-water combined transportation has been achieved, leading to a notable reduction in mainline transportation costs.

Structural optimization has unlocked cost dividends. In recent years, China has built major logistics hubs to consolidate resources and established a “passage + hub + network” operational system, continuously exploring economies of scale and network effects in logistics operations to effectively reduce unit logistics costs. The “public-to-water” and “public-to-rail” strategies have been actively promoted, with water transportation accounting for over 50% of turnover, facilitating the shift of bulk materials to more economical and environmentally friendly modes. Efforts to promote the integration of logistics with industry support the continuous optimization of supply chain structures in manufacturing and commerce, reducing redundant logistics links and lowering logistics activity intensity, thereby creating greater value in the real economy.

Technological innovation is reshaping operational efficiency. Digitalization and green transformation have become core drivers of logistics industry development. More logistics companies are using digital technologies to optimize management systems, significantly reducing empty runs, while automated warehousing equipment further enhances operational efficiency. The accelerated adoption of new energy transportation tools has effectively lowered overall energy consumption. Data shows that these technological applications have reduced the share of storage costs by 0.2 percentage points by 2025.

It is important to note that effectively reducing social logistics costs does not mean simply cutting transportation expenses or squeezing the reasonable profits of logistics companies, nor does it mean impacting the income of logistics workers. Instead, it involves adjusting structures, promoting reforms, optimizing the allocation of logistics resources across society, strengthening coordination at all links of the logistics chain, and comprehensively improving the operational efficiency of the logistics system—spending as little as possible on logistics costs to support as much economic output as possible.

Reducing social logistics costs effectively is a systematic project. Facing the goal of lowering costs to around 13.5% by 2027, the current reduction in China’s social logistics costs is only a starting point. Achieving a shift from “extensive expansion” to “refined optimization” of the logistics system will require continued hard work over the next two years. Key to this is deepening reforms of the institutional mechanisms. On one hand, further breaking down regional divisions and local protectionism, and advancing the construction of a unified national market. On the other hand, focusing on reforms in key areas such as railway freight, highway freight, and logistics platforms, promoting open and shared logistics data, and building a scaled and standardized logistics ecosystem to continuously lower institutional costs of logistics operations across society.

Connecting goods across all directions and ensuring smooth flow of materials energizes China. Logistics, as the “meridian” of the real economy, is the backbone of economic and social development. Only when the “meridians” are unobstructed can the circulation of the national economy become more efficient, and the momentum for high-quality economic development in China be more abundant.