Market Trends of China Third-Party Logistics (3PL) Industry
Value-added warehousing and distribution experiencing substantial growth
- As China embraces the Industry 4.0 era, its manufacturing sector remains a key catalyst for logistics growth. The surge of high-tech manufacturers is driving a notable uptick in demand for Grade A warehouses.
- Highlighting this trend, solar cell production has seen a remarkable growth rate of 54.2%, while New Energy Vehicles (NEVs) have surged by 30.4%. According to the China Passenger Car Association (CPCA), NEV penetration in China hit 36.2% in 2023, leading many brands to either set up or expand their manufacturing bases.
- Leasing trends differ across regions: Southern China's light manufacturing firms are emphasizing flexibility in their warehouse operations. In Eastern China, a leader in the nation's shift towards a low-carbon economy, a flurry of eco-friendly warehouses boasting LEED certifications are springing up. On the other hand, Western China's rapid NEV growth is bolstering a steady demand for warehouse leases.
- In 2023, the stock of non-bonded Grade A warehouses in 31 major cities exceeded 90 million sqm. Eastern China emerged as a dominant player, representing over a third of the nation's total stock. As supply consistently flowed in recent years, some developers resorted to rental trade-offs to mitigate rising vacancy rates.
- Northern China, especially in cities like Langfang, Tianjin, and Beijing, saw a surge in new supply beginning in 2021. Conversely, Western China has been gradually slowing down since 2020, allowing it to absorb its vacant stock.
- Southern China reached a supply zenith, particularly in Guangzhou and Dongguan, spurred by strong demand from cross-border e-commerce. Meanwhile, Central China maintained steady demand for transportation and consumption, yet still grappled with vacancy pressures due to the influx of supply over the last three years. This underscores a pronounced demand for warehousing spaces across the industry.
Understand The Key Trends Shaping This Market
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Surge in e-commerce activities driving the market
- China's e-commerce market has ushered in a transformative era for the nation's economy. Today, the digital economy plays an increasingly pivotal role in bolstering China's GDP. In 2023, over a quarter of China's consumer goods were purchased online, significantly surpassing the global average. Moreover, e-commerce is a key driver of employment in the country, thanks to its vast workforce.
- For the past decade, China has led the e-commerce charge, outstripping the U.S. by over USD 486 billion in revenue. Currently, China boasts the world's largest population of digital buyers. Recent years have seen the integration of features like live streaming and swift delivery into China's e-commerce realm, further enriching the customer experience.
- With the rapid digitalization permeating every facet of life, a growing number of Chinese businesses are transitioning online. Bolstered by its vast manufacturing sector and governmental backing, China proudly hosts the globe's largest B2B e-commerce market. Yet, while the online retail sector flourishes, B2B e-commerce growth has recently decelerated. Cross-border transactions have emerged as a vital segment of China's B2B landscape, predominantly leaning towards exports, with the U.S. standing out as the primary destination for Chinese B2B goods.
- China, home to some of the world's largest e-retailers, has seen consistent growth in e-commerce sales. Rapid internet adoption has propelled online shopping penetration to over 80%. With the surge in mobile device usage, shopping via smartphones and tablets has become commonplace. The pandemic-induced social restrictions and lockdowns accelerated the rise of online-to-offline ventures, including quick commerce, online food delivery, and community group-buying. AI advancements are reshaping e-retail, optimizing operations and customer interactions. Furthermore, the adoption of augmented reality (AR) and virtual reality (VR) technologies is enriching shopping experiences, leading to heightened customer satisfaction and boosted sales.
