Constructing a Modern Cotton Logistics System
March 16, 2010 In recent years, the trading volume and scale of cotton in China has been constantly expanded and the relevant service function for the cotton trade has also been constantly improved. Since its establishment, as a supplier of cotton trade services, China National Cotton Exchange (CNCE) has always been devoted to construction of the cotton trading service system to provide cotton traders with services in exchange, fund, information and logistics. According to the service experiences accumulated by CNCE over the years, in a perfect cotton trading service system, it is necessary to promote the development of business flow, information and capital flow with logistics, as is represented mainly in the following aspects:
■ First, it is beneficial for the mode of cotton trading to change from conventional to modern. With the reform in cotton circulation system being constantly deepened and marketization being elevated, it is necessary to make full use of the nationwide cotton storage and logistic resources and gradually set up a cotton logistics system for cotton production regions at the upstream and for the textile customers at the downstream and provide cotton traders with convenient storage and delivery services.
■ Second, it is beneficial to give play to the role of existing cotton storage facilities and consolidate the foundation of cotton logistics. Cotton storage facilities are the foundation for developing modern cotton logistics. To improve the network layout of national cotton depots and maximize the role of existing cotton storage facilities, the mode of market operation such as investment promotion, activation of stocking, replacement of old warehouses, cooperation for building and acquisition of support from the financial sector can be adopted for multichannel financing to upgrade and transform the existing cotton storage facilities.
■ Third, it is beneficial to construct a cotton market system. Cotton trading is eventually realized through logistics. The two are complementary and promote each other. Construction of a cotton market system and construction of modern cotton logistics should be closely associated and generally planned. According to the experiences of CNCE in building the trading platform over the last decade, construction of a perfect market system shall focus on modern facilities, regularized management, and electronic exchange and information network.
■ Fourth, it is beneficial to provide cotton traders with comprehensive services. The key link in construction of a modern logistics system is to construct the integrated service platform for cotton traders. In 2002, the CNCE started the service mode of “warehouse receipt hypothecation financing” and has, in seven years, accumulatively provided the capital service of over 6 billion Yuan, in collaboration with a dozen Chinese banks. Supervision is the core of providing such service. In order to ensure the normal turnover of such service, CNCE had included the supervision function based on the conventional function of warehouse storage: take responsibility for customers and financial business as an independent and just third party, provide professional service to ensure the safety of cotton in stock and undertake the liability to compensate for losses of cotton.
■ Fifth, it is beneficial to push forward the reform of the Chinese cotton circulation system. With the increase of Chinese cotton production, import and export and consumption, fast and accurate information will provide the relevant governmental departments with true information in making decisions of macro control. According to the planning for reform in the cotton quality inspection system, the central finance will grant appropriate subsidy policy for cotton delivered to the qualified cotton warehouses in terms of warehouse-in, custody and insurance.
In general, development of modern cotton logistics and transformation in cotton transport, storage, inspection, packaging, delivery and logistic information is of great significance in increasing the circulation efficiency, reducing the circulation cost of cotton and assuring the safety and rational allocation of cotton resources.
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