Construction of a Modern Logistics System

By Jim.Robinson|August 24, 2009

To better cope with the international financial crisis, the Chinese Government allocated 4 trillion Yuan to stimulate the Chinese economy. This year, the Government has explicitly required the development of a modern logistics system for cotton to better manage and transport “big-baled” cotton. Development of a modern cotton logistics system will increase the efficiency of cotton circulation.

One decade has passed since China launched the reform of the cotton circulation system. During this decade, reform has deepened in cotton production, processing, quality inspection, reserve and macro control, and its marketization has constantly increased. In recent years, the conditions have been constantly improving cotton storage, transportation, handling and packaging in China. With the establishment of the cotton reserve system, construction of warehouses for futures and spot deliveries, and a third-party supervision system, cotton logistics has developed to a higher level. China is smoothly moving 7 million tons. Since 2000, the State has expanded or built 12 cotton reserve warehouses nationwide.

As China’s quality inspection is eventually implemented as a whole, it will become increasingly prominent in three aspects:
Absence of unified planning for cotton logistics. The administrative authority of resources in one system has been designated to several departments.
Outmoded operation concept and relatively backward logistics technology. The modern notion of logistics is to allocate and manage resources capacity, and technology of complementary service providers as to promote solutions for the total supply chain.
Lack of logistic management personnel and low integration efficiencies of resources. Since China lags behind in education of logistics and has just started education and research on logistics, talent in the field is short. Since China is in the state of uneven distribution and inadequate supply, it is hard to realize the efficient integration of resources.

China has maintained an annual cotton yield of 8 million tons and an annual consumption above 10 million tons. Cotton output in Xinjiang shares one-third of the total output in China, while most of the cotton consumption areas are thousands of miles away. Due to the special geographical location of production and marketing, a fast and efficient transport system effectively shortens the distance.

I believe, as a basic link in the value chain of the cotton business, cotton logistics not only can help in the success of the cotton trade, but will also bring new added value to cotton-associated enterprises.