The China logistics industry prosperity index released by China Federation of Logistics and Purchasing in September 2022 was 50.6%, up by 4.3 percentage points compared with last month; China's warehousing index was 52%, up 0.8 percentage points from the previous month. Most of the sub-indexes rebounded, and the total business index and new orders index rebounded significantly. Corporate revenue, profit and capital indexes improved simultaneously, reflecting the consolidation of market demand, the recovery of business volume growth, and the positive signs of corporate operating indicators.

Continued steady trend

He Hui, Assistant to President of China Federation of Logistics and Purchasing, believes: In September, the logistics industry prosperity index rebounded 4.3 percentage points from the previous month, reversing the trend of two consecutive months of decline. From the index point of view, in addition to the service price and investment index fell from last month, other sub-indexes have picked up. From the regional point of view, the eastern and central regions rose last month, the western region fell last month. From the perspective of enterprise scale, the business volume of large, medium, small and micro logistics enterprises has recovered to varying degrees compared with last month. In the later stage, we should pay attention to the risk of spreading the epidemic to many places, ensure smooth transportation and logistics, and further consolidate the foundation for the recovery of the logistics industry.

The index of new orders picked up and market demand continued to grow. In September, the new order index was 50.1 percent, up 3.2 percentage points from the previous month, indicating an increase in orders in the logistics market and a recovery in business demand.

Employment index rebounded, logistics employment situation was stable. In September, the employment index rose 1.4 percentage points to nearly 50%, indicating that the employment situation was basically stable.

The main business cost index rebounded, and the cost pressure of enterprises remained. In September, the main business cost index was 54%, up 2.2 percentage points from the previous month, showing that the cost pressure of logistics enterprises has increased against the background of business volume growth.

From the later trend, the new order index and business activity expectation index are 50.1% and 55.7% respectively, indicating that with the further consolidation of the demand base of logistics operation, logistics business activities will continue to steady trend.

Improve industry profitability

Logistics activity picked up significantly, with central and eastern regions becoming the main driving force. In September, the logistics prosperity index in eastern and central regions reached 50% above the line of prosperity and decline, and the prosperity index rose by more than 2 and 6 percentage points respectively. Key provinces in western China were hit by the epidemic, and their logistics activity decreased month-on-month. By region, central China has been the most active region in logistics activity since September. Logistics demand indicators, inventory and turnover indicators were in the prosperity zone, and business volume index and new order index were 1.4 and 1.9 percentage points higher than the national level. The inventory turnover index rebounded to the highest level since this year, 54.8%. The micro profitability level was significantly better than other regions, and the main business profit index rebounded to 49.9%. Most indicators in the eastern region maintained an upward trend, with total business volume and new orders rising by 2.2 and 0.6 percentage point month-on-month. The investment completion index showed outstanding performance, higher than the national level.

Industry earnings have improved and operating efficiency remains under pressure. In September, the main business profit index rose by 4.2 percentage points from the previous month, reflecting some signs of improvement in corporate micro profit due to rising business volume and revenue. From the trend, the third quarter was significantly better than the second quarter, with the quarterly average profit index increasing 1.2 percentage points from the previous quarter. By industry, the profit index of all industries rose or remained flat, among which the profit index of warehousing and handling recovered to more than 50%, and the profit index of postal and express delivery industry rose by more than 10 percentage points. But operating profits remained under pressure. On one hand, the operating costs were still high. In September, the main business cost index further rose to about 55 percent, 6.7 percentage points higher than the profit index. Road transport, loading and unloading and postal express delivery industry cost index increased significantly, air transport was facing a double blow of demand and cost. On the other hand, logistics service prices fell back. The logistics service price index dropped 1.2 percentage points month-on-month in September, staying below 50 % for eight consecutive months.

Benefit all kinds of enterprises

Infrastructure was unimpeded on the whole, and the logistics supply capacity remained at a good level. In September, the country's logistics infrastructure was basically unimpeded. Among them, the e-commerce express delivery network maintained strong resilience, business volume and new order index recovered quickly, up 19.9 and 7 percentage points month-on-month respectively, e-commerce express business volume of key surveyed enterprises increased by 4-8% month-on-month in September; With the support of energy logistics, railway transportation remained high. The average daily railway volume of the research enterprises increased by 3-4% month-on-month, and the index of new orders rose by more than 8 percentage points month-on-month. However, it should also be noted that the spread of the epidemic is frequent in many places across the country, and some areas have been "silent" for a long time, which has affected the normal inter-regional flow of goods transport and caused a prominent delay in logistics time.

Policies benefited all types of enterprises, and the index of large, small and medium-sized enterprises improved simultaneously. As the government's package policies to stabilize the economy and measures to assist enterprises in their rescue and follow-up efforts have gradually taken effect, logistics enterprises have generally improved, large enterprises have continued to play the role of ballast, and the internal and external conditions for small and medium-sized enterprises have been consolidated. In September, the logistics prosperity index of large, medium and small enterprises was around 50%, which was more balanced compared with the previous discrete distribution. Medium-sized enterprises were more active, in addition to expectations and investment index, other sub-indexes were higher than large enterprises, which fund utilization, profit, service price, inventory and turnover index were higher than large enterprises 3 to 5 percentage points; Business volumes, equipment utilization, new orders and profits rebounded much more in small firms than in large ones.

The recovery of logistics prosperity index in September is the result of the effective implementation of national policies and measures, the steady recovery of household consumption, the rapid growth of energy logistics and the comprehensive recovery of logistics supply capacity and other factors. The improvement in the third quarter has not come easily and laid the foundation for the whole year. However, it is also important to note that the current international economic environment is still complex and severe, the sporadic and frequent epidemic in some areas has affected the stable operation of logistics, weak and unbalanced demand still exists, and there is still the possibility of rebound and fluctuation in the fourth quarter. The fourth quarter is the traditional peak season for logistics. According to the deployment of the CPC Central Committee and The State Council to stabilize the economic market, it shall seize the time window and time nodes, stabilize market expectations, take multiple measures to steadily boost the upstream and downstream demand of the supply chain, improve the stability of the industrial chain and supply chain and international competitiveness. In view of the risk of sporadic and frequent epidemics in various regions, we should pay close attention to key industrial clusters such as equipment manufacturing and automobile manufacturing, and key areas such as the smooth flow of goods and materials in and out of Xinjiang, so as to timely detect and correct the signs of excessive prevention and control such as "one size fits all" and "multiple blockades".

Source: China Federation of Logistics & Purchasing