China logistics profits fall below 10% from 30%

The gross profit margin of the logistics operators in China has fallen to below 10% from 30% the industry posted in 2002.

Xinhua New Agency reported that the current profit margin of domestic warehousing companies is only from 3-5% higer while transport companies hit only 2-3%.

The express industry, which relies heavily on the manufacturing, suffered as the factories produced fewer goods while cutting back on logistics costs due to the slowdown of the world economy. Meanwhile, the oil price increases for most of the year, and rising cost of manpower also reduced margins.

The report predicts that the situation will last through the early half of 2009.

During the first three quarters of 2008, China's logistics industry generated a value of CNY6.8 billion (US$971.6 million), up 26.7% year on year, but operating costs grew faster at 36%.