China's logistics sector on the mend under gov't support

China's logistics sector, reeling from the protracted COVID-19 pandemic, is eyeing a stepped-up rebound as the government's supportive policies gradually take effect and more favorable policies follow.

The logistics performance index, which tracks business volume, new orders, employment, inventory turnovers, and equipment utility rates in the sector, came in at 49.3 percent last month, up 5.5 percentage points from the previous month, data from the China Federation of Logistics and Purchasing showed (CFLP).

During the period, the index tracking China's warehouse storage sector went back to the expansion range of 50.2 percent, said the federation.

E-commerce logistics activities also witnessed a business reboot in May, with the index rising 2.1 points to 104.3 points from April.

He Hui, assistant president of the CFLP, attributed the aforementioned upbeat signs to the country's measures to unclog the logistics and prop up businesses in difficulties, saying that the sector will witness more expansion in June.

China has rolled out a raft of policies such as removing bottlenecks in transportation and reducing the burden for logistics enterprises to buoy the flows of logistics.

Shanghai, once hit hardest by the virus, launched an action plan to speed up economic recovery last month, releasing measures including stabilizing industrial and supply chains in the Yangtze River Delta, and smoothing domestic and international logistics and transportation channels.

The city handled an above-average daily total of 11 million express delivery packages on June 1, the first day of its return to normal production and life after two months of closed-off management to contain the COVID-19 resurgence.

Cities including Beijing have established a "white list" mechanism to secure the delivery capacity of fresh produce suppliers and support the resumption of work for key companies.

Financial support has been funneled to logistics enterprises across China to tide them over difficulties.

The Industrial and Commercial Bank of China's Shandong branch has extended over 800 million yuan (about $1.19 billion) of loans to support the logistics sector and the loans granted by the Agricultural Bank of China's Zhejiang branch for the transport and logistics enterprises exceeded 3.53 billion yuan.

China recently stressed further smoothing transportation and logistics, as part of efforts to ensure the operation of market entities and stabilize the economy.

While inspecting the Ministry of Transport on June 6, Premier Li Keqiang urged local governments to strengthen coordination on safeguarding smooth transportation for key industries, regions, and enterprises, and helping secure positive growth in freight volume as soon as possible.

More efforts should be made to cultivate market players in the logistics sector and help them flourish while building a unified and open transportation system to reduce logistics costs, he said.

"The hardest time for the logistics sector has passed, and we are bracing for the weeks-long mid-year online shopping event in good order under policy incentives," said Zhao Jian, a senior director in charge of global logistics and supply chain management of Cainiao Network.