Last mile transport's heavy load for truckers

Last mile transport is the greatest challenge for logistics companies on the mainland, while high road tolls and unregulated penalties have forced them to think of ways to lower costs.

Total logistics costs on the mainland topped 9.4 trillion yuan (HK$12 trillion) last year, equivalent to 18 per cent of gross domestic product, China Federation of Logistics and Purchasing data shows. Road tolls and trucking penalties accounted for a third of those costs.

About 95 per cent of the mainland's highways and 61 per cent of its first-tier roads are toll roads, with only the roads leading to suburban areas or within villages free. Trucks are also subject to many restrictions and penalties that weigh on the costs of logistics firms.

"I wish the government could allow trucks to use highways after midnight," said Johnny Chou, president and chief executive of Best Logistics Technology.

The ban has left trucking companies with no option but to use highways illegally after midnight in order to guarantee timely delivery.

The mainland's logistics market is very fragmented, with up to 10,000 logistics companies in operation, meaning that only a handful can take advantage of economies of scale.

Travelling empty leg is also a severe problem for trucking companies on the mainland, because they lack the comprehensive networks needed to optimise the routes they serve, leading to wasted capacity. The few big players in the market are, however, finding ways to lower costs.