Slowing economic growth in China speaks to the need for supply chain standardization, according to Peter Mackie, Group President of CHEP Pallets. Quoted by ChinaDaily.com, Mackie stressed that the Chinese supply chain remains very fragmented in terms of truck and pallet sizes.
As a result, goods often require manual handling as they move through the supply chain. With China expected to face a labor shortage over the next few decades, supply chain performance may suffer if standardization is not embraced.
Since 2014 Chep has collaborated with the research institute of the Chinese Academy of International Trade and Economic Cooperation (CAITEC), part of the Ministry of Commerce, with an eye to accelerating the development of standards for pallets, transportation equipment, and material handling systems. The result will be greater supply chain efficiency.
According to the ChinaDaily.com article, Chep and CAITEC are operating approximately 30 pilot programs in China that are sponsored by the central government.
China’s logistics costs run at 16 percent of GDP, according to the National Development and Reform Commission, which Mackie pointed out is far greater than in developed countries.
Chep has seen around a 20 percent growth rate in recent years, after a decade of operations in China. Its network includes in excess of 80 on-site customer service points and service centers, operating a pool of more than 4 million pallets. Customers include Nestle, P&G, and Unilever.
“But the fastest growth occurs when the supply chain is really unlocked, and it is still at the very early stage for us,” Mackie was quoted. “There’s a very strong correlation between population in a country and the potential size of pallet market, so China’s (huge) population means it’s the most important market for us in the long run.”