The State Post Bureau of China has suspended 56 unlicensed express firms as it continues its efforts to clean up the industry. The bureau uncovered 589 irregularities from March 1 to April 30, censored 2,485 companies and suspended 56 unlicensed express delivery firms, most of which were franchised outlets. Among the 56 companies, 32 were run by the country’s four largest express firms, including 12 ZTO Express branches, 10 Shentong Express units and seven Yunda Express outlets. Growth in the sector was more than 20% annually from 2006 to 2010. Many delivery firms chose franchising to expand quickly at the cost of service quality. To reduce irregularities, the Bureau required franchised outlets to receive licenses by May 1. In May, the bureau received 5,760 complaints about express and postal services and handled 2,550 cases. Customers recouped losses of CNY430,000 last month. The industry generated CNY5.97 billion in revenue, rising 27.7%  from a year earlier, and handled 290 million letters and packages, rising 56%. In the first five months of this year, the industry sent 1.28 billion letters and packages, up 52.4% from the same period a year earlier. Revenue increased 26.1% in the period to CNY27.39 billion, the Shanghai Daily reports.

Shanghai port expects business volumes to rise about 10% annually for the next five years. As more manufacturers move plants inland, cargo volumes along the Yangtze river have been increasing, said Chen Xuyuan, President of the harbor operator Shanghai International Port (Group) Co. The river handled 1.34 billion tons of cargo in 2009, more than triple the volume in 2000. Shanghai’s container traffic may rise 12% this year, down from 16% in 2010, and retain its No 1 position, ahead of Singapore. Shanghai handled 12.7 million containers in the first five months of this year, compared with 12.1 million by Singapore. Shanghai last year surpassed Singapore as the world’s busiest container port.

Shanghai International Port (Group) (SIPG) will slow its pace of investment in ports, terminals and related infrastructure along the Yangtze river after a massive spending boom in the past few years. SIPG Vice President Yan Jun said the company had spent CNY8 billion developing a network of ports and container handling facilities along China’s longest river. He believes this capacity is sufficient to meet “demand in the next two or three years”.  “Further development will be dependent on demand,” he said on the sidelines of a conference organized by the Journal of Commerce. Jon Monroe Consulting, which has studied shipping and port facilities on the Yangtze river, estimated total container handling capacity along the upper reaches of the Yangtze would grow from 1.9 million TEU in 2009 to 7 million TEU by 2015, but even with the most optimistic forecasts actual throughput at these ports, including Chongqing and Yibin, would only reach 2.2 million TEU by 2015. Yan could not comment on the impact of competition from rail lines on container volumes along the Yangtze river, saying it would depend on the speed of development of container rail transport.

Falling water levels and cutthroat competition are among the five main challenges facing port operators along the Yangtze river, just as manufacturers increasingly shift production to central and western regions. Gu Qiangsheng, General Manager of the Wuhan Port Group, said the other difficulties were terminal overcapacity, obsolete port equipment and inadequate support facilities, including container repair and data processing. He said the water depth during drought conditions was down to 2.8 meters and cargo-carrying vessels were unable to reach Wuhan. Gu said that although there were plans under the 12th Five Year Plan to increase the navigable water depth to 4.5 meters during the dry season, proposals to dredge the river bed by 2015 were still being prepared. He added that local and provincial authorities had encouraged the development of terminals and docks, causing overcapacity. This meant port operators offered “low-quality services and price-cutting competition to attract customers”, Gu said. Hutchison Port Holdings, in a joint venture with Sinotrans and Shanghai International Port (Group), has invested in terminals in Wuhan, while SIPG has stakes in seven ports along the Yangtze river. Joe Monroe Consulting, said CNY36.6 billion had been earmarked to improve port and transport facilities along the Yangtze – nearly three times the budget under the 11th Five Year Plan.

The Chinese government has unveiled eight measures to try to bring more orderly development to the nation’s logistics sector, such as cuts in road tolls for truckers and smoothing out taxes levied on various segments of the industry. At present, rules governing logistics operations are divided up among numerous government departments. The government has now pledged to unify business tax rates on different steps of the supply chain. At present, for example, there is a 3% tax on transport and a 5% tax on warehousing and freight forwarding. If the government were to unify those rates to just 3%, warehousing companies could raise their operating profit margins 2 percentage points to 9.95%  and net profit margins by 1.5 percentage points, Haitong Securities Co said. The government also said it will expand a pilot program to exempt logistics companies from multiple collection of taxes. At present, different companies with varying functions in the process of shipping a load of goods, including transport, distribution and warehousing, are all taxed on the same delivery. The National Development and Reform Commission (NDRC) and the State Administration of Taxation (SAT) in 2005 began a pilot program to end the multiple taxes on the supply chain, but at the time, only 593 companies were included. Today, there are more than 60,000 logistics firms operating in China. Last year, the logistics sector accounted for 18% of China’s gross domestic product (GDP), double that of developed countries, said He Liming, Director of the China Federation of Logistics and Purchasing. Highway tolls, accounting for one-third of logistics costs, are expected to be reduced under the new proposal, and an electronic toll system will be extended to allow trucks to pass through toll areas without stopping. High tolls and fuel costs often force truckers to overload vehicles. The new stimulus plan also calls for improvements in land use policies to allow expansion of convenient warehouse siting, the Shanghai Daily reports.