Reducing transportation and logistics costs is a strategic priority for China’s economic policymakers. Efficient logistics not only supports the real economy and manufacturing sectors but also enhances the competitiveness of Chinese enterprises in domestic and international markets. In December 2025, media summaries of a policy Q&A published on the Chinese Government Website responded to business concerns about rising logistics expenses and outlined how authorities plan to push costs down further in the years ahead.
National Logistics Cost Reduction Strategy
The effort to lower transportation and logistics costs stems from central government strategic planning and is embedded in multiple high-level directives. Reducing logistics costs supports the unified national market, enhances economic circulation, and underpins the competitive positioning of China’s manufacturing and export sectors. The “Action Plan to Effectively Reduce Logistics Costs Nationwide” (有效降低全社会物流成本行动方案) released by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council in November 2024 articulates an overarching framework and targets for logistics cost reduction to be achieved by 2027.
Under this plan, authorities aim to bring the ratio of social logistics costs to GDP down from 14.4 % in 2023 to around 13.5 % by 2027, translating into potentially trillions of yuan in cost savings across the economy. This strategic focus places transportation logistics including road, rail, waterways, civil aviation, and postal services, at the center of multi-sector efforts to reduce systemic costs and increase operational efficiency.
Current Logistics Cost Trends and Challenges
China’s logistics cost structure has seen measurable improvements over recent years. According to government sources, national logistics costs declined by approximately 400 billion yuan in 2024, largely driven by decreases in transportation expenses. Transportation costs typically account for over 50 % of total logistics costs, making them a key focus of policy interventions.
Despite this progress, logistics costs remain high compared with advanced economies, in part due to dominant reliance on road freight, legacy infrastructure constraints, and fragmented data systems. Transportation cost pressures directly influence corporate operational expenses, particularly for manufacturers and distributors with high freight volumes. Addressing these structural challenges requires coordinated reforms across multiple transport modes and logistics segments, from port and rail integration to data sharing and digital transformation.
Structural Reforms to Optimize Transportation Logistics
Improving the structure of transportation is one of the core policy thrusts for reducing logistics costs. The government is promoting a shift toward multi-modal transport, better utilizing rail and waterway networks to balance supply routes and lower cost per ton-kilometer for bulk cargo. For example, by linking inland ports, dedicated rail lines, and major manufacturing hubs, the logistics system can reduce dependency on higher-cost road freight and achieve economies of scale.
Multi-modal transport optimization includes prioritizing inland port development, enhancing intermodal hubs, and aligning industrial zones with logistics infrastructure. This approach increases volume utilization for rail and water transport, reducing bottlenecks that contribute to idle capacity and under-utilized infrastructure.
Integrating Transport and Industrial Clusters
Authorities plan to integrate transportation logistics with industrial ecosystems to achieve closer alignment between production bases and freight networks. Extending major highways, high-grade rail lines, and inland waterways directly into large manufacturing clusters and strategic industrial parks reduces the need for costly short-haul trucking and enables direct connection with logistics hubs.
Policy responses also contemplate logistics “parks within parks”, where logistics services are embedded within industrial zones. This proximity allows manufacturers to reduce inventory holding costs and transportation expenses and enables logistics firms to scale services with consistent demand patterns.
Supporting Comprehensive Logistics and Hub Development
Strengthening the national logistics hub system is another policy objective. Government plans envisage modern logistics networks with smart ports, rail-water intermodal hubs, and integrated freight terminals that connect domestic and international flows. Enhancing hub capacity unlocks efficiency gains by reducing transfer times, facilitating better scheduling, and improving utilization of freight corridors.
Digitization of logistics processes, including real-time tracking, automated scheduling, and data integration across modes, supports dynamic freight matching and reduces idle time and administrative overhead. Policies targeting logistics data openness and interconnectivity aim to consolidate data silos among transportation, customs, supply chain partners, and market participants to foster transparent, interoperable systems.
Encouraging Green and Digital Logistics Innovation
Cost reduction policies are closely linked with broader trends in digitalization and technology-enabled logistics innovation. China’s transportation strategy emphasizes smart infrastructure, such as intelligent highways, digital rail networks, and AI-assisted freight optimization. These technologies help reduce empty return trips, shrink idle capacity, and accelerate cargo throughput.
Policy dialogues indicate that artificial intelligence, Internet of Things (IoT), and big data analytics can unlock new efficiency gains by improving coordination among logistics stakeholders and enhancing predictive capabilities for demand and route planning. Encouraging pilot deployments of technologies such as autonomous vehicles, drones, and smart warehouses also forms part of a long-term path toward sustainable cost reduction.
Institutional and Regulatory Support
To ensure coherence, the government has established cross-departmental coordination mechanisms that align logistics cost reduction efforts across ministries such as the Ministry of Transport, National Development and Reform Commission (NDRC), National Data Administration, and customs authorities. These mechanisms aim to lift structural barriers that historically segmented logistics planning and regulatory oversight.
The Q&A policy response underlines the need to integrate logistics reforms with industrial, trade, and urban planning frameworks, ensuring logistics efficiency contributes to national economic goals, such as promoting high-quality development and modern supply-chain integration.
Implementation Timeline and Cost Reduction Targets
The government’s logistics cost reduction strategy contains defined milestones. According to the November 2024 Action Plan, the goal is to lower the ratio of social logistics costs to GDP to approximately 13.5 % by 2027, which translates into significant operating cost relief for logistics-intensive sectors.
Progress has been reported, with the ratio declining from 18 % in 2012 to 14.4 % in 2023 and further to about 14.0 % in the first three quarters of 2025, a trend reflecting active policy implementation and network improvements.
What This Means for Business
Efforts to further reduce transportation and logistics costs carry wide-ranging implications for businesses across sectors. Lower logistics costs directly enhance corporate competitiveness by reducing the cost of goods sold and freeing up capital for investment in innovation, market expansion, and talent. Producers, particularly in manufacturing and export-oriented industries, stand to benefit from improved transport efficiency and expanded intermodal connectivity.
Greater integration of logistics services with industrial clusters enables leaner supply chain configurations, reducing inventory levels and improving responsiveness. Meanwhile, digital logistics platforms and smarter freight networks can deliver visibility and predictive analytics capabilities, helping businesses optimize routes and reduce delays.
Policies promoting data shareability and interoperability facilitate ecosystem cooperation, paving the way for logistics firms, carriers, and shippers to plan collaboratively. However, businesses should also be prepared to engage with evolving regulations, invest in logistics-related digital capabilities, and pursue partnerships that leverage new transport infrastructures.
Finally, reducing logistics costs aligns with sustainability goals. More efficient modes of transport and smart logistics platforms contribute to lower carbon intensity and support corporate environmental, social, and governance (ESG) commitments.
Sources
- 《怎样进一步降低交通物流成本（政策问答·回应关切）》 — Chinese Government Q&A summary, published December 2, 2025. (https://www.gov.cn/zhengce/202512/content_7050003.htm)
- Action Plan to Effectively Reduce Logistics Costs Nationwide, joint plan by CPC Central Committee & State Council, Nov 2024.
- Analysis of logistics optimization and structural reforms, People’s Daily & English Government reports.
- Coverage of Ministry of Transport efforts to cut costs and enhance efficiency.