How China Remains the Logistics Powerhouse and the "World's Factory"

China is a dominant force in global manufacturing and trade. As the world's second-largest economy, it has one of the most complex, dynamic, and rapidly evolving logistics, supply chain, and freight markets. Read on to understand China's role in global trade and discover five key trends that are shaping its market.

The "World's Factory"

China's role in global supply chains is unrivalled. It holds a strong second position among the top economies in the world, after the United States, and is estimated to reach $19.23 trillion in gross domestic product (GDP) by the end of 2025. With around 17% of the global population living in China, the country is the world's top exporter and the second-largest importer of goods and materials. China exports goods ranging from electronics and machinery to textiles and consumer products. Still, its biggest exported products by value in 2024 were phone devices, including smartphones, computers, electronic integrated circuits, cars, and electric storage batteries. Meanwhile, last year, the country's top imports were electronic integrated circuits and microassemblies, crude oil, iron ores and concentrates, unwrought gold, and petroleum gases.

Major ports in China, such as Shanghai, Ningbo-Zhoushan, Shenzhen, and Guangzhou, consistently rank among the busiest globally, handling millions of TEUs (twenty-foot equivalent units) of containerised cargo annually. According to the World Shipping Council, seven out of the ten busiest world shipping ports are in China. That is precisely why KATA Global Logistics has opened an office in Hangzhou near Shanghai and Ningbo-Zhousha (two busiest ports in China) to support your logistics operations. To make its shipping industry thrive, China has built impressive domestic logistics infrastructure with extensive rail networks that include high-speed freight corridors, a dense network of highways connecting inland manufacturing hubs to coastal ports, strong air cargo facilities (particularly around airports like Guangzhou Baiyun and Zhengzhou Xinzheng), and advanced warehousing and distribution centres.

Huge investments in infrastructure from the Chinese government, particularly the Belt and Road Initiative (BRI)launched in 2013, have paid off massively and earned China the nickname of the "world's factory" over the years. In 2022, China's logistics market was valued at over $1.7 trillion, accounting for nearly 30% of the global logistics market. But the export market is alone, benefiting from strong infrastructure. Last year, China's courier industry reported its busiest year ever thanks to its brisk e-commerce business and a partial recovery in consumption. According to the State Post Bureau, parcel deliveries in China reached a record 174.5 billion in 2024, growing 21% year-on-year, while courier service revenues rose 13% to $191.2 billion. China has maintained its status as the world's largest parcel delivery market for 11 years, while an impressive country's logistics market serves its people and the rest of the world equally well.

Key Trends Shaping the Market

 

1. Digitalisation and Smart Logistics

Technology is at the heart of China’s logistics transformation as companies quickly adopt it in their daily operations. From AI-powered route optimisation to real-time tracking and automated warehouses, digitalisation enhances speed, accuracy, and transparency across the supply chain. Here are a few examples of what China is doing well:

• IoT devices track goods from the warehouse to the doorstep.

• Big data analytics support dynamic inventory and demand forecasting.

• Blockchain is being used to ensure end-to-end visibility and prevent fraud, especially in international shipments.

• 5G-enabled logistics hubs are improving coordination between suppliers, distributors, and retailers.

2. Sustainable and Green Logistics

As the "world's factory" with more than 17% of the global population, China plays a crucial role in sustainability and the future of our planet. Ten years ago, its government pledged that China’s carbon dioxide emissions would peak in 2030 while its 'carbon neutrality' would be achieved by 2060. Subsequently, it prompted a major push toward sustainable logistics for freight and logistics companies to adopt cleaner technologies and greener practices. As a result, today in China:

• Electrification of last-mile delivery fleets is becoming standard in major cities.

• Investments in rail and inland waterway freight are reducing emissions versus road transport.

• Warehouses are increasingly built with solar power, smart lighting, and green certifications.

• Carbon accounting and offset services are being added to freight solutions for ESG-conscious (Environmental, Social and Governance) companies.

3. Logistics Expansion

As we wrote earlier, the Chinese government is paying a lot of attention and investing billions of dollars in upgrading not only their logistics infrastructure but also those of other countries. In 2013, China introduced the Belt and Road Initiative (BRI), sometimes referred to as the New Silk Road, aiming to invest in more than 150 countries and international organisations, improving the logistics market, which would ultimately benefit Chinese trade.  In the meantime, China focused heavily on expanding its inland logistics infrastructure to reduce dependency on coastal manufacturing zones and promote balanced regional growth.

• Today, provinces like Chongqing, Chengdu, and Xi'an are emerging as key logistics hubs.

• China-Europe Railway Express is seeing growing volumes via inland cities, offering a faster alternative to ocean freight for Europe-bound goods.

• Infrastructure projects like the Western Development Strategy and the Belt and Road Initiative stimulate cross-border connectivity from these inland centres.

Additionally, last December, China announced a new five-year plan to prioritise the development of cold chain logistics, promote green packaging materials, and further reduce energy use and emissions in the logistics sector. Investment-driven government action such as this remains the reason behind China’s growth in logistics.

 

4. Acceleration of E-Commerce

China’s cross-border e-commerce exports are booming due to strong global dominance in manufacturing and commerce. According to the Financial Times, China makes almost a third of all manufactured goods globally – more than the U.S., Japan, Germany and South Korea combined. After that, e-commerce is fueled by online retailers such as Temu, AliExpress, and Shein, which are becoming incredibly hard to compete with for anyone worldwide due to their price, convenience, and variety of consumer choices. To put it into perspective, last year, around 4.6 billion low-value (not exceeding $156) goods entered the European Union market, equalling more than 12.6 million parcels daily. And the EU is not even among China’s top export destinations. Subsequently, the need to process millions of international parcels quickly and cheaply is reshaping freight operations.

• Special bonded warehouses and free trade zones are being expanded to support high-volume, low-value shipments.

• End-to-end logistics services tailored for e-commerce sellers, such as customs pre-clearance, are in high demand.

• Logistics players leverage air cargo and consolidated freight options to improve delivery times and reduce costs.

5. Freight Market Resilience

China’s freight industry remains exposed to global uncertainty, from geopolitical tensions to regulatory shifts and economic slowdowns. Regardless of that, China is prepared for that both through its dominance in the global market and active investments in logistics flexibility through diversification to mitigate the risks.

• Freight forwarders are adopting multimodal strategies (combining road, rail, sea, and air).

• Warehouse decentralisation reduces over-reliance on any single location or hub.

• Companies focus on supply chain resilience, using digital twins and artificial intelligence to simulate disruptions and plan responses.

• Demand increases for end-to-end logistics solutions, where a single provider manages everything from sourcing to last-mile delivery.

Today, the biggest risk impacting China’s growth is the Trade War with the United States, its top export destination. U.S. President Donald Trump introduced special import tariffs in the past few months from almost all countries, but China was hit the strongest. Although the negotiations between the two countries are ongoing, each side constantly raises levies on the other, reacting to each other's decisions in this Trade War. According to the Office of the U.S. Trade Representative, the U.S. imported $438.9 billion of Chinese goods last year, which amounts to around 3% of China’s total economic output. Therefore, the outcome of these tensions is vital to China’s trade. Meanwhile, China is strengthening its trade relations with other countries and is not backing down, proving its resilience and dominance in the global market.

In conclusion, whether you are a manufacturer, a retailer, or a logistics provider, understanding China's logistics landscape is no longer optional – it’s essential. If you ever need a trusted logistics partner, look no further – KATA Global Logistics has offices worldwide, including one in Hangzhou, China, conveniently located near Shanghai and Ningbo-Zhousha, two of the busiest ports in the country. We offer tailored solutions that adapt to shifting market needs, focusing on efficiency, cost-effectiveness, and customer satisfaction.

Contact KATA today, and let us help you succeed!