News

Why the cost of steel logistics is so high?

     The logistics experts said steel logistics is one of the largest Chinese logistics flow products, but the logistics fee is twice than Japan. Why the cost of steel logistics is so high? 
    Circulation channels is many and long
    Steel products from the production to the end user distribution channels are too long, and the grading is not clear. 60% circulation of the whole supply chain are implemented by the change hands of traders, which led to the transaction cost of steel too high.
    People in the industry say, in the domestic market, many steel pipe is finished after the trade circulation to the end user hand, in which will appear phenomenon that business organization resources across regions blind flow, led directly to the costs. Also, the same steel resources in the same area in the market, will appear that sent to the end user hand after repeated change hands, then increase among several logistics cost.
    In expert’s opinion, appearing this kind of situation has a inevitable connectio with traders low concentration. According to he introduces, although our country has more than 20 all kinds of steel trade company, but its size is less commonly. Annual revenue has under 5 million yuan of the following legal person enterprise accounting for more than 60%. This causes the steel supply chain organization is difficult, and stability is very low. Experts also suggest, we must change the situation that industry concentration is low, break the traditional a buying and selling mode operation of trade enterprise.
    Lack of industry chain synergy
    “From the industry itself, the chaos of the supply chain to internal competition is the important reasons of logistics high cost.”Experts said. Our country steel industry chain lack of overall planning, the link has not straighten out. Unreasonable distribution, logistics market competition, all cause the steel industry benefit low the logistics cost too high. And on this disorder of the steel industry chain competition did not only reflect in the whole supply chain between all joints, also reflected in each node of the internal.
    Between each node of the supply chain, the suppliers, vendors, processing enterprise, warehousing, transportation enterprise, end users did not form a complete set of coordination mechanism.Each node fight for theirselves. As a powerful node, for its own interests, they often maliciously extrude the upstream and downstream’s profit space. In the mean time, they severely blow to the adjacent node participation enthusiasm, which had a negative impact on the healthy development of article.
    In each node of the internal, even in steelworks, enterprise department also only consider their own interests. Only purely reducing a link in the logistics cost, not calculating the total cost of the supply chain, it will cause the whole supply chain cost high. The steel tube supply chain should be a system management engineering, must plan as a whole integration management. But now the steel industry logistics lack of overall planning, each link has not straighten, and did not form effective supply chain.
    One area of the suppliers, vendors, processing enterprise, warehousing, transportation enterprise, enterprise customers with a large business between vacancy, need effective coordination mechanism. 
    In addition, at present the steel supply chain has breakpoints, between supply and demand can’t form communication without clearance. Experts explained, the majority of steel products in circulation process, between production and consumption of information, is not symmetrical. Producers according to their own production scheduling to plan production that have excess capacity. And the actual terminal consumer groups, can not according to his needs to get the resources procurement plan supply. Between supply and demand had not formed the information standard interactive channel. Because the supply and demand has a disconnection chaos in the market, makes the logistics cost increase greatly.
    In the face of all these problems, reshape the work of the steel supply chain is imminent. To this, the steel enterprise should reshape the supply chain. From the vertical, it will reduce the flow link and consider from the whole supply chain to. On the other, it will have the information sharing and action coordination, and shared interests.

Share with

Leave a Reply