Fragmented Trucking in China and Supply Chain Impact

An article in the New York Times (April 29, 2011) describes the fragmented, unregulated trucking industry in China and the consequent cost per mile of $ 2.50 to $ 3.00 per mile vs the US coat of $ 1.75 per mile. This is despite labor costs in the US of $ 17/hour vs China labor costs of 25 cents/hour.  The fragmented trucking in China means that owner operators compete on price, overload their trucks and ignore mandated safety related driver rest periods but are exposed to bribes, road tolls etc.  But as factories move further inland, the archaic network of trucks, barges etc and the increased fuel prices and government regulation  threatens the manufacturing efficiency that is China’s export hallmark.  Will the increased logistics costs derail the cost efficiency of China manufacturing ? Will a China government push to incent larger trucking companies with more stringent enforcement of rules improve the competitiveness of Chinese manufacturers ? Should OEMs who manufacture in China be held responsible for the working conditions of the truckers who carry their loads ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , . Bookmark the permalink.

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