NORTH ASIA TRADE 2008 - Beijing’s Olympics and Beyond: Schneider’s Jack Gross outlines China’s logistics challenges Beijing-based Jack Gross, senior vice president of Schneider Logistics, outlines the myriad of challenges facing the transportation sector in China.By George Lauriat, AJOTBeijing-based Jack Gross, senior vice president of Schneider Logistics (part of the Green Bay Wisconsin-based Schneider National group), when asked how the Olympics influenced logistics in China, said that, “…traffic was bad before [the Olympics] and that the Government was enforcing strict guidelines.” Gross made this observation as his car was stalled in a traffic jam while being interviewed on his cell by AJOT. What is odd about this is that it isn’t odd at all. Twenty years ago, or even a decade ago, the streets would have been full of bicyclists and communication to the outside world would have been a chore. The problems facing China are different now with pollution and gridlock running hand-in-hand with mobile phones and Internet cafes. Beijing’s residents are now accustom to the 30 minute to 90 minute stalled commutes on the ring roads, endless days of smog, punctuated by occasional downpours that spill out from inadequate storm drains to cripple movement throughout the city. Gross says the new guidelines for heavy vehicles includes odd and even license plate access, European style Type-3 engines only and in July the implementation of Type-4 engines to reduce pollution. Further Gross says the debate over access for heavy lorries inside Beijing’s 5th and/or 6th ring roads could further choke truck availability. “We could see a shortage of trucks able to supply the DCs [Distribution Centers] and local retailers,” Gross remarked. He says that many large domestic suppliers have already worked out alternative plans to avoid the problems associated with the Olympics. The Olympics have already forced manufacturers in China’s industrial Northeast to suspend operations. Much of this production has been shifted to the South in Shanghai and Guangdong. Equally, production of electricity, generally from coal fired generating plants, has also been shifted away from Beijing to the South and West. In the case of electricity, many manufacturers have their own generating plants to avoid the brownouts that plaque industrial regions. These plants often use whatever oil is available and cause pollution that is hard for the Central Government to control. These measures were taken to mitigate pollution and the ubiquitous Beijing summer smog but whether they will be effective remains to be seen. BEYOND THE BEIJING OLYMPICS Although the transportation and logistics problems associated with the Beijing Olympics have taken center stage in recent months, the real challenges lie beyond the moment. “There is a long-term trend that the Chinese Government has diligently pursued of moving the Chinese Miracle off the Coast. “There are 600-700 million people in the interior that haven’t shared in the prosperity and by moving companies West, spreading out, this will help incorporate these people into the Chinese Miracle,” Gross said. There is more than sociology at play with decision to migrate industry West. The logistic problems of Beijing exists to some degree in every coastal municipal region whether, Tianjin, Shanghai or Guangzhou. However, the interior is relatively trouble free. Gross said of the Westward industrial migration, “…this is all good news to us, the physical infrastructure of rail and road is already in place.” He says that they are already witnessing the beginning of a second wave with multi national companies like Pro-Logis and Colliers investing in Distribution Centers away from the traditional coastal regions. Gross adds “I expect [the process] to accelerate in the second half of this year with new networks of offices, cross dock facilities and other infrastructure being built.” ROAD TO KNOW WHERE Although the Westward movement certainly relieves str