Chongqing Logistics takes long way to car giant Nuggets Logistics

Chongqing Changan Minsheng Logistics (Group) Co., Ltd. has positioned itself as the second-largest automotive logistics service provider in China, trailing only Shanghai International Automotive Logistics (Pier) Co., Ltd. According to Shi Chaochun, the company’s executive vice president, this achievement reflects a strategic shift that has significantly enhanced operational efficiency and cost control. Historically, Changan Group, China’s fourth-largest automaker, managed its logistics in a fragmented manner. Different departments handled material supply, vehicle delivery, and spare parts distribution separately, leading to inefficiencies and high costs. This situation became more urgent after the 2001 joint venture with Ford, which demanded more advanced logistics solutions. Since no existing provider met the requirements, Changan decided to build its own logistics system. In August 2001, Changan partnered with Minsheng Industrial Company and American Meiji Logistics to establish Chongqing Changan Minsheng Logistics (Group) Co., Ltd. This move marked a turning point for the group, offering multiple benefits: it improved logistics speed, reduced capital occupation, and cut financial costs. By implementing efficient, door-to-door services, suppliers could now operate on a just-in-time basis, drastically reducing inventory levels. According to internal data, over the past two years, Changan’s annual car production doubled, yet spare parts inventory dropped from 250 million yuan per month to less than 15 million. The average working days for inventory turnover fell from 152 to 55, showcasing remarkable improvements. Additionally, the logistics operation helped reduce institutional overhead, allowing the company to focus more on R&D and core manufacturing. The logistics division also serves as a profitable business unit, with an estimated annual return of over 15%. In developed countries, logistics is referred to as the "third profit source," a concept that highlights how logistics can generate profits by reducing costs. Unlike the first profit source (sales) and the second (production cost reduction), the third refers to the savings achieved through optimized logistics management. This idea has driven several companies, including Tenghui, a major cement producer under Changan, to invest in their own logistics systems. Similarly, Loncin, a long-standing motorcycle manufacturer, has expanded into logistics, leveraging its steel market in Chongqing to provide motorcycle steel distribution services. However, despite these efforts, many companies still rely on internal logistics systems, which are not fully aligned with the principles of socialization and professional division of labor. True modern logistics—known as third-party logistics—remains underdeveloped in Chongqing. Third-party logistics involves outsourcing logistics operations to specialized providers, enabling companies to focus on their core competencies while benefiting from more efficient and cost-effective services. FAW-Volkswagen was one of the early adopters of third-party logistics in China, establishing a nationwide network of spare parts centers. This model has proven successful in improving service efficiency and maintaining competitive advantage. To enhance Chongqing's logistics industry and improve the investment environment, the development of third-party logistics must be accelerated. It is not just about internal optimization—it's about building a sustainable, professional, and integrated logistics ecosystem that benefits the entire economy.

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