Driven by the country's revving retail and car industries, the logistics sector is expected to grow 30 percent annually over the next three years, an industry report said.

Revenue in the logistics market is expected to double from US$105 billion to US$210 billion by 2009, according to the study released by Jones Lang LaSalle, a global real estate money management and services consultancy.

Ten inland cities are emerging as logistics hotspots, boosted by a growing numbers of retailers and vibrant manufacturing, the report said.

A robust economy, dynamic export growth, expansion in retail outlets and a flourishing automotive industry are major forces driving growth, said Trent Iliffe, head of Jones Lang LaSalle's Industrial Business in China.

A tripling in the number of foreign retailers an increase from 314 in 2004 to 1,000 last year is the leading impetus for expansion in the logistics sector, followed by the automotive industry, which accounts for 16 percent of shipping activity, Iliffe said.

The industry is highly fragmented at the moment, but will see consolidation in the next few years as third-party logistics further develop, the China Logistics Report said.

There are now about 16,000 logistics providers, with the largest one commanding less than a 2 percent market share.

Third-party logistics, which currently accounts for a small portion of the market, is expected to grow sharply as China opens up to competition.

"The demand for outsourcing of logistics will stimulate the development of a larger third-party logistics sector, which will drive consolidation in the industry," the report predicted.

The report said that 20 cities, 10 of which are inland, are likely to become logistics hotspots in the next five years.

China's modern logistics facilities are currently clustered around three main economic zones - the Yangtze River Delta, Pearl River Delta and Bohai Bay regions -- where the country's five main logistics hubs, Shanghai, Shenzhen, Guangzhou, Beijing and Tianjin are located.

Exports will continue to drive logistics growth in main manufacturing centers and ports such as Suzhou, Ningbo, Qingdao, Dalian and Xiamen, rated by the report as China's second-tier logistics hubs.

(China Daily February 1, 2007)