CHINA has the best container shipping connectivity in the world, but it continues to fall down in logistics services, according to a Maersk Line study.

The Maersk study said proportion of China's logistics costs in gross domestic product is higher than many developed and developing countries.

"China's logistics market is in its infancy and consists of thousands of low-margin players. It is characterised by a low-cost, simple subcontractor outsourcing mode and low market penetration of sophisticated services," the study said.

"The lack of integration and co-ordination of services across the supply chain results in lower operational efficiency and higher logistics costs," it said.

"As a result, no logistics operators possess nationwide coverage and for Chinese operators service levels are often sub-standard.

"With rising labour costs, China needs to lower its logistics costs and improve its logistics performance if the country is to maintain a lead compared to its competitors' production cost advantages in other parts of Asia," said the report.

China increased its logistics performance six per cent in 2007-2012, which resulted in a 27 per cent increase in manufactured exports, an achievement that Maersk said can be enhanced by improvements beyond eastern and southern China.