Reverse Logistics Mode Selection for Construction Enterprises in the

Context of Green Transformation

Lau Long Yiu

, Yanhao Qu

2,* b

and Sihao Yang

School of Management, Huazhong University of Science and Technology, Wuhan 430074, China

School of Business, Macau University of Science and Technology, Macau 999078, China

School of Economic and Management, Bengbu University, Bengbu, 233030,China

Keywords: Construction Enterprises, Reverse Logistics, Green Transformation, Logistics Mode Selection.

Abstract: Driven by the goals of “carbon peak” and “carbon neutrality”, the construction industry is in urgent need of

realizing sustainable development through green transformation. With a series of policies such as the

construction of a resource-saving and environmentally friendly society in China, it is of contemporary

significance to research the recycling strategy of reverse logistic. However, construction enterprises are still

facing challenges such as a lack of science in mode selection, information asymmetry and insufficient

technical support in reverse logistics practice. Based on the literature review and case study, this study

systematically explores the advantages, disadvantages and applicable conditions of self-operated, third-party

and hybrid logistic modes, and verifies the theoretical framework by combining with the practice of Oriental

Yuhong Company. The study finds that the self-operated logistics ensures legal compliance and low-carbon

operation through strong control but requires high initial investment. The third-party logistics relies on the

scale effect to enhance flexibility, but suffers from the risk of information lag. The hybrid logistics balances

risk and efficiency, which is suitable for medium- to large-sized enterprises. The study proposes that

construction enterprises should choose the appropriate model according to their capacity, characteristics and

strategic objectives. The study also provides theoretical support and practical guidance for policy making,

enterprise practice and green transformation of the industry.

1 INTRODUCTION

The integration of "carbon peak" and "carbon

neutrality" targets into China's national strategic

framework has intensified pressure for green

transformation within the construction industry. As

indicated in the “China Building Energy

Consumption Research Report (2020)”, the

construction sector accounts for 54% of total societal

carbon emissions across its entire lifecycle, with the

building materials production phase contributing a

substantial 55.2%. This highlights the critical issue of

excessive resource consumption upstream in the

supply chain. Concurrently, data from the Ministry of

Housing and Urban-Rural Development (MOHURD)

reveals that approximately 3.5 billion tonnes of

https://orcid.org/0009-0004-3512-0974

https://orcid.org/0009-0001-3913-3113

https://orcid.org/0009-0005-2151-294X

Corresponding author

construction and demolition waste (CDW) are

generated annually nationwide, yet the standardized

recycling rate remains below 10%. A significant

volume of discarded building materials is landfilled

without proper treatment, leading to dual challenges

of land occupation and secondary pollution. Driven

by policy imperatives, construction enterprises

urgently need to restructure their reverse logistics

(RL) systems to break the "high consumption-low

recycling" vicious cycle and achieve a transition from

a traditional linear model to a green closed-loop

supply chain.

Reverse logistics, as a critical component of green

supply chains, is paramount for resource conservation

and environmental sustainability in the construction

industry. However, enterprises face numerous

348

Yiu, L. L., Qu, Y. and Yang, S.

Reverse Logistics Mode Selection for Construction Enterprises in the Context of Green Transformation.

DOI: 10.5220/0014355000004718

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on Engineering Management, Information Technology and Intelligence (EMITI 2025), pages 348-353

ISBN: 978-989-758-792-4

challenges in RL implementation. Current RL

practices exhibit characteristics of "fragmented

innovation and systemic disconnection." MOHURD

2023 monitoring data shows that the national CDW

recycling rate is only 32.7%, with significant regional

imbalances. While leading companies like China

Construction Third Engineering Bureau (CCTEB)

have piloted blockchain-based material traceability

platforms, achieving digital management for 80% of

recyclable materials using RFID tags, small and

medium-sized enterprises (SMEs) predominantly rely

on manual record-keeping, resulting in an RL

information discontinuity rate as high as 67%.

International experience, such as the EU's Extended

Producer Responsibility (EPR) system, which

internalizes the cost of building component recovery

into product pricing, demonstrates achievable

disassembly and reuse rates of up to 60% for

prefabricated buildings. In contrast, China's current

“Circular Economy Promotion Law” lacks specific

EPR implementation rules for the construction sector.

A notable concern is the evident disconnect between

RL technological innovation and standard

development. For instance, robotic sorting equipment

has been deployed in demonstration projects in

Xiong'an New Area, but the absence of matching

standards like “Intelligent Sorting Operation

Specifications” hinders its broader adoption. This

contradiction of "technology preceding institutions"

severely constrains the scientific basis for RL mode

selection.

This paper innovatively focuses on the

construction industry, exploring how to select RL

modes against the backdrop of green transformation

to provide practical guidance for enterprises. It will

systematically analyze the driving mechanisms for

RL mode selection in construction enterprises,

integrating multi-dimensional factors including

policy compliance, service quality, economic cost,

and operational efficiency. This research holds

significant implications for refining theoretical

frameworks, guiding practice, enhancing resource

utilization efficiency, and promoting the sustainable

development of the construction industry.

2 CURRENT SITUATIION

ANALYSIS

Reverse logistics in the construction industry started

relatively late. Although it has developed in recent

years, it remains in its nascent stage. Research by

domestic and international scholars on RL primarily

focuses on the following dimensions: The RL

framework proposed by Rogers and Tibben-Lembke

encompasses core processes such as product return,

remanufacturing, repair, and disposal handling. Its

essence lies in recovering value and enabling proper

disposal through resource reverse flows (Rogers and

Tibben-Lembke, 1999). . For example, Caterpillar's

remanufacturing business extends the lifespan of

construction machinery by 1-2 times through

disassembly, cleaning, and refurbishment of used

parts, validating the dual economic and

environmental benefits of this model (Seitz,2007).

However, specific applications in the construction

domain still face challenges of missing technical

standards and insufficient scale, as evidenced by

China's prefabricated building penetration rate being

below 30%, significantly lower than developed

countries.

Regarding RL network design, research by Li

Hongxuan based on multi-objective optimization

indicates that traditional single-objective models

struggle to balance cost minimization and recycling

rate maximization synergistically. Their study

employed an improved standardized normalization

constraint algorithm to solve the Pareto front,

achieving a dynamic balance between these

objectives (Li,2018). Simultaneously, it identified

game analysis between government incentive

mechanisms and enterprise recovery strategies as a

core factor influencing RL network efficiency. A

critical practical dilemma, however, is the severe

regional imbalance nationwide. MOHURD 2023 data

shows that the CDW resource utilization rate in

eastern coastal regions can reach 45%, while it

remains below 15% in western provinces. This stark

disparity is closely linked to variations in local policy

enforcement and resource investment. For instance,

although the national-level “Technical Specification

for Construction Waste Resource Utilization”

stipulates requirements for the application ratio of

recycled aggregates, its implementation at the

city/county level is ineffective. The root cause lies in

the widespread lack of dedicated funding support at

these levels; over half of existing building energy

efficiency retrofit projects face local fiscal shortfalls.

This directly constrains the construction and effective

operation of RL network infrastructure, exacerbating

regional imbalances.

Technological barriers constitute a core

bottleneck hindering RL development. Research by

Wang Guohong and Zhao Tao reveals the deep-seated

contradiction between insufficient sorting automation

and the lack of traceability systems (Wang and

Zhao,2008). While leading enterprises like CCTEB

Reverse Logistics Mode Selection for Construction Enterprises in the Context of Green Transformation

349

have piloted blockchain-based material traceability

platforms, SMEs still rely on manual records,

resulting in an RL information discontinuity rate as

high as 67%. Concurrently, although robotic sorting

equipment has been applied in demonstration projects

like Xiong'an New Area, its promotion is severely

hampered by the absence of technical standards,

creating a "technology-first, institutions-lagging"

dilemma. For example, Anhui Construction

Engineering Group implemented RFID technology

for prefabricated component lifecycle traceability, yet

the coverage of such digital factories is less than 10%

industry-wide, and RL costs are 18% higher than

traditional methods, highlighting the challenge of

balancing technological advancement with economic

viability.

The absence of synergistic policy and market

mechanisms further intensifies development

obstacles. While the EU's EPR system internalizes

recovery costs into product pricing, achieving 60%

disassembly and reuse rates for prefabricated

buildings, China's “Circular Economy Promotion

Law” has yet to establish sector-specific EPR

implementation rules for construction. In practice, the

disconnection between RL technological innovation

and standard development is particularly acute. For

example, the low technical barrier for plastic window

retrofitting has triggered cut-throat price competition

among small firms, leading to projects where actual

energy consumption exceeds that of traditional

buildings – exposing gaps in standardized regulation.

Furthermore, existing research inadequately explores

the driving mechanisms within the context of green

transformation, especially concerning the systematic

integration of emerging factors like carbon trading

mechanisms and policy compliance costs. A

theoretical framework integrating multi-dimensional

factors – economic cost, environmental benefit,

policy constraints – into a decision model is urgently

needed to provide actionable pathways for the

industry.

3 PROBLEM ANALYSIS

First, under the self-operated logistics model,

enterprises have control over all aspects of logistics.

They can adjust plans at any time according to

demand and have strong control over the entire

supply chain process. Through self-operated logistics

platforms, enterprises can integrate logistics

resources and analyze logistics solutions to avoid

logistics uncertainties. This reduces the risk of

enterprise operations and saves logistics costs (Chen,

2016). In addition, self-operated logistics can ensure

the compliance of reverse logistics(Feng, 2017). In

particular, it can better meet environmental protection

standards and carbon emission control requirements

when handling green building material recycling and

hazardous waste. For example, Oriental Yuhong

Company strictly controls the waterproof material

recycling process through its self-operated model to

ensure compliance with the “Green Building Material

Evaluation Standards” (Feng, 2017) and avoid the

risk of environmental protection violations caused by

outsourcing (Gao, 2024). In addition, under the self-

operated model, enterprises can build their own green

transportation fleets and reduce carbon emissions

through measures such as photovoltaic power

generation and electric transportation vehicles.

However, the initial investment in the self-operated

model is high. For example, the construction of

recycling centers and the purchase of equipment

require enterprises to have a certain amount of

financial strength and logistics management

capabilities. In the long run, the recycling of materials

can reduce material procurement costs. However, the

self-operated model is difficult to dispatch and is not

as flexible as third-party logistics in responding to

temporary large-volume tasks.

In contrast, the third-party logistics model has

significant economies of scale and can flexibly

respond to multiple categories of recycling and

fluctuations in demand. Third-party logistics

companies rely on their extensive network coverage

and specialized equipment to standardize,

professionalize, and scale logistics and distribution.

In addition, through resource and information sharing

with retailers and distribution centers, they reduce

logistics and distribution costs, ensure service quality

(Chen, 2015), and demonstrate greater mobility in

multiple locations or for sudden tasks. For example,

logistics companies such as Zhongtong and SF

Express can call on their nationwide networks to

cover remote construction sites and meet the

decentralized reverse logistics needs of the

construction industry. However, the disadvantage of

the third-party logistics model is that companies have

relatively weak control over the supply chain, making

coordination difficult. It also requires reliance on

third-party qualification management to ensure

compliance. In addition, the outsourcing model may

suffer from untimely information feedback, affecting

companies' real-time access to data on the quality of

recycled building materials, which in turn affects

product design improvements. In terms of carbon

emissions, if third-party suppliers fail to meet green

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certification standards, it may increase the indirect

carbon emissions of enterprises.

In order to balance the advantages and

disadvantages of self-operated and third-party

logistics models, a hybrid model has become a viable

option. In this model, construction enterprises and

third-party logistics enterprises jointly operate

logistics. Enterprises are responsible for self-

operating their core businesses, while third parties are

responsible for formulating logistics solutions and

providing logistics equipment. The advantage of the

hybrid model is risk diversification. Companies do

not need to make large investments in logistics

facilities and equipment, while at the same time

improving logistics efficiency with the help of third-

party professional management. However, the hybrid

model is more complex to manage. Companies need

to coordinate self-operated and outsourced resources

and establish clear standards and boundaries. This

model is more suitable for medium and large

enterprises. These companies have certain logistics

capabilities but do not want to build everything

themselves or rely entirely on outsourcing. It is

especially suitable for situations where projects are

complex and diverse.

As a typical case study of reverse logistics in the

construction industry, Oriental Yuhong Company's

self-operated model has demonstrated remarkable

characteristics and reference value. Through the

construction of its own recycling center, the

configuration of its own transportation fleet, and an

internal logistics management system, the company

has achieved closed-loop management of the entire

waterproof material recycling process (Gao, 2024).

Particularly in the green building materials recycling

process, the company follows the “Green Building

Materials Evaluation Standards” (Feng, 2017) to

standardize classification, sorting, storage, and

transportation processes, ensuring waste disposal

complies with environmental regulations.

Additionally, it uses photovoltaic power generation

technology to supply energy to recycling centers and

employs electric transport vehicles to reduce carbon

emissions, highlighting the self-operated model's

advantages in low-carbon operations. Its core

strengths lie in strong control and compliance

assurance. The company directly controls all aspects

of reverse logistics, enabling it to quickly respond to

policy changes and avoid outsourcing risks.

Additionally, through its own system, it can monitor

the quality data of recycled building materials in real

time, providing support for product redesign and

technological improvements, thereby enhancing

resource recycling efficiency. Furthermore, the

company's logistics team's ability to complete the

removal of construction site waste within 24 hours

further enhances customer satisfaction and project

execution efficiency. However, this model also faces

multiple challenges: high initial investment and

ongoing operational costs put pressure on corporate

cash flow, and the limited scale of the in-house fleet

means that external logistics capacity must be

temporarily mobilized in response to sudden demand,

increasing coordination costs and efficiency

fluctuations. The complexity of technology and

management requires companies to continuously

invest in the development of information systems to

integrate multi-link data, which places high demands

on the capabilities of the technical team. At the same

time, the limited regional coverage of the self-

operated network restricts the service capabilities of

remote construction sites, which may affect business

expansion. However, Oriental Yuhong Company

needs to further address information sharing barriers

and environmental compliance coordination issues

when exploring hybrid models. For example, when

introducing third-party logistics to supplement

transportation capacity, it is necessary to ensure that

the outsourcing links comply with green certification

standards. Avoid indirectly pushing up carbon

emissions. At the same time, unified management

standards need to be established to reduce the

complexity of cross-departmental collaboration. Li

Hongxuan's research points out that reverse logistics

network design needs to balance cost and efficiency

(Li,2018). Oriental Yuhong Company's practice

confirms the advantages of the self-operated model in

terms of quality control. However, it also exposes the

shortcomings of single-point network coverage. In

the future, the hybrid model can be optimized to

maintain self-operation in core areas to ensure

quality. Leverage third-party logistics to expand

service scope and introduce blockchain technology to

enhance information transparency. Wang Guohong's

research emphasizes that technological lag is the main

obstacle to the development of reverse logistics.

Enterprises need to further strengthen the application

of technologies such as intelligent sorting and Internet

of Things monitoring to improve the efficiency of the

entire chain (Wang and Zhao,2008). Overall, the case

of Oriental Yuhong Company not only provides

empirical reference for construction enterprises in

choosing a self-operated model for reverse logistics

in the green transformation, but also reveals common

challenges such as technological investment, cost

pressure, and collaborative management, providing

important inspiration for the industry to optimize its

practice path.

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4 RECOMMENDATIONS

In the context of green transformation, the choice of

reverse logistics models for construction enterprises

needs to take into account both strategic adaptability

and dynamic optimization capabilities. Based on the

practical experience and theoretical research results

of Oriental Yuhong Company, it is recommended that

enterprises first clarify their own resource

endowments and strategic goals. Through multi-

dimensional evaluation, they should select the

appropriate model from policy compliance, cost-

effectiveness, technical feasibility, and service

quality. Enterprises with sufficient resources and

strict environmental protection standards can give

priority to developing a self-operated model to

strengthen control over the entire chain. Small and

medium-sized enterprises or projects with large

fluctuations in demand can rely on third-party

logistics to achieve asset-light operations. Medium

and large enterprises can use a hybrid model to

achieve synergy between self-operated core links and

outsourced peripheral businesses, and use

technologies such as blockchain and the Internet of

Things to break down information silos and build a

transparent reverse logistics network. Second, at the

industry level, it is necessary to promote the

construction of a standardized system, jointly

formulate unified waste classification, recycling, and

carbon emission accounting standards with upstream

and downstream enterprises, and reduce cross-

enterprise collaboration costs. At the policy level,

subsidies for green technology research and

development and tax incentives should be increased.

The government should encourage construction

enterprises and logistics service providers to jointly

build low-carbon infrastructure, such as regional

shared recycling centers. In addition, the academic

community needs to deepen quantitative research on

green reverse logistics. It should explore the

application of multi-objective optimization models in

route planning and node site selection to provide

enterprises with data-driven decision-making tools.

The construction industry needs to be driven by the

“dual carbon” goals and build a reverse logistics

system that balances “resources, environment, and

economy” through model innovation, technological

empowerment, and ecological synergy. Ultimately, it

will achieve a sustainable breakthrough in green

transformation.

5 CONCLUSION

Focusing on the construction industry, this paper

enriches the research on the driving mechanism of

reverse logistics in the context of green

transformation from the theoretical level. Through the

theoretical research of scholars at home and abroad

and the empirical research of Oriental Yuhong

Company, it analyzes the advantages and

disadvantages of the three logistic modes as well as

the applicable scenarios and draws conclusions. Self-

operated logistics such as a self-built green transport

fleet, has significant advantages in environmental

compliance and quality control. Construction

companies can have absolute dominance in the

operation of various logistics links, which helps the

company to coordinate logistics activities in a timely

manner. But self-operated logistics need to bear

additional cost pressures and the potential risk of

untimely response. The scale effect of third-party

logistics can reduce the unit recovery cost. But it is

necessary to establish a standardized regulatory

system to break the phenomenon of information silos.

Inventory levels, the flow of goods status and

customer demand feedback and other important

information may not be shared in real time to the key

departments, which will make the decision-making

process from the top to the bottom of the slow and

inefficient, restricting the decision-making accuracy

and speed of response to changes in the market. So it

is not able to adjust the strategy in a timely manner in

order to cope with the changes in the external

environment. The hybrid model provides

construction companies with operational guidelines

that balance compliance and economy through the

path of “core self-operated + non-core outsourcing”.

It can also integrate data from multiple parties

through blockchain technology, which improves the

resource recycling rate and reduces the complexity of

management at the same time. Based on this, this

paper concludes and gives relevant suggestions for

the selection of reverse logistics modes for

construction enterprises. Under the dual-carbon goal,

enterprises can prioritize the hybrid logistics while

matching relevant modes according to their own

conditions.

In the future, construction reverse logistics will

evolve into an ecosystem of “intelligent IOT +

standardized collaboration”. Technologies such as

blockchain and assembly building full life cycle

traceability will continue to innovate. Policy

incentives are also increasing. It is expected that the

utilization rate of recycled construction waste will

break through again in 2030, promoting the industry

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to leap from resource-dependent to recycling, and

contributing to the green transformation of the global

construction industry with China's paradigm.

AUTHORS CONTRIBUTION

All the authors contributed equally and their names

were listed in alphabetical order.

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