In recent years, living needs of residents have been greatly enriched. The development of urban logistics industry is increasingly important for the overall development of the city. At the same time, in the context of China's remarkable improvement in urbanization and the rapid increase in urban population, the development of urban logistics is also facing many problems. First, high-density logistics demand in cities has increased the difficulty of organization and management. Second, urban logistics has to face urban land use planning and limited resource allocation. Third, urban logistics will have an external uneconomic impact on the urban environment, transportation as well as economy activities. The sustainable development of urban logistics and the interaction between logistics activities and other aspects have become an urgent research subject. The urban logistics system is taken as the research object in this thesis. In order to solve the problems existing in the modern urban logistics system in China, scientific planning methodology and feasible strategies are proposed in this article, aiming at improving the development of the logistics industry and promoting the sustainable development of cities in China. In order to be more realistic, a case study is employed. Chongqing, the representative city of the central and western regions of China, is selected as the study case object. Unlike other old-fashioned first-tier cities in China, Chongqing has experienced the process of rapid industrialization. The analysis of Chongqing has a good reference for many of China's quasi-first and second-and-third-tier cities. Through the analysis of the background of urban logistics development and literature research, the core research question of this thesis is put forward. “How can we propose a reasonable development strategy to promote the sustainable development of modern logistics in Chongqing while ensuring the optimal results of the entire system?” In order to explore this problem, this paper begins with an analysis of the urban logistics system architecture, the role of public policy, the evaluation standard for the development of urban logistics system, and conducts an in-depth study on the status quo and challenges of the logistics industry in Chongqing. The analysis results show that Chongqing logistics faces four major difficulties. Firstly, the global trade volume and logistics demand is shrinking. Secondly, logistics corporations is scattered and lack of modern technology and services. Thirdly, there is a greate shortage of senior logistics talent. Fourthly, the traffic congestion in the main urban area is severe. Based on the theoretical analysis and research, a system dynamics model is constructed. The model highly simulates the internal supply and demand structure and historical data of the logistics system in Chongqing. Through the analysis of the model operation, the comprehensive effect of several strategies on various evaluation criteria are simulated and analyzed in this paper, including promoting the growth of trade demand, improving modern service capability, attracting logistics talents and alleviating traffic congestion. Based on the simulation results, the optimal policy suggestions for the sustainable development of urban logistics in Chongqing are put forward.