China-based Cainiao Smart Logistics and competitor JD Logistics are looking to further expand internationally, citing steadily increasing demand with the rise of e-commerce and cross-border trade.
Credit: CAINIAO
China-based Cainiao Smart Logistics and JD Logistics are looking to further expand internationally, citing steadily increasing demand with the rise of e-commerce and cross-border trade.
Cainiao Smart Logistics, the logistics arm of the Alibaba Group, said it is launching direct cargo flights to high-demand areas such as Europe, Russia and Latin America in a bid to put in place a stable logistics connection to and from China.
Terry Xie, director of global linehaul at Cainiao Network in Hangzhou, said aside from serving growing demand, the overseas expansion is also meant to push forward the logistics firm’s ambition to achieve 72-hour global delivery.
“The number of passenger flights has decreased significantly due to the pandemic, which means that we need to increase our capacity by adding on chartered cargo flights in order to cope with the growing demand,” Xie told Asia Cargo News.
“The launch of direct cargo flights was spurred by both demand and supply factors. On the demand side, the rapid growth of cross-border businesses, especially in major markets such as Europe and Latin America, has culminated in the demand for more stable logistics services, which only direct cargo flights are in the position to provide,” he added.
72-hour global delivery
Cainiao had earlier set an ambitious goal to deliver packages in China within 24 hours, and within 72 hours elsewhere in the world.
To achieve this, Cainiao has forged partnerships to build its global logistics infrastructure and slash delivery times.
“It is in our plan to further expand our line haul connections and air freight routes through partnerships with other carriers. This will help us to attain our goal of delivering globally within 72 hours,” Xie said.
Recently, the company tied up with the Volga-Dnepr Group to launch its first China-Spain route, and with Saudia Cargo to launch a new Hong Kong-Liege route with a connection point in Riyadh. For Latin America, the logistics firm said it has partnered with Atlas Air and LATAM Airlines to expand its line haul network.
Cainiao currently utilizes Boeing 777/747 aircraft for long distance inter-continental transportation and Boeing 767 and Airbus 330 for mid-range distance transportation to regions such as Eastern Europe and Middle East.
Meanwhile, it uses Boeing 757/737 planes for short-distance transportation to areas such as Japan, South Korea and East Russia.
Russia: Biggest market
Xie told Asia Cargo News that Cainiao’s largest market by country is Russia, and Europe when measured by region. Beyond that, he said, Latin America is also one of the “fastest growing markets” for Cainiao.
“We will add more direct routes to Latin America, Europe, the Middle East and Russia, where we have been experiencing rapid growth,” he said.
Separately, JD Logistics, the logistics arm of Chinese e-commerce giant JD.com, is also setting its sights on international expansion banking on its technology-driven supply chain solutions.
“We are continually building our international supply chain network. Through collaboration with our international and local partners,” the company said in a statement.
“We plan to further develop our international supply chain network by increasing country coverage, and international road, air and railway routes. We also plan to increase our local presence and infrastructure in selective international markets with high growth potential,” it added.
JD Logistics – which was recently listed at the Hong Kong Stock Exchange raising an estimated HK$24.11 billion (US$3.1 billion) – said it was able to establish international routes to more than 220 countries and regions as of December 2020, providing customers with integrated cross-border supply chain services.
In Southeast Asia, it currently has logistics networks in Thailand and Indonesia, run by its e-commerce joint ventures JD CENTRAL and JD.ID.
The company noted that it is also looking to capitalize on technology as it pushes forward with its overseas expansion plans.
“Supply chain technology is the bedrock of our operations and differentiates us from our competitors. We leverage fundamental technologies such as 5G, AI, big data, cloud computing and IoT to continuously improve our capabilities in automation, digitalization, and ‘intelligentization’,” the firm’s statement said.
“We plan to further invest in our technological platform and supply chain technologies, in order to sustain our competitive advantage in technology innovation.”
JD Logistics has also ramped up efforts to support cross-border e-commerce. It said that as of the end of December 2020, JD International Logistics has 32 bonded warehouses and overseas warehouses, with a total management area of approximately 440,000 square meters.
According to the company’s prospectus, JD Logistics will utilize the proceeds from its IPO to upgrade and expand its logistics networks, develop advanced technologies to be used in its supply chain solutions and logistics services, and expand its existing solutions, among others.
Charlee C. Delavin
