Alibaba Group’s logistics unit Cainiao Network today unveiled plans to invest RMB 1 billion (US$140m) in more flights and overseas warehouses to speed up deliveries from China to the rest of the world.
The announcement, made at its livestreamed Global Smart Logistics Summit, is part of the group’s long-term strategic aim of offering package deliveries inside China within 24 hours and worldwide within 72 hours. It also came amid reports that Alibaba might increase its 63% stake in the company and after last week’s record-breaking 6.18 online sales event.
Cainiao plans to quadruple its chartered flights to 1,260 from 260 over the next nine months to reduce delivery times from 7-10 days to 3-5 days, reports in the South China Morning Post and China Daily both said. This would be 140 flights per month on average, or about 35 per week.
In addition, the logistics company will double the overall floor space of its overseas warehouses to 2 million sqm over the next three years, enabling Chinese retailers to store more goods closer to customers and thus further reduce delivery times. Closer cooperation with customs authorities is also planned.
“Our investment to establish a global smart logistics network, including international shipping routes and warehousing facilities, will provide businesses with greater operational efficiency, cost savings, transparency and accuracy in their supply chain management,” stated Cainiao president Lin Wan.
According to US-based Air Cargo World, cargo airline Atlas Air recently launched weekly B747-400F flights from Hong Kong to South America (Sao Paulo and Santiago) for Cainiao and freight forwarder Sinotrans, with more routes to follow soon.
Cainiao already set up numerous charter flights during China’s coronavirus lockdown, enabling vital supplies of PPE and other goods to be sent to Wuhan and other parts of the country.
In addition, it responded to the severe lack of international air capacity by investing in about 200 charter flights in March and April to fly Chinese goods to international markets. These included five weekly flights to Liege as well as others to Riga and Moscow, carrying PPE and other supplies to Europe and then European consumer products back to China.
Alibaba may increase Cainiao majority stake
Separately, Reuters reported today that Chinese conglomerate Fosun International might sell part or all of its small stake in Cainiao to Alibaba and other buyers for about US$1.3 billion to raise funds for investments in other sectors. Fosun holds a 6.7% stake in Cainiao, which has an overall valuation of about US$20 billion.
Alibaba already invested $3.3 billion last November to increase its stake in Cainiao to 63% from 51%. The additional 12% holding was gained by acquiring new Cainiao shares and shares from another, unnamed, shareholder.
Alibaba took majority control of the company in 2017 and then in 2018 announced plans to invest RMB 100 billion ($14 billion) to create a global logistics network to provide deliveries within 24 hours in China and within 72 hours worldwide. Since then Cainiao has invested large sums in warehousing and final-mile delivery services in China, and chartered aircraft for flights to Asia, Russia and Europe.
6.18 event logs record sales
Finally, Alibaba Group has announced record sales figures for last week’s ‘6.18 Mid-Year Shopping Festival’ as Chinese e-commerce continues to rebound from the impact of the Covid-19 pandemic earlier this year. The number of participating retailers and brands on the Tmall and Taobao marketplaces increased dramatically compared to last year.
Imported products were in high demand during the event, according to a report on the group’s Alizila information website. Tmall Global, Alibaba’s cross-border e-commerce platform, said nearly 25,000 overseas brands participated and launched more than 400,000 new products on the site. Orders generated on the platform during 6.18 increased by 43% compared to last year.
There were double the number of transactions involving goods shipped via its Tmall Overseas Fulfillment program. This is an initiative that allows brands to store their products at a dedicated TOF warehouse for sale on the platform, making it a low-risk method to test the waters in the China market before making a full-fledged entry.
“The record-breaking results demonstrate our effectiveness in helping brands accelerate their digitization and gain useful insights to develop the products and services favored by Chinese consumers,” said Liu Bo, vice president of Alibaba Group and general manager of Tmall and Taobao marketing and operations. “They also show China’s consumption, especially through online retail, has regained significant strength.”
