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Alibaba affiliate eyes global logistics network to boost e-commerce

A sign of Cainiao Network is seen outside its industrial park in Jinhua, Zhejiang province. Photo: Reuters

A logistics affiliate of China's e-commerce giant Alibaba Group is accelerating the construction of its grandiose delivery network domestically and globally.

Cainiao Network has recently signed a memorandum of understanding with Emirates SkyCargo, under which the two partners will jointly build a digital trade transfer hub at the Dubai international airport to streamline cargo transfers and deliveries in the Middle East. The digital trade transfer hub will also function as a fulcrum for smooth e-commerce shipments and parcel deliveries between Asia, Europe and Africa by utilizing the two companies' capabilities in cross-border e-commerce trade and airfreight operations.

It is a landmark step by Cainiao in expanding its international delivery network since the end of May, when Alibaba founder Jack Ma charted the blueprint for investing 100 billion yuan ($15.6 billion) to build the national backbone network of intelligent logistics, which the billionaire said will help achieve the goal of the 24-hour domestic delivery and reduce the logistics costs to less than 5 percent of China's gross domestic product. The massive logistics network also has the goal of 72-hour global delivery, especially in the regions covered by the Beijing-backed Belt and Road Initiative.

Alibaba took control of Cainiao last September.

Dubai is among the six global cities that Cainiao has chosen to set up the digital trade transfer hubs, and is the base of Emirates SkyCargo, the world's largest cargo airline operating a fleet of 267 wide-body airplanes including 14 freighters and a network of 155 international destinations.

The cooperation with Dubai will help Cainiao "achieve the goal of the 72-hour delivery globally", said Guan Xiaodong, general manager of Cainiao Global Business.

Nabil Sultan, Emirates divisional senior vice president for cargo, hailed the cooperation as the first step by the airline company in integrating into the global e-commerce supply chain, as Emirates SkyCargo is expanding its airfreight network and increasing flight frequencies to offer value-added services.

So far, Cainiao, in partnership with 32 airline companies, has established an air transportation network, which operates 106 international flights connecting more than 40 countries and regions.

Earlier this month, Cainiao, China National Aviation Corporation and delivery firm YTO Express announced plans to set up a joint venture company, which will be responsible for building a HK$12 billion world-class logistics center at the Hong Kong international airport, which is expected to start operation in 2023.

It is reported that the new Hong Kong logistics center will be able to handle 1.7 million tons of cargo per year at full capacity after 2023. The Hong Kong international airport has topped the list of the world's busiest airfreight ports for the eighth year in a row.

China National Aviation Corporation said that the Hong Kong project chimes in with the Belt and Road Initiative, which promotes infrastructure connectivity among different countries.

Cainiao's plan to build the digital trade transfer centers globally comes amid its intensified competition with JD.com, another Chinese e-commerce powerhouse which is also investing heavily on building its global digital supply chain, as e-commerce orders including cross-border cargo transactions account for a large proportion of China's retail sales every year.

Days ago, US technology giant Google announced a noticeable investment of $550 million in JD.com, heralding a deeper global collaboration in supply chain and logistics infrastructure. JD.com, which owns 110 overseas warehouses and operates approximately 1,000 international transportation chains, has set a goal of delivering cross-border parcels to any places in the world within 48 hours.
 


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