As previously reported in FlyingTypers,
Amazon’s emergence as a major player in air cargo and logistics
has been meteoric.
But Amazon is not the only ‘e-tailer’
with an ambitious plan to integrate online and offline commerce by building
huge logistics networks.
Alibaba is also most definitely causing
Ma He Says He Is Alibaba
Jack Ma, the co-founder and executive chairman
of Alibaba Group, increasingly has the global name recognition and ‘influencer’
status that comes to very few. Think Steve Jobs and Jeff Bezos and you
get the picture.
A Quick Read
Ma is, according to his own Wikipedia entry,
China’s richest man and a visionary investor and philanthropist.
Ma, like Bezos, was quick to grasp that
Alibaba’s business growth internationally will depend on a dependable,
global logistics network.
Huge investments are now putting in place
the foundations of this footprint, not least via Ma’s pledge to
invest $15.6bn in data-driven, smart logistics with the aim of offering
single-day delivery in China and 72-hour delivery across the globe.
Ali Baba and the Forty Thieves
is a children’s folk tale from One Thousand and One Arabian
Ali Baba is a poor woodcutter who discovers the secret
of a thieves' den of treasures locked in a cave, that opens its doors
when Ali Baba says the words: "Open Sesame".
When the thieves go after Ali Baba, his faithful girl
‘assistant’ foils their plot.
Ali Baba matches up his nephew to her in marriage and
keeps the secret of the treasure.
No word yet in the modern day, whether Alibaba will unlock
free shipping or anything else with similar secret words.
The Big Picture
“We have to think clearly today,”
he said last year.
“We must understand what infrastructure
is needed to support one billion parcels a day.
“We can’t avoid the future.
“World trade will change because of
“Global trade will go from containers
to packages, from trading between countries to trading between companies.
“All this change, we should be ready
to prepare for and fight today.”
Key to achieving these aims is establishing
an international air freight network and rapid progress has already been
made to this end under the management of Cainiao, Alibaba’s logistics
arm. The company has selected five cities to become its global hubs -
Hangzhou, Dubai, Kuala Lumpur, Liege and Moscow.
The Cainiao Factor
As well as making progress in filling out
that hub system in 2018-19, Cainiao is building a substantial platform
of logistics space across China, signaling that its ambitions extend beyond
just those five key areas.
For example, Cainiao Smart Logistics Network
is now committed to building a 160,000 square meter smart logistics facility
in the Shanghai satellite city of Wuxi.
Plans for a $1.53 billion high-tech logistics
center at Hong Kong International Airport in which it has a 51% stake
have also been unveiled - mainland state investment firm China National
Aviation Corp (Group) and courier YTO Express will hold 35% and 14%, respectively.
With a projected operations start of 2023,
the hub – which is expected to eventually be tagged by Alibaba as
the sixth in its global network – will include air-cargo processing,
sorting and order fulfilment facilities and automated warehousing technology.
“The Hong Kong hub will be yet another
milestone on our way to achieving our goal of 72-hour global delivery,
and will further empower SMEs locally and globally to more readily tap
the benefits of more inclusive globalization through cross-border e-commerce,”
said Cainiao president Wan Lin (above right).
Rush To Southeast Asia
Alibaba is now expanding its footprint in
Southeast Asia, a key battleground for the world’s e-commerce heavyweights
and one that could grow in importance as a manufacturing center should
the U.S.-China trade war continue or escalate.
The company announced last April that it
would invest $320 million in a “Smart Digital Hub” in Thailand’s
Eastern Economic Corridor under a partnership with the Thai government,
while Alibaba has invested $4 billion in Singapore-based e-commerce firm
Deal Puts Volga Dnepr In Pilot Seat
Expanding its cross-border e-commerce network
was also the driving force behind Cainiao’s memorandum of understanding
(MoU) with Volga-Dnepr Group signed last year, with the carrier promising
to provide effective logistics and Cainiao pledging to use the airline
as its preferred carrier.
Spreading The Wealth
Cainiao has now identified several other
preferred logistics partners and carriers across different modes of transport,
including Emirates, Silkway and Singapore Airlines (SIA). Indeed, SIA
announced last year it expected to join Cainiao’s broader efforts
in building a global smart logistics network that delivers across China
within 24 hours and globally within 72 hours.
The Volga-Dnepr deal tied in with the decisions
by both the Russia-headquartered airline and Cainiao to focus European
operations on Liège Airport in Belgium.
Liège Hub Going On Up
Already a key European hub for Volga-Dnepr
scheduled cargo airline subsidiary AirBridge Cargo Airlines (ABC), in
December Cainiao signed a contract to lease a total area of 220,000 sqm
to build a hub at Liège at a cost of €75m with the first phase
of the facility due to start operations in early 2021.
Where Alibaba and Cainiao invest next remains
unclear, and both companies refused to comment when contacted by FlyingTypers.
But the company’s strategy in China
offers some insight into its ambition. Following its recent investment
in STO Express, out of China’s top five private logistics companies
Shenzhen-listed Yunda Express is now the only one in which Alibaba does
not hold a significant shareholding.
The Alibaba Spider Web
“It’s interesting that Alibaba
likes to think of themselves as 'partnering' with logistics providers,”
said Cathy Morrow Roberson, founder and head analyst at Logistics Trends
& Insights, told FlyingTypers. “However, they're pouring
more and more money into logistics. They've
invested in various logistics providers via their numerous subsidiaries/sister
companies over the years.
“It's like a spider-web,” she
Climb On Board
Neel Jones Shah, SVP and Global Head of
Air Freight at Flexport, said both Amazon and Alibaba have the capacity
to reshape air freight logistics markets.
“I think that for companies like Amazon
and Alibaba that have such a leadership position in their respective markets,
whatever they choose to do, they are going to have an impact,” he
“And to think that this sort of disruption
isn’t going to impact the industry is incredibly naïve because
it’s going to.
“E-commerce is what’s driving
our industry right now, it’s the main driver for airfreight growth.
“Everybody, I think, agrees with that.
“And e-commerce is going to continue
to be the driver into the foreseeable future.
“So if you think about the likes of
Amazon and Alibaba and what their plans may turn out to be, you have to
pay attention very closely and try and partner with these sort of entities
because they will continue as a most original power for airfreight growth.”
Reminds us of a song to share.
Time for some music extraordinaire from the simply great and never equalled