Alibaba logistics arm sees business for third party partners grow by 54% to US$1.12 billion for the three months ending 30 June due to fast-growing cross-border e-commerce retail demand. Cainiao Network, the logistics arm of Chinese e-commerce services provider, Alibaba, increased its revenues by 54% to RMB7.7 billion (US$1.12 billion), excluding inter-company transactions, for the three months ending 30 June 2020, compared with the same period last year.
The growth in its third-party logistics (3PL) business was primarily due to the rises in both average revenue per order and volume of orders fulfilled from its fast growing cross-border and international e-commerce retail businesses, its parent company said.
Alibaba underlined that Cainiao Network “continues to improve the efficiency of its partners and China’s logistics industry overall through its data technology and infrastructure investments”.
It noted that the COVID-19 pandemic had caused significant disruptions to the import and export of goods by foreign businesses and organisations with operations in China, although Cainiao had gained some business from this.
“During the quarter, Cainiao Network enabled organizations and businesses to utilize its robust import and export fulfillment solutions that leverage its dedicated worldwide warehouse network and Smart Customs Clearance System,” Cainiao highlighted. “For example, in April 2020, the United Nations World Food Programme selected Cainiao Network to provide commercial hub, customs declaration and cross-border transportation services as part of its global response to the COVID19 pandemic.”
In June, Cainiao unveiled plans to invest RMB 1 billion (US$144 million) in more flights and overseas warehouses with the aim of speeding up deliveries from China to destinations worldwide. The move is part of the group’s long-term strategic aim of offering package deliveries inside China within 24 hours and across the globe within 72 hours.
Cainiao has its sights on increasing its number of chartered flights to 1,260 from 260 over the next nine months – to around 35 per week – to reduce delivery times from 7-10 days to 3-5 days. For example, earlier this month, Cainiao teamed up with Air China Cargo to operate a new, cross-border e-commerce route between Hangzhou and Liège, in Belgium, using B777 freighters, with the aim of speeding up delivery times between China and Europe. The route is served three times weekly, flights continuing on from Liège to Madrid.
JD Logistics buying Kuayue Express
Meanwhile, JD Logistics, the logistics arm of Alibaba’s main Chinese rival, JD.com, is to acquire a controlling stake in in Shenzhen-based courier services provider Kuayue Express in a deal valued at RMB3 billion (almost $434 million).
Founded in 2007, Sequoia Capital-backed Kuayue Express has established an integrated transport network with more than 17,000 delivery vehicles that serve more than 500 cities as well as 13 freight charter aircraft, according to international reports. It employs more than 50,000 staff.
The South China Morning Post noted that JD.com’s latest deal shows the “aggressive push” being made by Chinese e-commerce players to broaden their logistics and transport infrastructure to meet fast-growing consumer demand which has picked up pace this year amid the country’s coronavirus pandemic lockdowns and travel restrictions.