Chinese e-commerce giant announces new RMB23.3bn investment in Cainiao Smart Logistics Network, increasing its equity stake in the company from 51% to around 63% as the firm’s global expansion continues.
Chinese e-commerce giant Alibaba has announced a RMB23.3 billion (US$3.3 billion) investment in its logistics arm, Cainiao Smart Logistics Network, increasing its equity stake in the ambitious and rapidly expanding logistics company from 51% to approximately 63%.
It said this had been done by subscribing to newly issued Cainiao ordinary shares in its latest financing round, and purchasing a certain equity interest from an existing Cainiao shareholder. Other existing shareholders also participated in the fundraising, “demonstrating strong support for Cainiao’s long term outlook”, Alibaba noted.
Daniel Zhang, Alibaba Group executive chairman and CEO, commented: “Logistics is a key pillar of the Alibaba Business Operating System. It allows us to offer the best service to customers and to effectively advance our New Retail strategy.
“Cainiao strives to enhance service and user experience for merchants and consumers through superior technology and digital solutions, both within China and around the world. We are committed to supporting its ongoing development, to realizing greater synergies throughout the entire Alibaba Economy and accelerating digitization of the logistics industry.”
Cainiao was founded in 2014 by Alibaba and several partner organisations as a collaborative venture to improve the delivery of online purchases across China. Its backers were primarily financial institutions as well as other logistics companies, but it was always considered an extension of Alibaba’s own logistics capabilities.In September 2017, Alibaba took a controlling interest in Cainiao, increasing its ownership stake from 47% to 51%, and pledged to spend CNY100 billion (US$16 billion) over five years to build out a global logistics network.
Then in May 2018, Cainiao announced plans to set up five global logistics hubs located in Liège, Kuala Lumpur, Dubai, Moscow and Hangzhou, through which it has already been channeling growing volumes of international e-commerce-driven freight shipments. These freight volumes are expected to rise exponentially as Cainiao invests in dedicated facilities at these hubs and attracts or launches new freight services to and from them.
For example, Alibaba and Cainiao last year led a winning tender to build a new facility at Hong Kong International Airport – a move Cainiao president Wan Lin described as “yet another milestone on our way to achieving our goal of 72-hour global delivery”. Alibaba and Cainiao led a joint venture with shareholders including China National Aviation Corporation (Group) Limited and YTO Express to “develop and manage a premium logistics centre” at Kwo Lo Wan in the South Cargo Precinct of the airport.
Cainiao Smart Logistics Network will take a 51% stake in the joint venture, while Chinese state investment firm CNAC and courier firm YTO Express will take 35% and 14%, respectively, Cainiao said. Cainiao also pledged to invest $1.53bn to build the new centre, which will be able to handle 1.7m tonnes of cargo per annum when it reaches full capacity. It is scheduled to open in 2023.
Meanwhile, the Chinese e-commerce firm has announced that it will invest €75 million in its ‘smart logistics’ hub at Liège Airport, with Cainiao leasing a 220,000 sqm facility that is scheduled to start operations in early 2021. The hub will support cross-border trade, especially between Europe and China, and help SMEs better manage their exports especially with the surge in global e-commerce, it noted.
Alibaba and Cainiao already operate dedicated cargo flights between Liège and Hangzhou on a scheduled basis, while the e-commerce giant uses a lot of third-party capacity as well into and out from Liège, sending thousands of parcels each week via Liege, including via rail freight services. Indeed, last month this included the first dedicated Alibaba-Cainiao China-Europe cargo train arriving in Liège. The ‘China Railway Express (Yiwu-Liège) Alibaba eWTP Cainiao train’, loaded with 82 cargo containers, arrived from the Yangtze River Delta region of eastern Chinaafter a 17-day trip through Kazakhstan, Russia, Belarus, Poland and Germany, before arriving at the Belgian logistics hub.It was described asthe “first dedicated rail line serving cross-border e-commerce between the Yangtze River Delta region of China, Central Asia and Europe”.
In another recent example of Cainiao’s logistics expansion, at the end of last month Cainiao launched the first, direct air freight service linking Hangzhou, in eastern China and Moscow, according to a report by China’s state news agency, Xinhua. The first flight was operated by a Russian Tupolev TU-204 freighter decked out in Cainiao livery, although the report did not disclose the identity of the aircraft’s operator.
The service is scheduled to operate daily but the report said there were plans to increase this to two per day ahead of the annual Alibaba online shopping spree on 11 November, making it the busiest e-commerce air cargo route between China and Russia. During the 11.11 event, Cainiao is set to operate more than 100 chartered flights to send goods to cities in Europe and Southeast Asia, including Moscow, Liège, Riga and Kuala Lumpur, the report added, quoting Zhao Jian, general manager of Cainiao International.
Source: Lloyd’s
