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Hong Kong shipping and logistics

Alibaba affiliate Cainiao forms JV to build US$1.5 billion logistics centre at Hong Kong Airport

The investment forms part of Alibaba’s commitment to invest over 100 billion yuan in a global logistics network

PUBLISHED : Wednesday, 06 June, 2018, 7:02pm
UPDATED : Wednesday, 06 June, 2018, 11:25pm

Alibaba affiliate Cainiao Network on Wednesday said it will form a joint venture to build a logistics centre at Hong Kong International Airport (HKIA), one of six international logistics hubs as it continues to expand its global network.

The announcement comes as part of Alibaba’s commitment to invest over 100 billion yuan in a logistics network that will aim to complete deliveries in China within 24 hours, and within 72 hours globally. Last week, Cainiao said that it planned to open five logistics hubs in the cities of Dubai, Hangzhou, Kuala Lumpur, Liège and Moscow. Logistics provide the backbone of e-commerce.

Cainiao will take a controlling stake of 51 per cent in the JV, with China National Aviation Corporation and Shanghai-based delivery company YTO Express, taking stakes of 35 and 14 per cent respectively. A total of US$1.5 billion will be invested in the logistics centre at HKIA, the world’s busiest cargo airport, which handled over five million tonnes of cargo and airmail in 2017.

“The Hong Kong hub will be yet another milestone on our way to achieving our goal of 72-hour global deliveries, and will further empower SMEs locally and globally to more readily tap the benefits of more inclusive globalisation through cross-border e-commerce,” said Wan Lin, president of Cainiao Network in a statement.

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“As an important gateway for global goods to enter the mainland China market and vice versa, Hong Kong is of strategic importance to Cainiao and we have a strong commitment to help the city address the surging needs of the future,” added Wan Lin in the statement.

The logistics centre is expected to begin operations in 2023, and will have a gross floor area of 380,000 square metres and the capacity to handle “tens of millions of parcels” annually as cross-border e-commerce continues to rise. At full operating capacity, the centre will add 1.7 million tonnes of cargo volume per annum to HKIA.

It will also come with automated warehousing and temperature-control solutions, and will include an air cargo processing centre, a sorting centre and a fulfilment centre, according to Cainiao.

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Alibaba founder Jack Ma Yun earlier this month reaffirmed the commitment to strengthen its logistics network both in China and globally, saying Cainiao would invest “upwards of a hundred billion yuan” if necessary to fulfil this vision.

“Without the future logistics network, without modern logistics solutions, there cannot be new retail or a revamp in manufacturing,” said Ma at last week’s Global Smart Logistics Summit in Hangzhou. He added that the aim is to reduce China’s logistics spending from 15 per cent of China’s gross domestic product to below five per cent over time.

Alibaba is the parent company of the South China Morning Post.