Alibaba’s Cainiao Network to develop global hubs

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Alibaba’s logistics arm, Cainiao Network will develop ‘global hubs’ in five cities around the world to improve cross border logistics infrastructure and improve consumer experience.

Cainiao is not revealing any more details on the global hub expansion plan, promising more details will be announced at a later date but the five cities will be Dubai, Kuala Lumpur in Malaysia, Liege in Belgium, Moscow in Russia, and Alibaba’s home city of Hangzhou, China.

The ultimate goal is to boost speed and quality of service in 100 cities within three years.

Alibaba executive chairman, Jack Ma says the company will invest billions of dollars to build a smart logistics network aimed at improving delivery reach and efficiency, while also driving down costs.

Ma says: “This network is not only national, but global. [We want to] connect every courier, connect every warehouse, every hub, every city and every house.”

Cainiao has reduced cross border shipping times from an average of 70 days to less than 10 days for some countries, and the aim is to ensure single day delivery across China and 72 hour delivery to the rest of the world.

Cainiao’s smart network should push logistics costs down from 15 per cent to under five per cent, with Ma commenting that it is around seven to eight per cent of GDP in countries with more developed logistics systems.

Speaking to an audience at a Cainiao event in Hangzhou, Ma says: “If we can use data to solve the problem of low transport efficiency and high logistics costs, we can create huge profit margins for the manufacturing industry and logistics sector. I think this is what Cainiao and our logistics industry should do for the country.”

About 100 million parcels are carried using Cainiao’s logistics platform each day and the e-commerce sector in China has grown rapidly in recent years, with 130 million parcels being delivered per day, while five million people work at courier and food delivery companies across the country.

Ma says: “Twelve or 13 years ago, I said we’ll see one billion packages per year. Nobody believed me. But today, weekly package volumes exceed one billion.”

He predicts that the peak handling rate during the 11.11 megasale could become the daily average in a decade.

Ma says: “We can’t avoid the future. World trade will change because of logistics. 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 and fight today.”