Alibaba’s Cainiao to Lead $1.5B Investment in Hong Kong Logistics Hub

Alibaba Group wants to be able to deliver packages to any address in the world within 72 hours, and this week the Chinese e-commerce titan took another step towards that goal by unveiling plans for a $1.53 billion high-tech logistics centre at Hong Kong International Airport.

Alibaba’s logistics arm Cainiao Smart Logistics Network will lead a joint venture to invest in the estimated 380,000 square metre facility, according to a statement Wednesday. Cainiao will take a 51 percent stake in the venture, joined by mainland state investment firm China National Aviation Corp (Group) and courier YTO Express, which will each hold 35 percent and 14 percent, respectively.

Slated to start operations in 2023, the logistics hub will include facilities for air-cargo processing, sorting and order fulfilment and will feature automated warehousing technology. The announcement comes as Cainiao touts plans to ramp up its delivery infrastructure in China and build five logistics centres around the world, with an eye on handling up to one billion packages per day through its network.

Cainiao Facility to Boost World’s Busiest Cargo Airport

Hong Kong’s main airport, located on the island of Chek Lap Kok, has been ranked for over two decades as the world’s busiest for international air cargo. Last year it handled nearly five million tonnes of freight, representing 42 percent of the value of Hong Kong’s external trade.

Cainiao’s new facility will be designed to handle tens of millions of packages annually, bringing an additional 1.7 million tonnes of cargo per year to the airport when fully operational, the company said. The Alibaba subsidiary already has three global fulfilment centres operated by its partners in Hong Kong, and it opened an airfreight route between the city and Belgium last month.

“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,” Cainiao president Wan Lin said in the statement.

Last week, Cainiao trumpeted its strategy to set up five global logistics hubs in Hangzhou – Alibaba’s eastern Chinese home city – Kuala Lumpur, Dubai, Moscow, and Belgium’s Liège, without revealing detailed plans. The company also said it would build a 160,000 square metre smart logistics facility in the Shanghai satellite city of Wuxi.

Cainiao has already built a substantial platform of logistics space across China. The company said it uses over four million square metres of warehouses for its domestic fulfilment services as of March 2017, including “self-built, Cainiao-leased and Cainiao Partnered warehouses.”

China’s largest e-commerce firm Alibaba, headed by Jack Ma, bought a controlling stake in its logistics affiliate last September.

Alibaba Flexes Logistics Muscles in Thailand

News of the Hong Kong project comes as Alibaba ploughs investment into Southeast Asia, a battleground for the world’s e-commerce heavyweights. The company announced in 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.

At the time, an Alibaba spokesperson revealed to Mingtiandi that the planned project in the national development zone will occupy a gross floor area of more than 100,000 square metres and will serve as a centralized customs clearance, warehousing and fulfilment facility for Thailand and neighbouring countries.

The spokesperson added that various Alibaba Group entities, including Cainiao and other business units, would contribute to the development, which “will provide open platform services that aims to benefit any Thai businesses engaged in cross-border trade,” including but not limited to those exporting to China.

Alibaba has invested $4 billion in Southeast Asian e-commerce firm Lazada, most recently pouring $2 billion into the Singapore-based company this past March, as rivals including Tencent-backed Sea Limited and Amazon vie to dominate the region’s online shopping market.