Embedded within Alibaba’s most recent quarterly results was a clear sign that couriers in China have increasingly aligned their IT platforms with that of Alibaba’s logistics affiliate, Cainiao. As of March 2017, 81 percent of all items sold through Alibaba-owned sites moved through Cainiao’s delivery network. This figure was up significantly y-o-y, from 60 percent, in March 2016.
Hangzhou-based Cainiao operates a platform which integrates multi-modal transport suppliers and express couriers from every corner of the country in order to seamlessly deliver packages. This helps smooth the gaps in the courier’s service areas. Unlike UPS and FedEx which can serve nearly every zip code in the US within a matter of days, China’s couriers are comparably quite fragmented. In many ways, Cainiao functions as a domestic freight forwarder to ensure parcels make it from point-to-point, even if that means utilizing multiple last-mile providers.
As supply chain partners increasingly adopt Cainiao’s platform, the volume of parcels under the platform’s control has grown dramatically. For its most recent financial quarter, which ended in March, Alibaba reported the average number of parcels moving through Cainiao’s network to be around 42 million packages per day. With such great insight into the uplift requirements for e-commerce parcels moving around China, Cainiao possesses the information necessary to influence the network development of its air freight partners.
With Cainiao’s network reaching maturity in domestic China, it is starting to forge partnerships on its own, and through its affiliate courier partners. Alibaba is also the largest shareholder in Shanghai-based courier, YTO Express which last year commenced service of its airfreight subsidiary, YTO Express Airlines. Earlier this month, YTO Express announced its intention to acquire a 61.87% stake in Hong Kong-based forwarder and logistics specialist, On Time Logistics (OTEL), and establish its international business headquarters in Hong Kong.
The OTEL acquisition will support YTO’s efforts to go global by leveraging OTEL’s international business expertise, global network of 52 offices in 17 countries, and the advantages of incorporation in Hong Kong. With a framework for international expansion moving into place, YTO Express has hinted that its next steps will likely involve the acquisition of widebody aircraft by its airline subsidiary. As China’s couriers go global, Cainiao is likely to play a major role in network development1 - Reader Likes This Post