Consultant Insight: Cainiao expands services to customers outside of Alibaba’s ecosystem

In a step away from its parent company, Alibaba Holdings, Cainiao announced an agreement with Korea's small and medium-sized businesses (SMEs) and Startups Agency (KOSME) to serve as the agency's export logistics partner, including to members of the agency that are outside the Alibaba ecosystem in South Korea. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] As part of the agreement, SMEs and startups will tap into Cainiao's services, including warehouse inventory management, order fulfillment, delivery, billing and more. This news comes after Cainiao officially launched in South Korea last year to provide import and export logistics services. Cainiao's South Korean services include over 15,000 square meters of warehouse space in the country and sea and airfreight services, including six cargo ships and six cargo planes that provide weekly services. Cainiao also has various logistics partnerships that provide first and last-mile delivery and facilitate customs clearance in South Korea and China, according to the press release. Cainiao further noted that its South Korean full-chain service provided a 50% improvement in shipping efficiency, reducing total shipping time from 10 to 13 days to just five to seven days. This follows previous intra-Asia cross-border expansions by Cainiao. In September, for example, it partnered with BEST Inc., a logistics services provider in China with ties to Alibaba, to provide an end-to-end logistics service between China and Malaysia. Included in the service are customs clearance, sea freight forwarding, overseas warehousing and last-mile delivery. While the BEST and Cainiao partnership is focused on BEST customers, it's unclear if these are Alibaba members, external customers or a mix. Regardless, based on the recent tie-up with KOSME, could Alibaba Holdings be quietly following JD.com by allowing Cainiao to expand its offerings to external customers and possibly spinning off the group? It's hard to say what Alibaba’s underlying motives are in assisting external customers, but growth in Asian cross-border services continues to be among the most substantial in the world. According to a recent report from eShopWorld, a subsidiary of Asendia, which is itself a joint venture between La Poste and Swiss Post, China is the largest e-commerce market in the world in terms of cross-border online shoppers, with 149.4 million. China is also the largest e-commerce market by revenue, with $636.09 billion, and is the largest in terms of total online shoppers, with 1 billion. Besides China, India, Indonesia and Japan are among the top five largest countries in online shoppers, with the U.S. ranked No. 3. The strong growth in e-commerce within Asia has also attracted international logistics providers such as FedEx, UPS, DHL and more. In 2019, FedEx Express officially launched its Cross-border E-commerce Export Solution in South China. As part of the solution, it adopted China's Consolidated Clearance Declaration method at its Guangzhou and Xiamen gateways. In 2020, FedEx upgraded its cross-border e-commerce export services by utilizing policies developed during the cross-border e-commerce B2B export supervision pilot program implemented by China Customs. Meanwhile, DHL Express announced in May that it would replace its Hong Kong-Ho Chi Minh-Penang route with a direct flight from its Central Asia Hub in Hong Kong on an Airbus A300 aircraft to Penang five times a week. In addition, DHL Express will upgrade its aircraft traveling between Hanoi and Hong Kong from a 737-400 to a 737-800 to provide additional capacity. "Ho Chi Minh City and Penang have shown tremendous potential with the significant rise in air cargo volumes,” said Ingrid Raj, head of aviation for DHL Express Asia Pacific, in the company’s press release. “The expanded capacity will provide online businesses the opportunity to enhance their customer service and efficiency, as well as extend their reach across the region." As intra-Asia cross-border e-commerce logistics services and new, smaller e-commerce providers throughout the region grow, Cainiao may be looking for more opportunities beyond Alibaba members. However, it faces increasing competition from international as well as local competitors such as JD.com and SF Express, which are building out intra-Asia as well as global networks to address the growing e-commerce logistics needs of customers.

Consultant Insight: Cainiao expands services to customers outside of Alibaba’s ecosystem

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