CFA: JD Logistics’ cross-border expansion to rely mostly on partner capacity

Stard Huang, President of International Business, JD Logistics, speaks at Cargo Facts Asia 2019 in Shanghai.

During a fireside chat last week in Shanghai at Cargo Facts Asia, Stard Huang, President of International Business at e-tail giant JD.com’s logistics arm JD Logistics, outlined the company’s strategy regarding when it will rely on its own logistics network for filling orders placed through JD.com and its affiliated sites and when it will turn to logistics partners. According to Huang, operating its own-controlled network makes the most sense within China and in certain overseas markets, while partners are in some cases better suited to provide logistics services for cross-border e-commerce demand.

In a translated discussion during the conference, Huang said, “If you look at the global picture of the players in our market [in China], we are almost the only one that can handle the warehousing – not just logistics, but also cold-chain, B2B [business-to-business], and cross-border.” By operating its own-controlled network within China, “we can control the quality of our logistics network for our clients,” he added.

To further its own-controlled network in China, last November, JD Logistics launched its own dedicated freighter service through a partnership with HNA Group’s Tianjin Air Cargo. The carrier currently operates three 737Fs, but during another panel at Cargo Facts Asia, Tianjin Air Cargo’s CEO, Li Bin, said the carrier would likely turn to ACMI leasing of widebody freighters to accelerate its international growth plans. Tianjin Air Cargo has said in the past that it would like to grow its fleet to between fifty and 100 aircraft within only a few years.

Apart from its operations in China, JD Logistics has worked to build up its network in some overseas markets, including in Thailand and Indonesia, where Huang said it took JD between three and four years to establish a network to fulfill Indonesian orders. For JD’s customers in Indonesia, he said, “a large majority of that will be delivered by us, but a small [portion] will be delivered by local providers. In Thailand, we operate the warehouse, but the delivery will be by our partners.”

Relying on partners for deliveries in other markets and for cross-border orders will likely be a major part of JD’s strategy going forward, according to Huang. “In different countries, we have different strategies, usually based on local delivery capability and the local vendors,” he said, adding that cross-border delivery will be handled mainly by JD’s partners. “I don’t think we need our own freighters, planes, or ships – we will adopt different resources to maximize the use of our resources and utilize partners.”

Looking ahead, Huang said JD.com is focused on expanding its international developments, with its focus for the first half of the year on expanding in markets including Indonesia and Malaysia, alongside examining “big markets like the US and Europe.” Currently, expansion efforts are still in the market research phase, but Huang said, “in the second half, we expect to have the results of the market research and we will have a detailed plan to enter those markets.”

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