JD Logistics targets air cargo with IPO proceeds

Beijing-based JD Logistics plans to spend the majority of net proceeds from its recent $3.2 billion IPO to upgrade and expand its logistics network. Some of that spend is earmarked to grow the company’s air cargo line-haul business. [caption id="attachment_416626" align="alignright" width="560"] Unit 27071 operated JD’s first chartered flight between Hefei and London. (Photo/Aerotranscargo)[/caption] The logistics giant was spun out from Chinese e-tailer JD.com in a May 28 global offering and is now pursuing a rapid network growth strategy. “Approximately 55% of the net proceeds [are] expected to be used for the upgrade and expansion of our logistics networks in the next [twelve] to [thirty-six] months,” the company said in its 2021 Interim Report . While domestic and international fulfillment and bonded warehouse facilities are a major component of network growth, “we also plan to invest in and expand our air cargo network by increasing the number of destinations and flight frequencies,” the report said. As of June 30, JD Logistics said it was procuring capacity on over 1,000 air cargo routes, including chartered freighter flights to the United States and Thailand, launched earlier this year. On Sept. 8, JD Logistics kicked off a new route with thrice-weekly service between Hefei (HFE) and London (LHR). The flights, operated on a charter basis by Moldova-based Aerotranscargo, have so far utilized two of the carrier’s 747-400BDSFs. Cargo Facts believes JD Logistics is in the process of launching its own airline and has been considering doing so for some time. The company declined to comment or elaborate on its air cargo plans. Cool-chain infrastructure and last-mile delivery stations are other elements in JD Logistics’ network upgrade plan. Additionally, 20% of net proceeds will be used for supply chain automation and analytics technology and 15% will go towards the development of industry solutions and marketing that aim to reduce JD Logistics’ reliance on JD.com as a customer. Revenue from external customers was up 109.6% YoY during the first half of 2021, to $4 billion. Revenues linked to JD.com accounted for 46% of JD Logistics revenue during the period and increased at a slower rate during the period compared to external revenue. Total revenue increased by 53.7% to $7.5 billion in the first half. Amazon operates the largest own-controlled network of any online retailer , but other e-tailers have taken a logistics-heavy approach, a strategy that has only been reinforced during the pandemic. Cainiao, the logistics affiliate of JD’s top competitor in China Alibaba, has chartered thousands of flights to destinations in Africa, Asia, Europe and the Americas , and has plans for more as its adds international fulfillment and logistics facilities. Returning to JD Logistics, the company is also continuing to pursue rail as an option for expedited shipments. During the first half of this year JD Logistics also established a joint venture with China Railway Corporation. China Railway JD Logistics aims to utilize rail for multi-modal transport across China. As of June 30, the JV company could utilize more than 300 routes, 200 of which were high-speed routes, a notable expansion from JD’s initial trials with rail in 2018 . Cargo Facts Symposium, taking place LIVE Oct. 25-27 at the Wynn Las Vegas, is the essential event for stakeholders in the air cargo industry. Learn more and register at www.cargofactssymposium.com .

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