11 November 2020
E-commerce giant in competition with Amazon to become global logistics provider
Cainiao, the logistics arm of Chinese e-commerce powerhouse Alibaba (NYSE: BABA), has opened for business in Japan to provide comprehensive logistics service to importers and exporters there.
The latest step in Alibaba Group’s global logistics expansion follows last month’s launch of third-party logistics services in South Korea and an air charter service to South America. Alibaba is racing rival Amazon (NASDQ: AMZN) to extend end-to-end logistics services beyond its own delivery needs to other companies.
“Alibaba is moving as fast as possible to expand into 3PL services. Like Amazon, they understand that the big growth area for retail is in providing logistics services. Amazon has every intention of becoming a 3PL and Alibaba has to get ahead of this,” said Brittain Ladd, the chief marketing and supply chain officer at Pulse Integration and a former Amazon executive.
In Japan, Cainiao will handle first- and last-mile delivery, international ocean and air shipping, customs clearance, trucking and warehouse management. The company said its turnkey service will knock more than a week off the typical time it takes to complete freight moves by ocean, down to 11 to 13 days from the current 18 to 22 days. Its ability to aggregate ocean shipments is expected to save money for customers.
Cainiao has block space agreements on 10 weekly cargo services between Yokohama and Kobe in Japan to Ningbo and Shanghai in China and with air carriers.
The Alibaba unit said in a news release Tuesday that it is partnering with Nippon Express, 4PX, Sinotrans and Hongyuan Group for trucking, first- and last-mile delivery and customs brokerage.
For business-to-business shippers, Cainiao operates a 108,000-square-foot “smart” warehouse in Yokohama and a 205,000-square-foot warehouse in Kobe, each of which are about 10 miles from the port. For online retailers that directly deliver to consumers, Cainiao has a 215,000-square-foot warehouse in Tokyo and a 140,000-square-foot facility in Osaka that are six miles from Narita and Haneda airports, respectively. The company said it can prestock goods ahead of large sales events.
Cainiao also provides a fully digital platform for sharing and tracking logistics data.
Alibaba says it plans to build out its international supply chain and launch direct routes to major markets around the world. It expects to operate about 1,300 chartered flights by the end of 2020. The company reported Wednesday that its Singles Day shopping festival in China set a record with more than $74 billion in sales.
Amazon has started offering full 3PL services in Europe and last week opened its first European air hub in Germany as it expands its Prime delivery service on the continent. In the U.S., Amazon wholesales ocean freight transportation for its own imports and other customers and provides warehouse fulfillment on an outsourced basis.