A look at this week’s short shots and the number of airlines and forwarders launching new Chinese services, and you can see how China lives up to its native name of Middle Kingdom. When it comes to ecommerce, it is the center of the earth, and one Chinese company, in particular, is carving its own e-logistics Middle Kingdom: Cainiao.
If we stick with the etymology of names, then did you know that “Cainiao” means “rookie”, “newcomer”, “beginner”? Founded in 2013, it has exploded into a business now worth more than USD 20
billion, and a network covering over 200 countries and regions. For 2022, Cainiao reported 27% growth in revenue, of which almost three-quarters came in from external customers. Finance experts
have pegged it as the first of the six Alibaba consortium units to soon be spun off as an IPO as Alibaba Group Holding restructures according to plans announced on 28MAR23.
Creating a cargo center in Shenzhen
On 04APR23, Cainiao announced two things: that it had partnered with Shenzhen Airport to create an air cargo center, and that an inaugural flight had taken to the air from Shenzhen to São Paulo, Brazil, where it also has plans to establish a tight delivery network. First to Shenzhen: Dr Ding Hongwei, Vice President of Cainiao Network, explained: “This collaboration between Cainiao and Shenzhen Airport represents a significant milestone as we establish air cargo centers in key international airports to integrate our smart logistics technologies and global network within the value chain. By tapping onto Cainiao’s extensive overseas logistics infrastructure and network, we will further optimize the cross-border logistics value chain in Shenzhen and more broadly in the South China region. Merchants will in turn benefit from more easily accessible cross-border shipping services when they sell globally.”
International cargo gateway
The center will act as a freight gateway for exports from the Shenzhen and Southern China. Expectations are 24/7 operations, international cargo services, and a 20-30% increase in parcel processing efficiency. (This time, last year, Cainiao was processing in excess of 4.5 million cross-border and cross-border and international packages daily, across its entire network!)
Latin America, on account of its significant cross-border ecommerce business weighting, is the main focus for the smart logistics air cargo center. In just two decades, Latin America’s bilateral trade in goods with China skyrocketed from USD 14.6 billion in 2001 to USD 315 billion in 2020, and China is South America’s most important export market. Hence, Cainiao plans to launch nine sorting centers in seven Brazilian states over the next three years.
Atlas Air providing the lift to South America
The inaugural charter flight from Shenzhen last week, to São Paulo, Brazil, was operated by Cainiao’s partner, Atlas Air. The airline will serve the route twice weekly, uplifting up to 220 tons of cargo per flight. Speaking at the partnership signing ceremony in Shenzhen, attended by representatives from the Brazilian government, Shenzhen Airport, Atlas Air, and Cainiao Network, John Dietrich, President and Chief Executive Officer of Atlas Air Worldwide, stated: “We are pleased to announce the launch of new international cargo routes with Cainiao. Through deepened cooperation with Cainiao, we will be able to better serve Chinese brands as they export to the rest of the world.”
Digital logistics: 100 million RFID tags
Smooth logistics depend on transparency, and Cainiao last week also published the results of its research and development in identification technology, stating that it had manufactured and sold more than 100 million RFID tags since these were officially launched in APR21. Dr Ding Hongwei, Vice President of Cainiao Network, attributed the success of these sales to their 99.9% accuracy and tailored solutions for the different supply chain requirements: “Internet of Things (IoT) has permeated a range of industries, and we believe that the large-scale application of Cainiao's RFID technology will help to drive logistics and supply chain digitalization. By adopting a data-driven approach to operations and decision-making, businesses will benefit from greater improvements in time and cost efficiencies. Currently, the market application of RFID is still in its infancy, and we strive to continue our endeavor to refine its core technology and enhance the advantages of RFID products and solutions in order to drive the overall digital transformation across industries. In the past, it would often take employees up to three days to conduct store inventory checks, but with RFID technology, it only takes half an hour to complete using a RFID handheld device. This not only improves efficiencies and accuracy but also reduces human errors. With RFID technology, consumers can also self-checkout, enhancing consumer experience.”
Even in its infancy, the global RFID market is valued at more than USD 11.8 billion (2021 figures), with a 2031 forecast of USD 31.5 billion; a CAGR of 10.2% from 2022 to 2031. With its own continuing research and development into RFID, Cainiao is poised to claim a good chunk of the cash going forward.
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