With plenty of space to spare

Cainiao Network is beefing up its logistics capabilities in Southeast Asia and currently the company works with various Lazada warehouses in the region to empower local merchants and merchants on Alibaba platforms with improved warehousing services.

Wan Lin, vice president Cainiao Network, said that Cainiao is focused on building a logistics-data platform that leverages the capacity and capabilities of its logistics partners and empowers the logistics ecosystem through data, standards and collaboration whether in China or abroad. 

“We currently work with more than 50 overseas logistics partners to facilitate cross-border delivery between China and overseas markets primarily with the use of big data, and our expertise and experience from China has proved to be invaluable,” said Lin.

 

However, he added, given that every market is unique, the company’s focus is not on replicating the scale of its China operations elsewhere, but on providing tailored logistics solutions to address specific challenges in different markets. 

“For example, in Russia, where customs clearance for inbound packages used to be slow due to reliance on manual processes, we work with Russia Post to provide them with our platform data, which enables electronic customs clearance before packages actually arrive in Russia from China,” said Lin.

For Thailand, he said Thailand is a relatively new market for Cainiao but it does present a lot of opportunities for development in cross-border trade and logistics with China.

“We will work with Lazada closely in Thailand and other major Southeast Asian markets to explore cooperation in various areas, including industry standards, big-data technology and warehouse management, with a view to improving the operating efficiency of the local logistics industry,” said Lin.

The collaboration between Cainiao and Lazada combines Cainiao’s strength in logistics data-platform operations and Lazada’s locally tailored capabilities in Southeast Asia in areas such as last-mile delivery. It is set to benefit consumers and merchants of both sides, Cainiao said.

In Southeast Asia, Cainiao will work with Lazada closely to explore cooperation in various areas, including industry standards, big-data technology and warehouse management, with a view to improving the operating efficiency of the local logistics industry.

Cainiao’s goal is to enhance the logistics system for partners and customers, and profit is not a priority. With this unique approach to logistics, Cainiao itself has virtually no competitor in the market, the company claimed.

As a logistics-data platform and an Alibaba affiliate, Cainiao currently serves over 10 million merchants on Alibaba’s various e-commerce platforms.

Judy Tong, chief executive officer Cainiao Network, said at Cainiao Network Open Day this month in China that Cainiao’s approach is to enhance the capability of this pre-existing network by using its technological advantages and data resources to empower delivery companies. 

In 2015, Cainiao was capable of delivering 33 million parcels per day on average. On 11 November 2015, the first day of China’s “Singles’ Day” shopping season, Cainiao delivered a total of 467 million parcels to customers as Alibaba recorded US$14.3 billion in sales on one day alone.

As of 2016, Cainiao’s daily capacity has increased even further to 42 million parcels per day, addressing a total market value of more than US$485 billion in fiscal year 2016. Even so, Cainiao employs only 1,400 employees – far fewer than other major e-commerce platforms. In fact, if Cainiao had used the traditional logistics model employed by its competitors, the company would have needed more than one million employees to achieve its current level of efficiency.

Currently, 72 per cent of parcels delivered in China, or 30 million parcels daily, use Cainiao’s E-Shipping Label standard. Its network covers more than 200 smart warehouses, with all of these warehouses including those built by Cainiao operated by partners under the Cainiao Alliance network. With over 40 domestic partners in warehousing and distribution, Cainiao is able to perform next-day deliveries to customers in more than 700 counties and districts across China. 

One example of this smart warehouse is a facility operated by Cainiao partner ALOG Technology Logistics in the city of Suzhou, China. This particular warehouse stores and delivers products ordered by customers of Alibaba’s Tmall retail platform, and it is capable of shipping over 800,000 parcels per day. 

With Cainiao’s extensive Big Data capabilities, these smart warehouses can stock products in anticipation of customer demand. This data platform can even handle unexpected consumer behaviours. For example, a product that suddenly becomes popular on a major sale day can be moved to a high-priority processing station within 30 minutes of the sudden change.

Cainiao was founded out of Alibaba’s commitment to support small and medium businesses around the world with its e-commerce platform. Cainiao’s network is to aim to offer cross-border deliveries, rural deliveries, and last-mile deliveries.

For example, originally deliveries from China to Russia could take as long as 40 days to complete, especially during peak shopping-season periods. Currently, with utilising a full “closed loop” of data available from AliExpress (online retail service), AliPay (online payment platform), and Cainiao, customers in Russia now receive their products within an average of 20 days.

Cainiao’s research and development team is currently working on second-generation warehouse facilities with increased automation technology.

Currently, Cainiao works with over 3,600 logistics partners in 224 countries worldwide to optimise their delivery systems. This network of partners, known as the Cainiao Alliance, covers some two million employees.