Alibaba are to invest billions of dollars to build the technical backbone for a smart logistics network aimed at improving delivery reach and efficiency, as well as sharply driving down costs. Cainiao Network, Alibaba’s logistics arm, is to eventually ensure single-day delivery across China and 72-hour delivery to the rest of the world.
Cainiao has reduced cross-border shipping times from an average of 70 days to less than 10 days for some countries. Within China, Cainiao’s single-day and second-day delivery now covers 1,500 counties and districts.
Cainiao’s smart network should push logistics costs, which currently comprise about 15% of China’s gross domestic product, down to under 5%. The figure is around 7% to 8% of GDP in countries with more-developed logistics systems.
“If we can use data to solve the problem of low transport efficiency and high logistics costs, we can create huge profit margins for the manufacturing industry and logistics sector. I think this is what Cainiao and our logistics industry should do for the country.
This network is not only national, but global, we want to connect every courier, connect every warehouse, every hub, every city and every house.”
– Jack Ma Executive Chairman Alibaba
Jack Ma also pointed out that global trade will go from containers to packages and from trading between countries to trading between companies. That’s already happening for ecommerce merchants and logistics networks need to adapt to cope with billions of daily packages in the future.
Alibaba isn’t the only company, Amazon are also building out a worldwide logistics network, but their focus is to get goods from manufactures into Amazon fulfilment centres in the West ready to be shipped out to consumers through the Amazon Prime program using their own couriers. Alibaba in contrast is talking about connecting every courier in the world that wishes to participate into a single technology network – which is a more attractive open solution but a much larger task.