Proving the Business Case for the Internet of Things

Alibaba leads $1.5bn investment in Hong Kong logistics centre

Steve Rogerson
June 19, 2018



Alibaba Group’s logistics arm Cainiao Network is leading a group that will invest $1.5bn to build a digital logistics centre at Hong Kong International Airport.
 
Cainiao will lead the project via its joint venture with China National Aviation and YTO Express. The companies hold respective 51, 35 and 14% stakes in the venture.
 
The logistics centre at the world’s busiest cargo airport will have an estimated gross floor area of 380,000 square metres. It will include an air-cargo processing centre, a sorting centre and order-fulfilment centre. It will feature automated warehousing technology and automated temperature control.
 
The centre should be able to handle tens of millions of packages a year and bring an additional 1.7 million tons of cargo per year to the Hong Kong airport when fully operational, supporting burgeoning activity by small and medium-sized companies involved in ecommerce, Cainiao said. The centre is slated to go online in 2023.
 
It’s not the first handling centre for Cainiao in Hong Kong, a key entrepôt for goods entering and leaving China. It already has three global fulfilment centres operated by its partners in Hong Kong. Cainiao also opened an airfreight route between Hong Kong and Belgium last month, the second international route set up for ecommerce parcels after opening one between Hangzhou and Moscow earlier this year.
 
Cainiao plans to open five hubs around the world, in Dubai, Hangzhou, Kuala Lumpur, Liège in Belgium and Moscow. All told, Cainiao has committed to invest over RMB100bn to build out a smart logistics network that drives 24-hour delivery inside China and 72 hours to and from the rest of the world.
 
 “The Hong Kong hub will be yet another milestone on our way to achieving our goal of 72-hour global delivery, and will further empower SMEs locally and globally to more readily tap the benefits of more inclusive globalisation through cross-border ecommerce,” said Wan Lin, president of Cainiao Network. “As an important gateway for global goods to enter the mainland China market and vice versa, Hong Kong is of strategic importance to Cainiao, and we have a strong commitment to help the city address the surging needs of the future.”
 
Alibaba executive chairman Jack Ma gave ambitious predictions for the number of daily packages that will be routed through Cainiao’s logistics network in the years to come. The number now is about 100 million, and Ma said the time was not far off when it would rise to one billion a day.