Alibaba to bet big on logistics

Alibaba Executive Chairman Jack Ma has said that the company will invest billions of dollars to build the technical backbone of a smart logistics network.

“This network is not only national, but global,” he commented. “[We want to] connect every courier, connect every warehouse, every hub, every city and every house.” The target of 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. The smart network should push logistics costs, which currently comprise about 15% of China’s gross domestic product, down to under 5%. 

“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,” Ma told an audience at an event in Hangzhou.

“This network was established by Cainiao, but it doesn’t belong to Cainiao. It belongs to all logistics companies. Logistics companies are Cainaio’s most important partners…we need to provide our partners with core technology and core products to make our logistics partners stronger.”

China’s logistics landscape has undergone massive change in recent years. Ma noted that the industry now delivers 130 million parcels generated by e-commerce per day. “12 or 13 years ago, I said we’ll see one billion packages per year. Nobody believed me. But today, weekly package volumes exceed one billion,” said Ma.

“We have to think clearly today. We must understand what infrastructure is needed to support one billion parcels a day. We can’t avoid the future. World trade will change because of logistics. Global trade will go from containers to packages, from trading between countries to trading between companies. All this change, we should be ready to prepare and fight today.”

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