Jack Ma Says Cainiao Network to Become 'Brain' of Logistics Industry With USD15.6 Bln Investment
Chen Juan
/SOURCE : Yicai
Jack Ma Says Cainiao Network to Become 'Brain' of Logistics Industry With USD15.6 Bln Investment

(Yicai Global) May 31 -- Cainiao Network, an affiliated logistics company to Alibaba Group Holding, will invest CNY100 billion (USD15.6 billion) in logistics and create a national smart network, improving the efficiency in the sector and reducing costs through technology, said Jack Ma, co-founder and executive chairman of the internet giant.

Speaking today at Cainiao's 2018 Global Smart Logistics Summit in Hangzhou, East China's Zhejiang province, where Alibaba is headquartered, Ma said, "This network is not only national, but global. As the industry will increasingly become tech-driven, Cainiao aims to be the 'brain' of the logistics industry."

Cainiao's mission is to help delivery firms to deliver goods by building a network that links all logistics elements and connects "every deliver person, every warehouse, every hub, every city, and every house," Ma said.

With the fast development of China's logistics industry, cost reduction has become the industry's top priority.

Sector Prospects

Advances in core technology and algorithms will reduce the costs of China's logistics industry significantly in the future, Ma said. "Profit is the key to logistics. In the past, the costs of China's logistics industry accounted for about 20 percent of GDP. The percentage has now decreased to 15 percent. However, the percentage in developed countries is 7-8 percent. Our goal is to cut down the costs to about 5 percent, which will bring huge profits to the manufacturing sector."

China's logistics landscape has undergone massive change in recent years, reaching unprecedented scale. The industry started from zero ecommerce parcels and is now delivering 130 million parcels per day, while there are about five million people working at courier and food-delivery companies in the country, and seven delivery companies have gone public, Ma said.

"With that pace of change, it's not unreasonable that the peak handling during the company's 11.11 [China's Single's Day celebrated as a major online shopping festival] megasale will become the daily average a decade later," Ma added.

Alibaba and Cainiao Network announced on May 29 that they will invest USD1.38 billion in express delivery company ZTO Express to own 10 percent of its stake. Both parties will cooperate on logistics services, including express, terminal, warehouse and cross-border services of new retail, a retail model that merges online and offline commerce through technology.

"Today, the industry can process 100 million packages a day. In the future, we will need to process 1 billion packages a day. The logistics industry need to get prepared for that with a robust infrastructure," Ma said.

Editor: Mevlut Katik

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Keywords: Alibaba , Cainiao Network , LOGISTICS , Delivery , Courier Services