Alibaba investing US$15 billion in smart logistics

Alibaba Group will invest more than RMB100 billion (US$15.6 billion) to build the technical backbone for a smart logistics network aimed at improving delivery reach and efficiency.

Executive chairman Jack Ma says the network will also drive down logistics costs sharply.

It mainly aims to push 24-hour delivery across China as well as suppress logistics costs to less than 5 per cent of China’s gross domestic product from around the current 15 per cent. This will boost profit margins for the manufacturing industry and logistics sector.

Alibaba says it will also aim to push 72-hour delivery to the rest of the world.

Since its establishment five years ago, Cainiao Network, Alibaba’s logistics affiliate, has reduced cross-border shipping time from an average of 70 days to less than 10 days for some countries through technology innovation and open collaboration. The number of B2C parcels going through customs clearance is now 1 million every day. Within China, Cainiao’s same-day and next-day delivery covers 1500 counties and districts.

“This network is not only national, but global. This is what we will work closely with our partners to achieve and bring benefits to all,” says Ma.

“As the industry will increasingly become tech-driven, Cainiao aims to be the ‘brain’ of the logistics industry. Since the first day, Cainiao’s mission has not been to deliver goods, but to help delivery firms do so by building a network that links all logistics elements and connects every delivery person, every warehouse, every hub, every city and every house.”

About 100 million parcels are processed every day now through Cainiao’s logistics platform.

Started from zero

Ma says the industry started from zero e-commerce parcels and is now delivering 130 million items a day, while there are about 5 million people working at courier and food-delivery companies in China, and seven delivery companies have gone public.

“In the future, we will need to process 1 billion packages a day,” says Ma. “The logistics industry needs to prepare for that with a robust infrastructure.”

At its 2018 Global Smart Logistic Summit, Cainiao unveiled plans to upgrade its global logistics network with initiatives to open five hubs internationally.

It also showcased its “Future Park” logistics complex that will house a smart warehouse, offices and shops. In the city of Wuxi, near Shanghai, the park uses AI, edge computing and Long Range (LoRa) IoT. Its automated assembly lines include robotic arms, as well as more than 500 AGV (Automatic Guided Vehicles) robots for rapid and efficient picking and packing of orders.

The automation is expected to save warehouse staff members about 50,000 steps each every day. There are also infrared sensors that track the height of the inventory stacking, and cameras that calculate storage capacity in real-time.

Cainiao also showcased other technologies that address pain points in the logistics
sector. For example, its Cainiao Box will be able to receive package delivery through recognising the facial ID of the delivery person when no-one is at home; while the temperature of the smart box can be adjusted via a mobile phone app if there is a food item that needs to be kept hot or cold.

Cainiao’s new ET Lab’s G Plus robot is equipped with a multi-sensor navigation system for last-mile delivery. The Lab aims to put G Plus into commercial production by the end of this year.

Cainiao also announced its plans to open five global hubs in Asia, Europe and the Middle
East. Dubai, Hangzhou, Kuala Lumpur, Liège (Belgium) and Moscow are among the first cities being considered for the hubs. Cainiao already delivers to 30 cities across six countries and regions within five days. The aim of the hubs is to expand the speed and quality of service to 100 cities over the next three years.

Cainiao’s ultimate mission is to deliver anywhere in the world within 72 hours.

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