Alibaba's logistics arm, Cainiao Smart Logistics Network, has announced a partnership agreement with cargo airline group, Volga-Dnepr Group (VDG), to boost its cross-border shipping capabilities and meet growing demand for better and faster delivery services.
According to a Memorandum of Understanding (MoU) between the two parties, VDG will guarantee access to its network and fleet of 41 aircraft to Cainiao, while Cainiao has named the Russian operator its preferred carrier for airlift capacity and logistics services. They have also agreed to leverage their respective logistics assets in Asia, Europe and Russia to develop a more efficient shipping network.
“The future of air freight is in the e-commerce sector with customers becoming more tech-savvy, internet-driven and demanding in terms of delivery services,” said Volga-Dnepr Group's vice-president Strategic Management, Tatyana Arslanova.
“The key to success of winning this lucrative market lies in the ability to provide fast, fully digitalized and transparent services with the support of reliable partners, such as Cainiao Network,” she added.
Russia is an important market for Cainiao’s parent company, with the Chinese e-commerce giant's international B2C shopping site AliExpress said to be the country's most-popular e-commerce platform. Earlier this year, Chinese media reported that Cainiao Network had launched regular cargo flights to Russia to meet surging demand for China-origin goods.
Moscow is one of five global hubs that Cainiao is currently setting up to facilitate a long-term aim of reducing worldwide e-commerce delivery times dramatically to as little as 72 hours. The others will be located in Liege, Dubai, Kuala Lumpur and the home city of Alibaba, Hangzhou.
Cainiao's global general manager, James Zhao, commented: “We are delighted that Volga-Dnepr Group becomes our strategic partner to beef up air freight capability of our global smart logistics network, enabling merchants and brands – especially small and medium enterprises – to access more efficient cross-border logistics services.”
The announcement came after confirmation earlier this month that Alibaba Group is setting up a €75 million European logistics hub at Liege Airport (LGG) where VDG's main subsidiary, AirBridgeCargo Airlines (ABC), also has major expansion plans.
ABC is Russia’s largest cargo airline and has expanded rapidly to become one of the world’s major air cargo players. It operates scheduled flights between Russia, Asia, Europe and North America, and covers more than 30 destinations worldwide, with its global hub at Sheremetyevo International Airport in Moscow.
In October this year, ABC and LGG signed an “historic” 10-year lease agreement that they claimed “will bring the scale of cooperation between two companies to the next level of development, boosting air cargo volumes of ABC to and from the airport and placing Liege Airport among the top five cargo airports in Europe by 2020”.
ABC will invest €25 million to lease warehouse premises covering 25,000 sqm, with the first 12,500sqm warehouse going into operation in June 2019, and a second one to follow in early 2020. The Walloon Airports Company (Société Wallonne des Aéroports – SOWAER) is building four new aircraft stands at LGG to accommodate ABC's expanding fleet.
The agreement between ABC and LGG was described as a “logical extension” of the MoU signed between the Volga-Dnepr Group and the Belgian airport during the Farnborough International Airshow in July this year. This focuses on VDG and its UK affiliate CargoLogicAir (CLA) turning LGG into a European hub from which it will operate up to 30 cargo flights per week within five years.
Last week, sources at the airport confirmed that Cainiao could be flying five to six wide-body freighter round trip flights daily through Liège when Alibaba's forthcoming e-commerce hub there is fully operational in 2024.
The partnership between Cainiao and VDG follows regular announcements by the Chinese group this year on the building-up of its global logistics network. In June, it revealed it would lead a joint venture to invest approximately US$1.5 billion to build a world-class digital logistics centre at Hong Kong International Airport (HKIA), the world’s busiest cargo airport.
The same month also saw Cainiao sign an MoU with Emirates SkyCargo “to jointly facilitate the delivery of cross-border parcels as Cainiao looks to expand its global logistics infrastructure with Dubai as a hub” while also working closely to manage e-commerce shipments in the Middle East and other neighbouring regions through Dubai.
In July, Cainiao announced a link-up with Bolloré Logistics, focusing on identifying co-operation opportunities for their hubs and networks, in Asia, the Middle East, Africa and Europe. Then in August, Alibaba Group and Singapore Airlines (SIA) announced a comprehensive strategic collaboration that includes logistics.
