To become the fourth largest cross-border logistics provider in the world, what has Cainiao done?

After going through the confused exploration period, the 9-year-old rookie gradually matured.

In the past Alibaba 2022 fiscal year (April 2021 to March 2022), Cainiao contributed 66.8 billion yuan in revenue to the group, a year-on-year increase of 27%, of which 69% came from external customers, mainly due to cross-border electricity. business, domestic supply chain and other businesses.

For Alibaba, Cainiao is an important logistics infrastructure supporting Alibaba’s business map. From the perspective of Cainiao itself, since its establishment in 2013, it has started from the logistics industry, expanded its business coverage step by step, and consolidated its logistics technical capabilities. Now it has become a global industrial Internet company.

The global outbreak of the epidemic has prompted a surge in demand for online shopping, cross-border e-commerce has ushered in a bonus period, and cross-border logistics that support the operation of cross-border e-commerce has also developed rapidly, becoming a new incremental market in the industry.


Cainiao Europe’s largest smart logistics hub eHub in Liege, Belgium

At present, in the field of global logistics, Cainiao owns 9 overseas self-operated sorting centers. Its logistics business covers more than 200 countries and regions around the world, with an average daily cross-border parcel volume of more than 4.5 million pieces, ranking the top four in the world, and the top three in the world. Express giants FedEx, DHL, UPS are in the same echelon.

Breaking the traditional cross-border dedicated line operation model, Cainiao has gradually built a globally integrated cross-border digital and intelligent logistics, and has applied the digital and intelligent technology that has developed rapidly in recent years to overseas markets to support the development of overseas business.

01 Globally integrated logistics capabilities

From e-commerce to logistics, no one wants to miss the opportunity of cross-border trade.

According to iResearch’s data and forecast, the compound growth rate of China’s cross-border export e-commerce scale will reach 26.4% from 2016 to 2025. Correspondingly, the market compound annual growth rate of cross-border export e-commerce logistics will reach 22.5% in the next five years. , the market size is expected to reach 3.6 trillion yuan by 2025.

Cross-border logistics in the traditional sense is more operated from a special line perspective, such as the main European route, North American route, and so on. However, when the cross-border e-commerce industry ushered in explosive growth and the demand soared, the private line approach may not be enough to support such a huge business volume.

Cainiao’s cross-border logistics business faces this problem head-on. Covering the business volume of more than 200 countries and regions around the world, the operation mode of cross-border private line is not suitable for Cainiao. In this context, Cainiao has built a digital and intelligent logistics covering the world, and realized the upgrade from the private line model to the network effect, which has become the key advantage of Cainiao ahead of its peers.

Different from most express logistics companies and freight forwarders, the focus of cross-border e-commerce logistics competition is the company’s own ability to control the entire supply chain. This network is the core infrastructure for Cainiao to establish a cross-border logistics supply chain.

What is the structure of this cross-border logistics?

In terms of image, Cainiao’s cross-border logistics is multi-dimensional construction on the “point, line and plane”.

According to the description of China Merchants Securities Research Report, the so-called “point”, Cainiao has deployed in the world to help build an electronic world trade platform “eWTP” that is in line with the development trend of global small and medium-sized enterprises and undertakes Ali’s business overseas needs, including the digital trade center eHub , as well as cross-border e-commerce infrastructure such as bonded warehouses, central warehouses, transit warehouses, overseas warehouses, and self-pickup points in overseas countries, covering the terminal self-pickup network in Europe, Oceania and other countries.

The so-called “line”, Cainiao Global Logistics covers 224 countries and regions around the world, serving more than 75% of AliExpress’s small and medium-sized enterprises’ exports, accounting for more than 90% of AliExpress’s parcel volume, and can provide “arrival + transportation”. +Declaration” one-stop service.


Cainiao Overseas Transport Truck

The so-called “noodles”, Cainiao has built a European truck network covering Germany, France and other European countries for European import and export business. For example, centered on the Liege eHub, Cainiao has built a truck network covering seven core European countries. Since Liege Airport has cooperated with Cainiao in logistics, the cargo volume of Liege Airport has increased from 720,000 tons to 1.12 million tons, and the number of e-commerce parcels has increased from only 300,000 in 2017 to 548 million. Over the past three years, Liege Airport has repeatedly broken its cargo record in terms of cargo volume, making it one of the fastest-growing cargo airports in Europe.

Thanks to Cainiao’s vigorous investment in logistics infrastructure and dozens of charter flights per week, Cainiao’s cross-border logistics can still maintain stability and resilience under the influence of unstable factors such as the epidemic and geopolitics.

During the continuous outbreak of the epidemic in 2020, many cross-border logistics lines were fused, and Cainiao became one of the few logistics companies that could maintain operations. Every day, packages sent by hundreds of thousands of merchants in China were shipped to key global regions such as Europe and North America.

Cainiao’s good performance during the epidemic has further demonstrated its strength in cross-border logistics, and has also established a strong user mental awareness. After the epidemic, Cainiao’s cross-border business volume has exploded, and the logistics on e-commerce platforms Organic penetration has increased by 20 percentage points.

Behind this is the segmented collaboration under the unified and standardized logistics underlying architecture, as well as the application of digital and intelligent logistics technology.

To put it simply, starting from China, Cainiao divided the entire cross-border logistics into A, B, C, and D sections. Among them, section A includes domestic collection and sorting capabilities; section B is the trunk line section, including air cargo terminals, as well as some parcels in the middle, aircraft scheduling, etc.; C-end is from the region where the destination country is located to the destination country. For example, the intermediate process from Liege eHub to France belongs to Section C; Section D refers to the sorting and distribution of packages in the destination country.

Segmentation collaboration helps Cainiao to grasp the various elements of logistics more intuitively, so as to optimize the SOP more deeply and ensure that the logistics is always efficient and stable. At the same time, many innovative technologies also provide differentiated services.

For example, instead of sending multiple packages separately, Cainiao’s smart order combination function can combine multiple orders from the same buyer at different stores at different times into a single package for delivery before being sent to a cross-border charter flight. According to the research report of China Merchants Securities, under this new model, the delivery speed is nearly a week faster than the original one, and the logistics rate of the total package is lower than that of a single package.

In addition, compared with domestic and international counterparts, Cainiao’s advantages in cross-border logistics also include overseas localization, business flow support of Ali-based e-commerce platforms, and its continuous investment in technology.

02 Deeply cultivate digital intelligence

For a long time, traditional cross-border logistics has the characteristics of high labor costs, low level of digitalization, and lack of unified standards. As a new player in the industry, the key to realizing overtaking in corners lies in the deep cultivation of digital intelligence. Cainiao has built a series of digital-intelligence infrastructure and IoT devices to help its business operate efficiently, and at the same time help the entire industry to accelerate the digital-intelligence transformation.

For example, RFID (Radio Frequency Identification Technology) is considered as the third generation identification technology after barcode and QR code. With RFID, it is equivalent to having an “electronic ID card” for each piece of goods. In the process of node handover, there is no need to manually do some handover work. It is generally used for cargo inventory, inbound and outbound handover, and the whole chain. road tracking.


Cainiao Overseas Distribution Center

Previously, the recognition accuracy of this technology in complex logistics environments was not high, so it was not put into large-scale applications. At present, Cainiao has greatly increased the recognition accuracy rate to 99.8%, and has used RFID in many aspects of cross-border logistics, which has improved efficiency and accuracy and greatly reduced costs.

In addition, it is worth mentioning that Cainiao’s “Apollo System” has been implemented in Indonesia, Malaysia, Singapore, Vietnam, Thailand, the Philippines and other Southeast Asian countries.

Southeast Asia is one of the fastest-growing markets for e-commerce in recent years, but the local logistics level is relatively backward.

According to a report from the World Wide Web, through the “Apollo system”, merchants, express logistics companies, warehouses, transshipment centers and consumers in Southeast Asian countries are connected for the first time by a unified logistics center, which is equivalent to changing local logistics. A “digital brain”. The new logistics technology has been in operation for more than half a year, and the accuracy of parcel delivery time prediction has increased by 50%. The incidence of mismatches between e-commerce and logistics information in the core six countries in Southeast Asia is only 2.7% of the original, and the average cost of parcel delivery. Decrease by 10%.

03 Strive for overseas localization

To do global logistics, only cross-border logistics is not enough, it is also necessary to “gnaw down” the “hard bone” of overseas localization.

Why do you say “hard bones”? The problems that logistics technology needs to solve when going overseas include but are not limited to diverse logistics scenarios, differentiated needs, epidemics, and geopolitical instability.

Despite many difficulties, Cainiao’s overseas localized logistics business is still advancing steadily. For example, Cainiao is promoting local express delivery in countries such as France and Spain.

In terms of promoting overseas localization, Cainiao’s primary advantage is that its products have strong flexible configuration capabilities. Relying on a series of digital and intelligent capabilities, in the face of the differentiated needs of different countries and regions, the configuration capabilities of Cainiao logistics products can support specific demands without necessarily requiring re-development and upgrading.


Cainiao Overseas Distribution Center

On the other hand, compared with China, some countries and regions have a very low fault tolerance rate for technology going overseas, which puts forward higher technical requirements for logistics enterprises. Therefore, the importance of the technical team is self-evident. Cainiao’s overall technical staff accounts for more than 40%. Currently, product technical teams are deployed in many overseas countries, focusing on supporting the research and development of localized business.

According to the relevant technical person in charge of Cainiao, overseas practical infrastructure is a very important project for Cainiao, including the construction of a digital and intelligent national distribution center, the construction of a localized digital and intelligent distribution system, and digital and intelligent terminals such as self-pickup cabinets. The construction of the system, etc., so in the next year, Cainiao will upgrade the overall practical system again.

At present, Cainiao has demonstrated strong technical and product capabilities in the field of cross-border logistics. With the continuous advancement of overseas localization, how to better connect and interact with cross-border logistics and localized logistics to form an integrated The “global logistics capability” of Cainiao will be a great test for Cainiao’s technology and product capabilities.

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