Alibaba broadens boundaries of global ecommerce with ambitious new logistics layout

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On May 31, Jack Ma infused Alibaba’s smart logistics network with a USD 15.58 billion investment intended to cut courier costs.

Specifically, the USD 15.6 billion goes to the company’s smart logistics backbone network, targeted toward pushing delivery costs below 5% of China’s GDP from its current 15%. “If we can use data to solve the problems of low transport efficiency and high logistics costs, we can create huge profit margins for manufacturing and logistics sectors,” Ma said.

The network is not only national, but global, according to Ma. “In the future, we will need to process one billion packages a day. The logistics industry needs to be prepared with a robust infrastructure,” he added. Specifically, Alibaba aims to provide 24-hour delivery across China and 72-hour delivery for international markets.

In addition, the company underpins its massive layout by stressing green energy. On May 25th, Alibaba Group’s logistics unit Cainiao spearheaded a comprehensive green initiative aimed at the domestic courier industry. The company strives to apply AI algorithms to shorten delivery routes in rural areas and deploy EVs in 100 Chinese cities by 2020.

Without a doubt, Jack Ma is advancing his vision of empowering SMEs to trade globally on a larger scale. On May 30, Cainiao announced the company’s selection of Hangzhou, Dubai, Kuala Lumpur, Liege, and Moscow to be among the first batch opening new global hubs in Asia, Europe, and Middle East.

In fact, an airline connecting Hangzhou and Moscow was set up by Cainiao in March, thus enabling SMEs to conduct international business through end-to-end supply chain solutions.

Meanwhile, Alibaba has been taking on logistics rivals boldly and swiftly. On May 29, the company, along with Cainiao Logistics, strategically invested USD 1.4 billion to hold a 10% stake of courier company ZTO, the third after Alibaba bought minority stakes in YTO Express and Best Inc. Last month, Alibaba reportedly invested USD 720 million in the Jiangsu-based Huitongda Network to build new supply chain networks in rural China.

Hence, it is obvious that the company attempts to reshape the instant delivery sector to further empower its continuously expanding ‘New Retail’ ecosystem, which according to Alibaba CEO and Cainiao Chairman Daniel Zhang, is reciprocally catalyzing new opportunities and demands in logistics.

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