Alibaba’s Cainiao to lead JV at new HKIA e-commerce hub

Airport Authority Hong Kong has awarded the tender to build a logistics centre at Hong Kong International Airport (HKIA) to a joint venture (JV) led by the Cainiao Network – the logistics arm of Alibaba Group.

The ‘Centre’ will be located in Kwo Lo Wan in the South Cargo Precinct of HKIA and shareholders will include China National Aviation Corporation (Group) Limited and YTO Express. Cainiao will hold a 51 per cent stake, China National Aviation Corportation 35 per cent and YTO 14 per cent in the JV.

Cainiao said that it is part of a $1.5 billion investment and the logistics facility will be spread over 5.3 hectares with an estimated floor area of 380,000 square metres, the ‘Centre’ will be the third-largest warehouse in Hong Kong. Under the agreement, the JV will design, construct, finance and manage the facility.

Scheduled to commence operation in 2023, the ‘Centre’ will become the smart hub in Asia serving the fast-going global e-commerce business.

This aligns with the cargo development strategy of HKIA to capture opportunities arising from increased cross-border e-commerce and related businesses, as well as the growth in the logistics business related to temperature-controlled products such as pharmaceuticals.

Airport Authority Hong Kong said: “The Centre will further reinforce the cargo leadership position of HKIA, which will also benefit from the opportunities brought by the opening of Hong Kong-Zhuhai-Macao Bridge later this year and the commencement of the Three-runway System in 2024.

“The Centre is targeted to be future-proof, with high specifications to attract fast-growing air cargo segments including cross-border e-commerce and temperature-controlled airfreight handling.”

HKIA has been the world’s busiest cargo airport for eight consecutive years. In 2017, tonnage saw a year-on-year growth of 9.4 per cent to over five million tonnes, the first airport ever to cross this milestone.

Cainiao said the logistics centre will include an air-cargo processing center, a sorting center and order-fulfillment center. It will feature automated warehousing technology and automated temperature control.

It should be able to handle tens of millions of packages a year and bring an additional 1.7 million tonnes of cargo per year to HKIA when fully operational, supporting burgeoning activity by small and medium-sized companies involved in e-commerce, Cainiao said.

It’s not the first handling center for Cainiao in Hong Kong, a key entrepot for goods entering and leaving China. It already has three global fulfillment centers operated by its partners in Hong Kong. Cainiao also opened an airfreight route between Hong Kong and Belgium last month, the second international route set up for e-commerce parcels after opening one between Hangzhou and Moscow earlier this year.

Cainiao also recently unveiled plans to open five hubs around the world, in Dubai, Hangzhou, Kuala Lumpur, Liège in Belgium and Moscow.

Cainiao president, Wan Lin said: “The Hong Kong hub will be yet another milestone on our way to achieving our goal of 72-hour global delivery, and will further empower SMEs locally and globally to more readily tap the benefits of more inclusive globalization through cross-border e-commerce.

“As an important gateway for global goods to enter the mainland China market and vice versa, Hong Kong is of strategic importance to Cainiao, and we have a strong commitment to help the city address the surging needs of the future.”