Cainiao Network, the logistics arm of Alibaba Group, announced today that it will lead a joint venture to invest approximately USD 1.5 billion to design and build a world-class digital logistics centre at Hong Kong International Airport (HKIA).
The tender award by the Airport Authority Hong Kong follows an open tender exercise held earlier, which the Authority said attracted strong bids from local and international players.
Cainiao will lead the project through its controlling joint venture with China National Aviation Corporation (Group) Ltd and YTO Express. The companies hold a 51, 35 and 14 per cent stake respectively in the joint venture. Under the agreement, the joint venture will design, construct, finance and manage the Centre which will come into operation in 2023.
Located at Kwo Lo Wan in the South Cargo Precinct of HKIA, the centre – which will be the third-largest warehouse in Hong Kong – will feature a 380,000 sqm gross floor area. It will also be built to advanced environmental protection standards and include state-of-the-art technologies, such as automated warehousing and temperature-control solutions.
Although lacking direct air side access, the facility will include air cargo processing, sorting and order fulfilment, among other functions. The centre will handle tens of millions of parcels every year to meet the surging cross-border e-commerce needs of global SMEs, bringing an incremental cargo volume of approximately 1.7 million tonnes per annum to the Hong Kong International Airport when the centre operates at full capacity, and reinforcing the city’s position as a key gateway in the global logistics chain.
The move forms part of Cainiao’s broader effort to expand and strengthen its global logistics network, the company said. Just last week, Cainiao unveiled plans to open five hubs in five cities around the world – Dubai, Hangzhou, Kuala Lumpur, Liège (Belgium) and Moscow. The new Hong Kong hub will mark another enhancement to this network. It is also part of Alibaba’s commitment to invest more than CNY 100 billion (USD 15.64 billion) in an efficient smart logistics network that drives 24-hour delivery in China and 72-hour delivery to the rest of the world.
“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 globalisation through cross-border e-commerce,” said Wan Lin, president of Cainiao Network.
“The Centre will become the smart hub in Asia serving the fast-going global e-commerce business,” according to the Airport Authority Hong Kong (AAHK). “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,” the authority said.
The announcement follows that of DHL Express late last year when in November 2017 it announced HK$2.9 billion (USD 370 million) expansion, boosting annual throughput by 50 per cent, for its Central Asia Hub at Hong Kong International Airport.
The AAHK added that the new logistics Centre will further reinforce Hong Kong’s position as the world’s busiest cargo hub which it said 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. It will feature ramp access to all floors and allow the use of large-scale robotics and automation. Environmental certification of high international standards will be adopted, such as BEAM Plus Gold and LEED Gold.
Commenting on Hong Kong’s position, Cainiao’s Lin said: “The Hong Kong International Airport has been the world’s busiest cargo airport for many years. 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.”
Cainiao already has three Global Fulfilment Centres in Hong Kong which are operated by its partners. As well, Cainiao opened an airfreight route between Hong Kong and Belgium last month. This is its second such international airfreight route specially for e-commerce parcels following the opening of its Hangzhou-Moscow route earlier this year.