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Alibaba to spend billions on smart logistics network, executive chairman says

Chinese e-commerce giant Alibaba Group Holding Ltd. will invest billions of dollars to build a smart logistics network that will improve delivery efficiency at lower cost, executive chairman Jack Ma said at the Global Smart Logistics Summit in Hangzhou, China.

According to a May 31 post on the company's Alizila news site about Ma's speech at the event, he shared his prediction that the logistics sector in China would eventually grow to handle 1 billion parcels per day. Ma noted that it has already vastly expanded in recent years, going from zero parcels generated by e-commerce to now delivering 130 million parcels per day.

"World trade will change because of logistics. Global trade will go from containers to packages, from trading between countries to trading between companies. All this change, we should be ready to prepare and fight today," he said.

The annual summit is held by Alibaba's logistics arm Cainiao Network, which processes about 100 million parcels each day. It does not carry out delivery work but instead serves as an information platform that links a network of courier companies, warehouses and distribution centers.

Ma said Cainiao's eventual goal is to be able to deliver goods across China within one day and within 72 hours globally. Currently, the logistics network's same-day and second-day delivery cover 1,500 counties and districts in China, and it has reduced cross-border shipping times to less than 10 days for some countries from a previous average of 70 days.

Costwise, Cainiao aims to cut logistics costs down to below 5% of China's gross domestic product from the current 15%, in order to compete with the 7% to 8% range found in countries with more-developed logistics systems, Ma said. The business will rely on technology and automation to achieve those targets.

Ma's remarks come shortly after Alibaba and Cainiao made a deal to purchase a 10% stake in Chinese courier service ZTO Express (Cayman) Inc., with plans to collaborate on first- and last-mile delivery services, warehouse management, cross-border logistics and related technology-focused services.

Also during the summit, Cainiao unveiled a smart logistics solution called Cainiao Future Park, which digitalizes warehouse management through Internet of things applications, big data, edge computing and artificial intelligence.

The first installation of the Cainiao Future Park is planned for a 160,000-square-meter complex in the eastern Chinese city of Wuxi, according to a separate May 31 Alizila post. The site will house a smart warehouse, offices and convenience stores. The warehouse will be equipped with fully automated assembly lines using robotic arms and self-charging automated guided vehicles. Advanced technologies will be used to assess warehouse storage capacity and inventory stacking heights as well as guide vehicle traffic within the park.

Meanwhile, Cainiao said it plans to put an upgraded version of its last-mile robot, G Plus, into commercial production by year-end, and it also debuted Cainiao Box, a smart locker that consumers install outside their door to receive packages and food deliveries.

In addition, Cainiao designated five cities in Asia, Europe and the Middle East to serve as its global logistics hubs, according to Alizila. Plans for Dubai, Hangzhou, Kuala Lumpur, Moscow and Liège, Belgium, include helping enhance cross-border logistics infrastructure as part of progressing toward a broader goal of raising speed and service across 100 cities within three years.

The logistics unit also reiterated its commitment to reducing its environmental impact. By 2020, Cainiao aims to deploy new-energy vehicles to 100 cities across China and use AI for smart routing in 40,000 Chinese villages to make for shorter delivery trips in rural areas. It also plans to use more electronic shipping labels in place of traditional paper labels.