Cainiao South Korea at a Glance
A smart logistics company that delivers worldwide within 72 hours
Article is translated from a Korean interview featured on Alibaba’s media platform Alizuji
Introduction to Cainiao
Cainiao Network, a smart logistics company established in 2013, is a logistics arm of the Alibaba Group. As part of its efforts to create customer value, Cainiao adopts a collaborative logistics approach that improves efficiency and customer experience for all participants in the supply chain. With the goal of delivering to anywhere in China within 24 hours and worldwide within 72 hours, Cainiao is fulfilling Alibaba’s mission to make business easy from anywhere.
Cainiao defines the niche market in the logistics sector by adopting a hybrid approach that includes not only owned assets but also aggregates resources via leasing and industry partnerships. Through this, Cainiao’s business can provide added value to customers in the form of in-depth industry knowledge and resources, along with the typical flexibility of a platform company.
Cainiao is able to customize logistics services from first/last mile delivery, international freight, warehouse storage, to supply chain management according to the unique needs of business customers.
Interview with Mr Janghwan Shin, Leader of Cainiao Supply Chain Korea
Q. What are the distinctive features of Cainiao’s global logistics network and advanced logistics technology?
A: Through a hybrid approach to business operations, Cainiao integrated resources in areas such as cargo transportation and last-mile logistics by collaborating with logistics partners. Additionally, Cainiao’s development of smart regional logistics hubs called eHubs and the launch of electronic shipping labels for real-time package tracking have led to a digital transformation across the industry and enabled entry into areas that enhance transparency. As a result, business partners, merchants, and consumers were able to add flexibility and agility to their supply chain and logistics management strategies.
As a digital-first company, we were able to optimize and streamline the entire logistics value chain by harnessing our technological capabilities, ultimately increasing cost and time efficiency.
Q. What logistics services does Cainiao provide in Korea?
A: In March of last year, we announced that we had established our first distribution center and truck transportation route in Korea to enhance our cross-border delivery service on our e-commerce platform, AliExpress. Korean customers can receive their ordered products from mainland China within as short as three working days, and on average within five working days. We plan to further expand our last-mile delivery network by adding more domestic courier partners in the near future and build a nationwide comprehensive logistics network beyond Seoul.
The aforementioned logistics center is located within a one-hour drive from Seoul, the capital and largest city of Korea, and strategically located near domestic customs clearance facility. Various smart logistics facilities are provided, including innovative smart technology such as automated assembly lines and smart distribution that can sort and classify large and small packages. By doing so, the operating cost of cross-border shipping can be reduced by 10%, and processing time reduced by more than 12 hours.
Furthermore, in the second half of 2021, a direct sea route between China and Korea was opened as AliExpress’s Korean-bound parcel volume nearly doubled compared to the same period last year. Through the direct sea route, which operates six times a week, domestic consumers can receive their parcels within five days after ordering from AliExpress, and some areas can receive their orders in just three days. As the cargo ship leaves the Port of Shandong within 12 hours, shipping costs can be reduced by up to 30%.
Cainiao signed an MOU with the Korea Small and Medium-sized Enterprises Promotion Corporation (KOSME) in 2021 to serve as the official logistics partner for export businesses in Korea. The MOU aims to promote trade and foster various forms of cooperation to drive the growth of e-commerce between South Korea and China. This is an important milestone for Cainiao as it expands its logistics services and makes it easier for merchants outside of the Alibaba ecosystem to enter overseas markets.
Here, Cainiao will serve as KOSME’s official logistics partner for their logistics subsidy program which will provide up to 15 million won in subsidies per company to cover approximately 70 per cent of their export expenses such as e-Commerce logistics. The objective is to help SMEs tide over this uncertain economic situation by accessing the Chinese market. As part of the agreement, small and medium-sized enterprises can utilize Cainiao’s one-stop logistics management system, providing real-time insight and support for warehouse inventory, order fulfillment, delivery status, billing, and abnormality tracking during shipping.
Q. What are the unique characteristics of the Korean market that you discovered while providing direct and reverse logistics services in Korea?
A: Since our official launch in Korea in 2020, we have witnessed tremendous growth in the market. This is due to our logistics infrastructure connecting Korea and countries around the world, as well as various other factors such as the growing popularity of e-commerce and increased demand for cross-border shopping. Additionally, we found that the Korean market is highly competitive, with high expectations for fast and reliable delivery services. Customers in Korea are also very price-sensitive, and shipping costs are an essential factor in their decision-making process. Therefore, we have strived to provide cost-effective and efficient logistics services that meet the needs of Korean consumers.
