The past decade has witnessed tremendous technological transformations within the logistics and supply chain sectors. Most recently, Industry 4.0 and Logistics 4.0 are giving rise to digitization of data and commercial applications of cutting-edge technologies such as Internet of Things (IoT), artificial intelligence (AI), machine learning (ML) and robotics in supply chains and logistics.
Amid rapid business transformation and economic growth in the early 2010s, Cainiao was founded to address existing market gaps exacerbated by the rise of eCommerce and surging consumer demand at the time. We were driven by a vision to foster eCommerce growth through a global logistics network that provides efficient cross-border and local deliveries, superior customer experiences, and supports global trade flows through industry-wide digitalization. By integrating existing resources from last-mile couriers and other leading logistics players, we defined a new business model that leverages technology to aggregate and optimize industry resources.
Since then, we have embarked on a journey to offer greater transparency and visibility to drive impactful change that extends beyond the boundaries of the logistics industry and across the entire value chain.
A decade in a nutshell
It is noteworthy to reflect on the state of the logistics industry in the early 2010s, amid the start of the eCommerce boom. The industry could be described as fragmented, with numerous independent logistics players, as well as internal supply chain stakeholders within the same organization that worked in silos. This often-meant asset under-utilization, work duplication, and other unproductive processes that resulted in undue inefficiencies.
These shortcomings stood out during peak periods such as major shopping festivals and seasonal holidays, where the surge in goods demands and parcels led to challenges such as shortages of warehouse space, personnel, and delivery vehicles. This then caused bottlenecks along the eCommerce logistics value chain, which translated to slow deliveries and poor customer experiences.
Interlaced with the challenges stemming from inherent legacy issues, were disruptions surfaced by the pandemic and geopolitical events, which created uncertainties and instability in global supply chains. These disruptions were pivotal in accelerating the digital and industrial transformations that were already set in motion. Coupled with the rising popularity of eCommerce and the growth of manufacturing sectors in markets like China and Vietnam, demand for fast, efficient, and reliable logistics services is growing at an exponential rate. In fact, the global eCommerce logistics market is expected to experience a CAGR of 22.3 percent between 2023 and 2030.
The rising popularity of digital platforms and growing proportion of digital natives in recent years are fueling the emergence of new technologies and solutions, particularly focused on smart logistics and last-mile delivery optimization. Alongside shifts in consumer behavior and rising customer expectations, logistics players are realizing the need to adapt and constantly innovate to stay ahead of the curve.
A decade of innovation
At Cainiao, we have always adopted a collaborative approach to logistics as part of our commitment to place customers at the heart of our business. To boost efficiencies and customer experience within the supply chain and logistics ecosystem, our vision remains steadfast — to drive digital transformation of the logistics industry.
This month, in celebration of our 10th year anniversary, we reflect on the significant milestones we have achieved and our endeavors in digitalizing the logistics industry.
Shaping our new decade ahead
“Today’s best performance is tomorrow’s baseline” — This onward-and-upward mindset outlined in Alibaba’s core values has helped the team tide through our most challenging moments and thrive when we are ahead. This Alibaba spirit embodies the need to constantly challenge and reinvent ourselves, and strive to excel. As we celebrate the successes in the past decade which laid a strong foundation for us, we are also immensely grateful for the strong partnerships forged, as well as the support and trust from our merchants and consumers.
As we turn the page to kickstart the next chapter, we want to take the opportunity to reinforce our commitment in three key areas that we envision will bring about a huge impact to the world — smart logistics, green supply chains and community revitalization.
Smart logistics — Driving industry-wide digitalization
To keep pace with the rise of the digital economy and smart nations globally, we saw a pertinent need to transform an otherwise traditional industry and push the boundaries of innovation. Take for example our latest breakthrough in radio frequency identification (RFID), store inventory checks that used to take as long as three days to complete now only requires half an hour with the RFID handheld device. What’s more, our RFID tags, readers, and identification algorithms were recently optimized to enable larger-scale commercial applications in logistics and supply chains, and advanced our research and development (R&D) efforts to display enhanced identification sensitivity in challenging scenarios involving metals and liquids.
Just last year, our Technology Day saw the launch of a proprietary pallet shuttle to augment warehouse operations alongside our smart automated guided vehicles (AGVs), and the introduction of a supply chain control tower to achieve greater oversight and address anomalies in real-time.
These innovations were announced just months after we unveiled our partnership with eCommerce logistics company Flash Express to establish the largest smart warehouse in Southeast Asia. The warehouse is equipped with our enterprise smart warehouse solution that leverages AI, cloud, and automation such as AGVs and a central warehouse management system (WMS) to support the continued rise in parcel volumes in recent years. Most notably, this digitalization project sits outside the general Alibaba ecosystem, in line with our goal of empowering businesses globally.
Our plan to create a holistic ecosystem to benefit logistics firms, businesses and consumers globally, continues to be at the heart of what we do at Cainiao. From the launch of our autonomous logistics robots for last mile deliveries, to the digitalization of post stations with smart lockers, AI-based smart route management for couriers, and electronic shipping labels for real-time parcel tracking, we continue to be an inclusive platform that makes it easy for merchants to do business anywhere, and for customers to benefit from a more comprehensive and transparent offering.
Green supply chains — ESG practices embedded across our value chains
Sustainability has always been core to our business since our early days. With a partner- and customer-centric approach, we continuously introduce new innovations and initiatives to deepen sustainability efforts along the value chain.
Over the years, our ESG efforts have empowered the development of a greener and more sustainable industry. Our AI-based smart packaging algorithm, developed to accurately determine the optimal carton size for each parcel, reduces packaging materials for 530 million parcels in a year, resulting in a 15 percent reduction in packing materials used.
Our electronic shipping labels on the other hand, have helped to save 400 billion pieces of paper over the span of six years. Launched in 2014 and applied on more than 100 billion parcels, the electronic labels saved 400 billion pieces of paper and RMB 20 billion in costs for the industry. This is equivalent to a reduction of 1 billion kilograms of carbon emissions. Today, we are working with express companies to reduce the size of electronic shipping labels even further, expanding on our efforts to decarbonize the logistics industry.
In 2021, we effectively reduced up to 53,000 tons of carbon emissions during the Double 11 shopping festival with the use of our carbon management dashboard to track emissions from industry stakeholders. Following this project, our solar-powered warehouses which utilizes photovoltaic (PV) energy to generate electricity in six logistics parks in China, generated a total of 87,000 kWh of electricity from solar energy during Double 11 the same year.
Aside from leveraging our digital capabilities to empower a greener industry, we are also fostering green practices among consumers in order to create a wider ripple effect in communities. Recycling stations set up at Cainiao Post stations and domestic express delivery stations spanning 315 cities in 31 provinces across China, incentivized consumers to recycle their eCommerce packaging at Cainiao Post stations — encouraging a more environmentally conscious community. An estimate of more than 100 million express delivery carton boxes can be recycled and reused annually.
These are just some of the many initiatives and milestones we have achieved amid our continued efforts to promote full-chain green transformation of the industry. By tapping on our expertise and partnering with businesses and communities, we will be able to achieve greater heights in our ESG initiatives in the long run.
Community revitalization — uplifting society for win-win scenarios
Post stations today have evolved past traditional post and parcel collection services. With business models now focused on convenience, accessibility, and community, we recognized the opportunity to revitalize communities and digitalize last-mile logistics for safeguarding of the industry.
Cainiao Post, our last-mile delivery network comprising post stations and designated collection points, is a great testament to our community-centric approach. More than just meeting the heightened demand for eCommerce and cross-border trade, Cainiao Post was fuelled by our vision to digitalize the wider industry.
Today, Cainiao Post plays a key role in China’s rural revitalization. From increasing villages’ access to city goods through the establishment of a seamless flow of goods from cities to various counties and villages, to empowering community job creation and income generation, Cainiao Post has contributed to the Chinese government’s efforts to revitalize communities and deliver an overall uplift to all.
In fact, as of 2021, Cainiao Post has provided over 200,000 jobs, with presence in more than 40,000 communities and 3,000 university campuses, serving a combined total of over 128 million consumers.
We recognize there is still room for digitalization to enhance agility and efficiency in last-mile logistics. With Cainiao Post’s success and expansion of the network outside of mainland China, in Hong Kong, in 2021, we aim to build 10,000 more Cainiao Post stations in China by 2024 in line with the government’s goal of driving domestic economic growth. There is a great potential to further expand and localize the last-mile logistics model to other regions such as Southeast Asia to deliver value to the industry and communities.
Moving forward with a purpose-driven mindset
As we look back at our past 10 years, we are incredibly humbled to see how far we have come and the breakthroughs we have accomplished. The entrepreneurial spirit that the people at Cainiao possess — walking the path no one else has ventured and boldly taking on challenges to define new and better ways of doing things — is one spirit that we hope will continue to shine through.
It might be hard to imagine that a cross-border shipment could take about a month to deliver in 2014. But with pushing boundaries, come new breakthroughs. And today, we deliver more than 4.5 million cross-border parcels daily, with newly-added inclusive offerings such as USD5 10-day delivery and USD2 20-day delivery to lower trade barriers and ensure that the overseas markets are more accessible than before to small businesses — and this is just the beginning.
The pandemic no doubt emphasized the importance of investing in logistics infrastructure and sustainability measures. As digitalization of supply chains and last-mile logistics remain key in safeguarding supply chains for success, innovation and adaptability will be the linchpin in staying ahead of the curve.
Just like how we have always adopted a purpose-driven mindset in the past decade, our operations moving forward will look to build on existing capabilities and successes that we have achieved thus far to bolster eCommerce growth and global trade.
As we celebrate our 10th year anniversary this year and undertake more transformative challenges, we would like to take the opportunity to extend our gratitude to our incredible employees and unwavering support from our customers and partners whom Cainiao’s success over the past decade is owed to. Together, we will be able to usher in a new era of even smarter and greener logistics and supply chain ecosystem.