At the 2024 Global Smart Logistics Summit held by Cainiao, Ding Hongwei, Vice President of Cainiao Group and General Manager of the International Express Division, delivered a keynote speech titled "Towards Global 72-Hour Delivery." In his view, delivery speed will become one of the core competitive advantages for cross-border e-commerce in the future. Efficient cross-border logistics fulfillment capabilities are expected to drive explosive growth in the industry’s expansion overseas. Below is a partial transcript from his speech:

Ding Hongwei, Vice President of Cainiao Group and General Manager of the International Express Division

1.Localized E-Commerce Logistics Will Become the Next Breakthrough

The rapid development of cross-border e-commerce has driven continuous growth in the cross-border logistics industry. Logistics is a fundamental necessity in this industry. However, because cross-border logistics involves lengthy collaboration chains, the logistics costs account for a significant portion of the overall e-commerce cost. In different countries and regions, this can make up 30% to even 40% of the total cost. Therefore, as cross-border e-commerce grows, the logistics industry is constantly innovating and building new capabilities.

Looking ahead, from the perspective of overseas consumers, current cross-border e-commerce services and competitiveness are only just beginning. Consumers care more about product quality, price, service quality, and delivery speed, rather than whether the products are shipped from China or locally. According to a McKinsey report, consumers' expectations for e-commerce, beyond pricing, are increasingly centered around service speed and cost. Therefore, the future breakthrough in cross-border e-commerce will be delivering localized e-commerce logistics services, representing a huge opportunity for growth.

As cross-border logistics continues to develop, new changes have occurred, especially over the past two years. The explosive growth in cross-border e-commerce has led to regulatory changes in several areas. For example, starting last year, the U.S., Mexico, Brazil, Europe, and other regions have implemented tax reforms related to e-commerce.

At the same time, due to fluctuations in the cross-border e-commerce industry and growing competition, various participants in the cross-border logistics chain, including freight forwarders, local delivery companies, and trunk line operators, have faced new operational challenges.

Although the booming growth of cross-border e-commerce presents significant opportunities for the logistics industry, the uncertainty and volatility in cross-border operations demand greater depth, capability, and resilience.

2.Cainiao’s Global 5-Day Delivery Now Covers 14 Countries

Over the past decade, Cainiao has been honored to witness and promote continuous improvements in cross-border logistics services.

Take South America as an example. Over a decade ago, cross-border logistics often took 20 to even 60 days. The primary goal of logistics was to help e-commerce partners deliver cost-effective products from China to global consumers, mainly offering coverage and basic services. However, with the development of cross-border logistics and improved capabilities, we have entered a second phase, aiming for 10-day and 14-day deliveries, offering more reliable and controllable services. This provides end consumers with a stable expectation from order to delivery, marking a fundamental enhancement in service capacity.

Starting in 2023, Cainiao and its partners further upgraded to offer Global 5-Day Delivery, making a significant leap in cross-border logistics capabilities. We can now deliver products to consumers in a shorter time and with more stable services. By implementing global 5-day delivery, what was once an exclusive, high-end courier experience has become accessible to the general public. After more than a year of effort, Cainiao's Global 5-Day Delivery service now covers 14 countries, offering merchants and consumers highly reliable, cost-effective, and fast logistics services.

3、How Does Cainiao Meet Diverse Logistics Needs?

How does Cainiao meet the growing demands for diverse logistics services? The answer lies in Cainiao’s continuous efforts over the past decade to build a global smart logistics backbone.

First, in the logistics industry, regardless of how advanced a company’s technology is, the ultimate goal is to facilitate the flow of goods, products, and packages. To achieve this, a robust logistics network is essential. Cainiao has not only invested in creating a domestic logistics network covering nationwide collection, inventory control, packaging, and sorting, but also partnered with airlines, freight forwarders, and other stakeholders to establish a global trunk line network. A key component is the e-Hub system, which serves as a critical hub in the global network, integrating air cargo operations, local overseas sorting hubs, and highly automated infrastructure. This enables Cainiao to balance both speed and efficiency in global deliveries.

Second, e-commerce directly serves end consumers, so the last-mile delivery experience is closely tied to customer satisfaction. In the final delivery stage, Cainiao collaborates with hundreds of logistics partners worldwide to build a global last-mile delivery network, ensuring packages are efficiently delivered to customers, creating a better service experience.

Lastly, the rise of the internet, AI technology, and digitization presents significant opportunities. As a part of Alibaba, Cainiao has accumulated strong capabilities in these areas, which has enabled the creation of a digital network that enhances the value and efficiency of the logistics network. For example, in global smart routing, every stage of cross-border fulfillment involves different combinations of time, cost, and experience. Therefore, Cainiao’s global routing system offers numerous combinations and requires a smart global routing brain.

New technologies will further enhance logistics efficiency. Cainiao has developed and applied RFID technology across all international express stages, enabling batch, high-efficiency, near real-time data capture. This allows real-time tracking of logistics packages across the entire supply chain, enabling quick responses to any anomalies by adjusting routes and resources, creating more reliable end-to-end logistics services in collaboration with logistics partners.

Additionally, customs clearance, both for exports and destination countries, is another challenge in the cross-border logistics chain. Customs policies vary depending on each country’s stance on e-commerce and cross-border trade. To address this, Cainiao uses digital technologies to pre-process data, ensuring the data precedes the physical goods. This interaction with government regulatory systems enables pre-clearance decisions, allowing Cainiao to achieve second-level customs clearance globally while maintaining smooth, real-time, and efficient operations across the entire logistics chain.

4. Cainiao’s Full Cross-Border Logistics Chain Layout

How does a package travel through the global cross-border logistics chain? The process is long, with each transportation method, mode, and partner differing from one another. This journey can be likened to a 4×100 relay—to build fast and efficient global logistics, each leg of the relay must be fast. Moreover, given the heterogeneous nature of cross-border chains, smooth transitions between each leg are crucial, ensuring both resilience and seamless information flow.

Dividing the cross-border journey into three stages—domestic, trunk line, and destination—Cainiao has established over one million square meters of warehouses within China to efficiently consolidate packages domestically. For the trunk line stage, the e-Hub and air trunk lines operate like a public bus system for intercontinental transport, ensuring high efficiency. At the destination, Cainiao has leveraged China’s expertise in logistics, express delivery, and supply chains. In recent years, Cainiao has partnered with global entities to bring this industry knowledge and technical applications overseas, enhancing local delivery networks and services.

Ultimately, the value of logistics services must be endorsed by customers and consumers. With the continuous improvement and implementation of Cainiao’s capabilities across five major global areas, consumer satisfaction with logistics in various countries has significantly improved, contributing to the industry's rapid growth. Cainiao also appreciates the trust and support of its global partners. Looking ahead, Cainiao hopes to turn its vision into reality, accelerating the transition to Global 72-Hour Delivery.

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Official WeChat Account: Cross-Border E-Commerce Logistics Bai Xiaosheng