News / Cainiao expands European air cargo and trucking networks as demand grows

Slowly but surely Alibaba’s logistics network, Cainiao, is developing its air freight network – but is still some way off its bold promise of 72-hour delivery anywhere in the world.

Today, it announced its first direct flight between Zhengzhou and Budapest, two airports which signed a cooperation agreement in April, establishing the Hungarian capital as central and eastern Europe’s gateway for China’s Silk Road logistics project.

Budapest receives five cargo services a week from Zhengzhou – three operated by Hainan Airlines and two by AerotransCargo, on behalf of Sino-Hungarian logistics development company CECZ/Utlink.

Cainaio is boasting a five-flights-a-week service of up to 17 tons a day and said customers across eastern Europe would be able to receive parcels from China within 10 days.

It expects to see 30% growth in its cross-border e-commerce volumes between China and Europe, one of its fastest-growing sectors, by the end of the year. It said it had seen “booming demand from local consumers purchasing fashion, home appliances and electronic accessories from China”.

Trade between China and 17 central and eastern European countries hit $30.13bn in the first quarter, up 50% year on year, and Cainiao has expanded its trucking network to cover 10 countries from Budapest alongside partners, including Hungarian Post and Polish Post.

The new service will see delivery times reduced by 20%, while costs will fall 5%. In part, delivery times have fallen following the development of a digitalised customs clearance system at the airport, which can clear goods before the flight lands. It cut the average offline clearance time of up to two days, to an average of six hours.

Budapest Airport, which has invested heavily in its cargo business, noted that the deal underlined its role as a key hub gateway. William Xiong, Cainiao’s chief strategist and general manager of export logistics, added: “Hungary has a strategic geographical advantage in eastern Europe. Cainiao’s parcel volume to the region in April rocketed 53.7% compared with the same period last year.

“We are committed to improving the efficiency of international transport between China, and central and eastern Europe, as well as building digitalised logistics infrastructure and services with our local partners.”

Mr Xiong said Cainiao’s low-cost logistics service, which costs $5 for 10-day delivery and is already available in most of western Europe, would also be operating in the central and eastern region soon.

The news comes as Amazon too announced a new route: flying once a day into Pittsburgh with a 737-800F operated by Sun Country Airlines. The airport has been trying to position itself as an international logistics centre, a move underlined by Amazon’s new flight.

Amazon Air will use 50,000 sq ft of space at Pittsburgh’s airport, which includes an on-site area to sort packages bound for their next destination, managed by Amazon logistics partner Trego-Duncan Aviation. The site is expected to support more than 50 jobs.

Amazon Air now flies to more than 40 airports in the US. Chris Preston, director of Amazon Gateway Operations, said: “Growing the network of sites where Amazon Air flies is essential to supporting fast, free shipping for our customers.”