Logo of Phnom Penh Post newspaper Phnom Penh Post - Alibaba eyeing bigger role in global logistics

Alibaba eyeing bigger role in global logistics

Content image - Phnom Penh Post
A Shanghai YTO Express (Logistics) Co Ltd aircraft gets ready to take off at Xiaoshan airport in Hangzhou, Zhejiang province. China Daily

Alibaba eyeing bigger role in global logistics

As competition intensifies in China’s logistics market, e-commerce giant Alibaba is deepening its collaboration with major domestic couriers to explore opportunities in international and digital businesses.

In a public filing to be dated on Wednesday, Shanghai-listed YTO Express said it will transfer 12 per cent of the stake in YTO Express valued at 6.6 billion yuan ($960 million), or 17.406 yuan per share, to Alibaba.

The deal will increase Alibaba’s shareholding in YTO Express to 22.5 per cent upon completion of the transaction.

Zheshang Securities Co Ltd industrial analyst Kuang Peiqin said: “For years, Alibaba has been consistently strengthening its collaboration between its logistics arm, Cainiao Smart Logistics Network, and major express delivery firms.”

To date, Alibaba has acquired a 33 per cent stake in Best Inc, 8.7 per cent of ZTO Express, 14.65 per cent in STO Express, and two per cent in Yunda, public information showed.

Huatai Securities Co Ltd industrial analyst Yuan Ding said: “The Chinese tech giant’s increased shareholding in these couriers is expected to raise the efficiency of the Chinese logistics sector, and intensify the competition among express firms as well.”

China’s express delivery business soared from 3.67 billion packages in 2011 to 63.52 billion units last year, a compound annual growth rate of 42.82 per cent. The figure stabilised to 22.05 per cent growth in the first half this year with 33.88 billion parcels delivered, data published by the State Post Bureau of China show.

More players joined the logistics sector in the second quarter, and a price war is looming among major delivery companies.

China Merchants Securities Co Ltd senior analyst Chen Zhuo said: “After announcing a 42 per cent rise in the half-year report thanks to its advantage in air cargo business, SF Express saw its share price soar recently.”

Likewise, operating a fleet of 12 cargo aircraft, YTO Express reported 52.49 per cent rise in business volume, and a 40.63 per cent year-on-year increase in its net profit in the second quarter of the year.

The share purchase deal is part of the strategic cooperation inked between Alibaba and YTO Express, as the two parties vowed to collaborate in promoting express logistics, air freight, international networks and supply chains, and information technologies, the Shanghai-based express delivery firm said.

“The keys of the strategic collaboration are globalisation and digitalisation,” said a separate filing of the listed company.

Since the outbreak of Covid-19, YTO’s cargo fleet has carried a number of flights for Cainiao to destinations which include Malaysia and Pakistan.

Currently, YTO Express is partnering with Cainiao and China National Aviation Corp (CNAC) in establishing a new HK$12 billion (US$1.5 billion) logistics hub at Hong Kong International Airport.

The 380,000sqm facility is expected to integrate the three parties’ strength in the fields of air cargo transport, e-commerce, and express delivery networks. It is scheduled to start operations in 2023.

YTO Express and Cainiao are co-developing logistics facilities and establishing smart logistics big data applications, Alibaba said.

The strengthened cooperation in capital, industrial and technology will further promote the high quality development of YTO Express, it said.

Industry experts said concrete details are needed to transform their collaboration from capital to business, and further strengthen their respective competitiveness.

Kuang said: “The deepening of collaboration between Alibaba and YTO Express, which started more than a decade ago, will leverage YTO Express’ expertise in air cargo and distribution.

“And it will also accelerate Alibaba’s establishment of a logistics system to match its scale of e-commerce business,” he said.

He added that the purchase of YTO Express’s stakes at a price that is more than four per cent higher than its closing price is proof of Alibaba’s confidence in the courier’s future development.

CHINA DAILY/ASIA NEWS NETWORK

MOST VIEWED

  • Phnom Penh unveils rules for post-lockdown transition

    The Phnom Penh Municipal Administration issued a set of detailed guidelines for the seven days to May 12 after the capital emerges from lockdown at the onset of May 6. In the 14-page document signed by municipal governor Khuong Sreng released on the evening of May 5, the

  • SBI LY HOUR Bank Launches Cross Border Money Transfer Service between Cambodia and Vietnam on RippleNet, utilizing DLT

    SBI LY HOUR Bank Plc and Hanoi-based Tien Phong Commercial Joint Stock Bank (TPBank) on Friday launched the first Cambodia-Vietnam money transfer service in real currency via RippleNet, provided by SBI Ripple Asia Co Ltd to provide safe, fast and convenient services. SBI LY HOUR

  • Gov’t issues guidelines as lockdown nears end

    The government has issued a five-page set of instructions to be enforced when the three-week lockdown of Phnom Penh and adjacent Takmao town in Kandal province ends on May 6. According to an announcement signed by Prime Minister Hun Sen on May 4, the instructions cover a

  • Cambodia ready to exit LDC status

    Cambodia is well-prepared to minimise economic risks when it graduates from its Least Developed Countries status, according to a senior official at the Ministry of Commerce on May 7. Four LDCs – Cambodia, Laos, Bangladesh and Nepal – met at a virtual workshop last week to explore potential

  • Nine US franchises eye Cambodia debut

    Nine famous US franchising companies are looking for business opportunities and expansion into Cambodia to build a footstep for a strong foundation in Southeast Asia. The US embassy in Phnom Penh, in partnership with the US Foreign Commercial Service and with support from the American

  • Jab drive announced for two more Phnom Penh districts

    The Phnom Penh Municipal Administration on May 15 announced a first-dose novel-coronavirus vaccination campaign for Boeung Keng Kang and Sen Sok districts from May 18-31, and a follow-up second-shot drive from June 1-15. Twenty vaccination sites have been set up in a combined 13 communes across both