Cainiao CTO talks about digitizing China’s logistics sector

Three models of unmanned logistics cars developed by Cainiao’s ET Logistics LabCHINA has an interesting logistics market.

As a result of the booming e-commerce in the country and larger-than-life online events like the Single’s Day (11.11) Sale pioneered by Alibaba’s Jack Ma, there’s a strong demand for more players and more technology in this space.

Companies such as Cainiao Network — one of China’s unicorn companies launched by the Alibaba Group and eight other companies — are working quickly to meet the demand and delight customers at the same time.

In an exclusive interview with Tech Wire Asia, Cainiao Network CTO Xuemei Gu talked about the state of the country’s logistics sector and its plan for the company and industry over the next three years.

“In our view, the major challenge for the logistics industry in China is not a lack of resources. It is the vast area that the logistics network needs to cover.”

Gu highlighted that outside the main hubs in China, the logistics network is quite constrained and in many cases, stretched too thin. And while technology does seem to provide an exciting solution, it’s not something everyone can afford instantly — as costs of entry and maintenance are high.

Alibaba-owned Cainiao has a finger on the pulse of the industry and aims to create solutions to solve the problem quickly.

“We expect to build a smart logistics network in China which will help reduce the cost of logistics as a percentage of China’s GDP to below 5 percent. We’ve also already launched an IoT open platform for partners and peers in the industry to help reduce hardware costs to one-tenth of the original,” claimed Gu.

China’s Cainiao Network is ambitious and has the resources to charge towards big goals that it believes will help the country as well as the business and its stakeholders equally.

The company recently announced a three-year plan with its Chinese express courier partners to accelerate digitization and improve efficiency in the local logistics industry.

Cainiao expects the introduction of its state-of-the-art digital technologies and the close partnership with express courier companies will lead to higher business volume and lower costs in the sector.

Overall, the plan is estimated to create CNY50 billion (US$7.25 billion) in value for China’s logistics industry over the next three years.

Cutting-edge technology will transform logistics

Cainiao Network worked behind the scenes to help Alibaba deliver the billion-plus packages that were ordered on Alibaba on Single’s Day this year.

Given how smoothly the job was completed, the company seems to have won the trust of players in the industry who now believe that technology can really provide them with intelligent solutions that help them leapfrog into the future.

Cainiao’s own three-year plan is centered around three key technology solutions:

# 1 | Cainiao Guoguo App

The Cainiao Guoguo app is expected to be a one-stop digital platform that allows consumers to place and track orders and get a courier to collect the parcels within one hour, on average, creating a premium user experience and bringing in more business and revenue streams for delivery companies.

In three years, Cainiao Guoguo is expected to serve Chinese consumers over one billion times every year.

# 2 | Cainiao Post Stations

Cainiao and its courier partners have developed neighborhood delivery solutions with a combination of community and campus stations – Cainiao Post Stations – which handle over 10 percent of the total packages generated in Alibaba’s China retail marketplaces.

These have become an important complement to the last-mile delivery network of Cainiao’s express delivery partners, helping them significantly reduce service operation costs.

In three years, the number of Cainiao Post stations is set to reach 100,000 nationwide.

# 3 | IoT Platforms

Cainiao has announced an inclusive IoT solution for warehouses and post stations.

The technology is expected to be open to industry partners and developers, with an algorithm-backed management system and the latest IoT technology matrix.

The platform will power robots in different scenarios, smart equipment with an image-recognition function, near-field sensing systems, and acoustic-photoelectric systems, all of which will help efficiently connect orders, equipment, and workers.

Cainiao expects its IoT technologies to be connected to 100 million smart devices over the next three years.

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