Alibaba’s International Airline in the Making

Are the likes of Amazon, FedEx and UPS getting uneasy about the plans and present developments of Chinese e-commerce giants? On the face of it, they claim not to be worried – but should
they be?

In the face of a changing market scenario
A Chinese e-commerce giant along with a well-established and successful Russian air cargo airline and what some might see as an ideal airport – will this end up with a Chinese dominance of the
e-commerce market in Europe?
It could well turn out that way if the recent MoU signed between the Cainiao Network and the Volga-Dnepr Group develops in such a way that Alibaba’s logistics arm, Cainiao gets a firm footing and
an own-controlled operation in Europe.
The formula is quite simple, but one which it seems that many carriers and airports have not yet fully woken to. There’s no stopping the e-commerce train and those who have not yet realised that
this market segment will dominate air cargo with the next decade, had better go back to the drawing board.
We’ve seen the e-commerce development in mainland China move with leaps and bounds during the past couple of years. Chinese express companies have rigidly set-up massive handling and sorting
centres in various Chinese locations, all of which are planned to cater for a ‘blanket coverage’ to optimise e-commerce demand.
This has been supplemented by using their own in-house airlines who fly exclusively for them. In the meantime, they have also branched out into other Asian regional markets with the same concept
and there is no doubt that they will be successful there as well.

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Russia’s Volga-Dnepr Group and Cainiao / Alibaba will closely cooperate  -  photo: RAI
Russia’s Volga-Dnepr Group and Cainiao / Alibaba will closely cooperate – photo: RAI

Now comes Europe
It was only a matter of time before Alibaba set its sights firmly on the European e-commerce market. Simply because so much traffic for this segment is generated in China and other Far Eastern
states as well as the fact that they want control of the traffic out of Europe.
As is the case in China, they need a workable location, a dedicated airline and facilities which can ensure a seamless door-to-door traffic flow. Not an easy task, but the first deciding step has
been to choose the carrier.
The Volga-Dnepr Group with its carriers AirBridgeCargo, CargoLogicAir and Atran, the future CargoLogicGermany – seem to be an ideal solution and a good catch. AirBridgeCargo made it known already
last year that they were seeking a location where they could build their own dedicated hub. The decision so far seems to circle around Belgium’s Liege Airport, which along with its large sister
Brussels Airport, has made a name for itself as a reliable air cargo transit point.
Cainiao also have opted to develop a cargo facility in Liege – so the tie-up between Alibaba, ABC and LGG would seem to be a done deal! But, is it?

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Can Liege handle this enormous task in the future?
Liege Airport have invested much in expanding the cargo facilities for the future, but originally these were intended to be there to satisfy present customers such as FedEx and Ethiopian Airlines
and to attract new carriers.
Do they then run the risk of creating a giant customer which will dominate the scene or even scare off other airlines who may well think that they will be playing ‘second fiddle’ in the
band?
There is always the possibility that AirBridgeCargo may well go for two hub locations in Europe in order to avoid putting their eggs in one basket. But, would Alibaba also see it that way?
Leipzig Airport could be seen as an alternative as CargoLogic Germany is planning to set-up there. However, DHL would want to have a say in anything being decided there.
The MoU between Cainiao and Volga-Dnepr stipulates that Volga-Dnepr gives Cainiao access to their total network and fleet of 41 aircraft – and in return Volga-Dnepr’s airline subsidiaries become
Alibaba’s preferred carriers. Cainiao has made it clear that they’ll set up six global hubs in order to dominate world e-commerce trade by offering the fastest delivery times of all.
A win-win situation – or the danger of a future monopoly?


John Mc Donagh

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Source: Cargoforwarder

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