Cainiao, the logistics arm of Chinese e-commerce giant Alibaba Group (NYSE: BABA), says it won’t slow down operations during the Chinese New Year for shipments destined to Hong Kong.
Cainiao said Tuesday it will spend $645,000 to keep logistics facilities open during the Feb. 12-26 holiday to help businesses in mainland China and Hong Kong to continue sales and deliveries during the traditional Lunar New Year shutdown and prevent shipping delays for consumers in Hong Kong.
Hong Kong is the first place outside Mainland China where the company is testing the service. The Alibaba subsidiary said it plans to expand to other regions in the near future. The extended operation involves 1,500 workers, 170 collection points in the city, warehouses, courier partners and customer service. Customers will be compensated for deliveries that take longer than three days.
“With the pandemic, logistics has increasingly served as an essential service that connects people to goods, services and, most importantly, their loved ones. During festivities such as this Lunar New Year, we hope that by keeping the logistics service running, we are creating opportunities for businesses to increase sales revenue and for consumers to connect with their loved ones by sending gifts across the border or to enjoy local produce without having to commute home,” said Ray Cheuk, who heads Cainiao’s Hong Kong supply chain operations, in a statement.
The holiday period usually spans two weeks, with factories closing so workers can travel to visit their families.
Alibaba, which is building a logistics network that rivals that of Amazon (NASDQ: AMZN), last month launched an online booking service for ocean and air containers covering 200 ports in 50 countries, along with managing door-to-door moves. Cainiao said it can offer port-to-port shipping at rates 30% to 40% lower than the market average and provide containers during worldwide shortage, although how it would do so remains unclear.
Bookings are confirmed in as fast as two business days with a discount of $15 per order if the confirmation is delayed. If a merchant’s cargo misses the departure time after booking due to Cainiao or its partners, the merchant gets back $155 per container for ocean freight or 20% of the shipping fee, whichever is higher, and 10% of the airfreight shipping fee.
The global surge in demand for shipping containers and delays getting empty containers returned from overseas locations has led to a severe container shortage and record-high freight rates for international trade. Container lines are sending back empties without waiting for exporters in the U.S. and Europe to utilize them because they can make more money on outbound service from China.
COVID outbreaks have reduced the level of available longshoremen at U.S. ports, contributing to slow servicing of vessels and container yards. Average container turnaround times have increased to 100 days from 60 days previously because of port capacity issues in the U.S. and Europe, according to the China Container Industry Association.
Cainiao also recently launched a reverse logistics channel between Hong Kong and mainland China as well as a delivery guarantee to protect against late deliveries, damaged and lost goods.