Airport Authority Hong Kong has awarded the right to develop and manage a logistics centre at Hong Kong International Airport to a joint venture led by Cainiao Network, the logistics arm of Alibaba Group.

According to the airport authority, the site is located at Kwo Lo Wan in the South Cargo Precinct of the airport and occupies an area of approximately 5.3 hectares. The centre, expected to launch operations in 2023, will have an estimated gross floor area of 380,000 square metres and will be the third-largest warehouse in Hong Kong, handling 1.7 million tonnes of e-commerce parcels per year at full capacity.

The airport authority’s open tender exercise received bids from local and international players.

The joint venture consists of Cainiao, which holds a 51% stake, China National Aviation Corporation (Group) Limited, which holds 35%, and YTO Express, with a 14% share.

Cainiao said that the JV would invest approximately US$1.5 billion in the facility, which will include an air cargo processing centre, a sorting centre and an order fulfilment centre. It will also feature automated warehousing and temperature-control solutions.

“The Hong Kong hub will be yet another milestone on our way to achieving our goal of 72-hour global delivery, and will further empower SMEs locally and globally to more readily tap the benefits of more inclusive globalization through cross-border e-commerce,” said Wan Lin, president of Cainiao Network. “Hong Kong International Airport has been the world’s busiest cargo airport for many years. As an important gateway for global goods to enter the mainland China market and vice versa, Hong Kong is of strategic importance to Cainiao and we have a strong commitment to help the city address the surging needs of the future.”

The centre will also benefit from the opportunities brought by the opening of the Hong Kong-Zhuhai-Macao Bridge later this year and the commencement of the three-runway system in 2024.

Hong Kong International Airport has been the world’s busiest cargo airport for eight consecutive years and became the first airport to handle more than 5 million tonnes of cargo and mail in 2017.

Cainiao already has three Global Fulfillment Centers in Hong Kong that are operated by its partners. The company also launched an air freight route dedicated to e-commerce parcels between Hong Kong and Belgium last month, adding to a Hangzhou-Moscow route launched earlier this year.