Cainiao Smart Logistics, the logistics arm of Alibaba Group, has announced the launch of its first direct cargo flight between Zhengzhou, China, and Budapest, Hungary.

In a statement, it noted its expectations of a 30% growth in its cross-border e-commerce volume between China and Eastern Europe by the end of 2021.

"The five-weekly flight is able to transport up to 17 tons of goods per day, and customers in Eastern Europe will be able to receive their parcels from China as soon as 10 days," Cainiao said in a statement.

Booming demand from Eastern Europe

As one of Cainiao’s fastest-growing regions, Eastern Europe, especially key markets such as Hungary and Poland, has witnessed a booming demand from local consumers purchasing items such as fashion, home appliances, and electronic accessories from China.

In the first quarter of this year, the trade volume between China and 17 Central and Eastern European countries reached US$30.13 billion, a year-on-year increase of 50.2%, which was 11 percentage points higher than the growth rate of China's foreign trade in the same period.

An extension of its logistics network in key markets of Western Europe, Cainiao’s trucking network has now expanded to cover 10 countries in Eastern Europe, directly transporting Chinese goods after they arrive at the Budapest Airport.

This is achieved with local partners such as Hungarian Post and Polish Post. The overall delivery time and expenses are reduced by 20% and 5% respectively.

Digitalized custom clearance

"In collaboration with local customs bureau and logistics partners, Cainiao has developed a digitalized customs clearance system which processes a massive amount of information such as orders and payments to digitalized data," it said. "This meant the clearance process can be completed even before the flight lands."

Cainiao said the current system has shortened the average offline clearance time of 1-2 days to an average of 6 hours, making Hungary the first country in Eastern Europe to be equipped with a digitalized customs clearance system.

"The cooperation with Cainiao is a significant milestone for the Budapest Airport. We are committed to elevating the bi-literal trade between the two countries, making Budapest an important cargo hub gateway for Central and Eastern Europe by leveraging the country’s unique strategic location and Cainiao’s global parcel network," said Chris Dinsdale, CEO of Budapest Airport.

William Xiong, Cainiao's chief strategist, and general manager of Export Logistics noted the "strategic geographical location" of Hungary for the service launch.

"Hungary has a strategic geographical advantage in Eastern Europe. Cainiao’s parcel volume to the region in April rocketed 53.7% compared to the same period last year. We are committed to improving the efficiency of international transportation between China, and Central and Eastern Europe, as well as building digitalized logistics infrastructure and services with our local partners," Xiong added.

Cost savings cited 

"It is expected that Cainiao's cost-effective logistics offerings such as US$5 for 10-day delivery service will be available in Central and Eastern European countries soon," the Cainiao executive added.

At present, Cainiao’s US$5 for 10-day delivery service covers Spain, France, the Netherlands, Belgium, the United Kingdom, Germany, Portugal, and other European countries, with expectations to cover over 10 more countries globally this year.

As of March 2021, Cainiao processes more than 5 million cross-border parcels per day.