Cainiao designates Budapest Airport its ‘East-Central European hub’

Cainiao Smart Logistics Network, the logistics arm of Alibaba Group, has designated Budapest Airport as its ‘East-Central European hub’ and launched a five-times weekly air cargo service connecting Zhengzhou in China with Hungary’s capital in response to growing e-commerce demand in eastern Europe.

It follows the signature of a cooperation agreement at the end of last month between Budapest Airport, the Chinese Henan Airport Group (the operator of Zhengzhou International Airport) and the Chinese-Hungarian business and logistics development company CECZ/Utlink.

This focuses on “establishing the aerial Silk Road between Hungary and China” and creating dedicated logistics centres at the two airports, to handle freight traffic. Cainiao said the project “elevates cooperation between the two countries, further developing exports and imports and enabling the two airports to become key cargo gateways in China and in the East-Central European region, offering opportunities to market players like the Alibaba group”.

Dedicated cargo handling warehouses have already been established at Budapest and Zhengzhou airports to handle traffic.

The agreement also makes provision for the designation of Budapest Airport as Cainiao’s ‘East-Central European hub’, and “as a result of successful implementation, tens of tonnes of freight – tens of thousands of packages – have already appeared at Budapest Airport per day, and much greater volumes are expected going forward, primarily thanks to the regional hub role of the project.”

Of the five-times weekly round-trips on the Zhengzhou-Budapest, three are operated by Hainan Airlines and two by Aerotrans Cargo on behalf of CECZ/Utlink, carrying up to 17 tonnes each flight.

According to a report posted on Cainiao's twitter feed, Eastern Europe is one of the company’s fastest-growing regions and which has “witnessed a booming demand” from local consumers purchasing items in the fashion industry from China. Items also include electronic accessories and home appliances.

Cainiao’s trucking network has been expanded to cover 10 countries in Eastern Europe “as it directly transports Chinese goods from Budapest Airport”. Co-operation with postal utilities in Hungary and Poland allows overall delivery times to be reduced by 20% – to 10 days ex-China – with costs decreasing by 5%.

William Xiong, Cainiao’s chief strategist and general manager of Export Logistics, commented: “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 digitalised logistics infrastructure and services with our local partners.”

Meanwhile, in a separate development, Cainiao has launched dedicated cargo charter flights from Singapore to China’s offshore duty-free island of Hainan in response to buoyant demand for imported luxury brands.

It plans to make Hainan one of its key hubs by implementing technologies and digitalised services, as well as expanding its air network with new cargo routes to key countries for e-commerce like Japan, South Korea, Australia, New Zealand and Europe. Cainiao aims to fly over 800 international cargo flights in Hainan by the end of 2021.

In a trading statement on its full fiscal year ended March 31, 2021, issued last week, Alibaba said that after elimination of inter-company transactions, “Cainiao Network achieved solid revenue growth of 68%, year over year, to RMB 37.25 billion (US$5.68 billion), representing 5% of our total revenue. Cainiao Network also reached an important milestone of generating positive operating cash flow during fiscal year 2021.”