The digital economy today is no longer merely a trending topic, but a consequential part of the landscape that is shaping how businesses navigate and scale the global economy.

Crowned as Asia’s premier logistics, aviation, and maritime hub, Hong Kong is at the heart of the global logistics network—offering direct connections to Europe, Asia, Africa, Australasia, The Pacific Islands, and The Americas. From where I am seated and as I pen this, I am witnessing vast opportunities unfold.

Strategically located and with flights just hours from half the world’s population, Hong Kong is an ideal bridge connecting the East and West. In addition to its advantageous location which primes the city for a booming e-commerce and logistics ecosystem, Hong Kong’s robust economic growth is further bolstered by the strength of its trading and logistics sector, which accounts for 23.7 percent of the city’s Gross Domestic Product (GDP) and the creation of 608,200 jobs in 2021.

The above-mentioned compelling factors contributed to our strategic decision to establish a regional smart hub in Hong Kong – Cainiao Smart Gateway. Located next to the Hong Kong International Airport (HKIA), SkyCity, and the new Third Runway, Cainiao Smart Gateway is well poised to play an instrumental role in reshaping Hong Kong’s logistics and supply chain ecosystem. As the city continues to take proactive steps to incorporate cutting-edge technologies into the sector, we are confident in contributing to the city’s competitiveness as an international trading hub.

The evolution of cross-border e-commerce logistics

Alongside the surging demand for cross-border e-commerce logistics, the market is grappling with navigating evolving cross-border parcel flow patterns, largely characterized by small parcel sizes at high frequency and volume. Adding to the complexity is the amplified demand for return logistics, which is increasingly being regarded as a key component of customer experience enhancement.

As such, it has become pertinent for logistics service providers to transform their operations in order to stay future-ready. This involves catering to a diverse range of logistics scenarios such as handling large volumes of small parcels, customizing operations for special categories such as luxury goods and sensitive items, and more.

Warehouses, on the other hand, now demand that logistics service providers also tap into innovative technologies and equipment to make inventory management more transparent and seamless—facilitating full-chain visibility and driving greater optimization across the entire chain.

This includes leveraging data analysis technologies which play a crucial role in offering tenants insights into customers’ purchasing habits and category preferences, aiding in better judgment of stock levels required. Ultimately, this results in a better understanding and control of various items or SKUs in the warehouse, which will be critical in upholding service quality standards during peak seasons such as the year-end shopping festivals.

The unique value proposition of regional smart hubs

From the perspective of cross-border logistics, the unique value proposition of regional hubs lies in their role as bridges between regions and countries, fostering greater air shipping stability.

When connected to other regional smart hubs, they form a hub-and-spoke model, which safeguards shipping timeliness and efficiency through regular charter flights. This logistics model allows businesses to benefit from consolidated shipping between regions, which is then further stimulated by the digitalization of customs clearance facilities and parcels.

Leveraging Cainiao’s experience in cross-border logistics operations, logistics technology, and infrastructure such as air cargo centers and distribution centers, we have been able to integrate automated warehousing solutions. Alongside our capabilities that extend across the value chain, Cainiao Smart Gateway will help achieve our aim of driving optimal operational efficiencies and facilitating smooth bilateral trade for import and export businesses.

Yin Daxue is the Chief Executive Officer of Cainiao Smart Gateway. Cainiao was a winner of the Enterprise Award: Corporate Sustainability Champions, ORIGIN Innovation Awards 2022.

ORIGIN Innovation Awards 2022 winners: Startup Leaders of the Year and Corporate Sustainability Champions