New Paradigm of

Regional E-commerce Order Fulfilment Centre –

Where and How?

Alaina Shum General Manager, Aviation Logistics

Airport Authority Hong Kong

Cross-border E-commerce is continuing to Grow, particularly in Asia-Pacific

502

918

67176

2014 2020

51

1345

2014 2020

15 526

2014 2020

558

1,525

71

476

2014 2020

93

43

13% 19%

25%48%

33%60% 12%

31%

2014 2014

2014 2014

2020 2020

61

6

53

2014 2020

140

10%

37%

2014 2020 2020 2020

North America Western Europe Mid-Eastern Europe

Latin America Middle East & Africa Asia-Pacific

Global Cross-border B2C E-commerce transaction value (US$ billion)B2C E-commerce B2C Cross-border E-commerce

Source: “Cross-border E-commerce B2C Growth and Its Impact”, Accenture Analysis, 2018 1

402

674

73216

2014 2020

18%32%

2014 2020

Cross-border E-commerce has boosted volume of parcels in the past decade but the Recent Trend …

2

40

60

80

100

120

140

160

180

200

220

240

260

280

300

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Index (year 2006=100)

HKIA general cargo, express cargo and airmail growth (2006-2017)

Source: Airport Authority HK (Jul-Sep 2018 are provisional statistics)

Airmail

Express Cargo

General Cargo

CAGR 2006-2017

2018 (Jan – Sep)

YOY%

+2%

+6%

+10%

-3%

-6%

+4%

Sino-US trade war

Increase in UPU terminal dues for

China outbound mail

E-tailers tapping into logistics

market

Complicated consumer needs

Market Dynamics affecting Cross-border E-commerce Delivery

Efficiency Competition

and More

CostShipment Flow

3

Integrators’ partnership

Photo source: Clarabridge; Nigeria Political Economist; UPU; Recode; The STAT Trade Times

Cross-border E-commerce Delivery Model

HK Regional Order Fulfilment Centre

4

Hong KongCustomer

Small Parcel

Air Freight

Direct Ship by Express Delivery

Hub Ship by Air Freight-and-Express Delivery

TaiwanCustomer

Hong KongCustomer

Small Parcel

Small Parcel

Icon source: Freepik; Vignesh Oviyan from www.flaticon.com; shutterstock; Vectorstock; Freeimage;

Alibaba’s World-class Digital Logistics Center at HKIA

• Joint venture led by Cainiao Network, Alibaba’s logistics arm

Target Completion: Mid-2023

5Source: Airport Authority HK

• US$ 1.53 billion investment

• Supports SMEs in global cross-border e-commerce

• GFA of 380,000m², HK’s 3rd largest warehouse

• Adopts state-of-the-art technologies for sorting and order fulfillment centers, handling tens of millions of parcels every year

• An incremental cargo volume of 1.7 million tonnes per annum when in full capacity

Why HKIA?

Excellent Connectivity World’s Freest Economy Efficiency and High Standard

• 1,100+ Daily flights

• 120+ Airlines

• 220+ Destinations

• 5 hrs reaching half of world’s population

• Proximity to PRD via HZMB

• Free port• Well-established legal, financial,

banking and insurance system

• 24 hrs Customs clearance

• Accept cargo up to 3 hrs before departure

• IATA CEIV Pharma Partner Airport

• All 3 cargo terminals are

GDP and TAPA Class A certified

Alibaba’s Target Delivery time:

24 hrs within China

72 hrs around the World

6Source: Airport Authority HK

1 3 5

Expansion of Cargo and Mail Facilities at HKIA

DHL Central Asia Hub Expansion Redevelopment of Air Mail Center

Photo source: Meinhardt Group 7

Establishing E-commerce Regional Order Fulfillment Centre

WHERE?

HOW?

8Icon source: Freepik from www.flaticon.com

Thank You