JD Logistics Goes Plane Shopping to Tap Air Freight Demand

JD Logistics Goes Plane Shopping to Tap Air Freight Demand
·2 min read

(Bloomberg) -- JD Logistics Inc. is planning to set up its own fleet of planes as the Chinese firm eyes a greater slice of a cross-border cargo market engulfed by global supply chain snarls.

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The logistics arm of Chinese e-commerce giant JD.com Inc. aims to have “no fewer than 100 planes” by 2030, including leased and jointly purchased aircraft, said Chief Executive Officer Yui Yu. The company, which had previously chartered planes from airlines to transport goods, has already won approval from the Civil Aviation Administration of China to operate its own air freight business.

Businesses worldwide are scrambling for ways to move everything from masks to consumer electronics out of China as widespread lockdowns and delays in manufacturing led to jams at the country’s sea ports. Companies are increasingly turning to alternatives like air freight, but airlines are struggling to absorb the backlog and take in new orders, especially ahead of the Christmas shopping season.

Read more: How China’s shipping delays contributed to trade chaos

“Covid-19 has heavily impacted supply chain-related industries globally. We’ve seen the shortage of shipping resources and air freight resources,” the logistics firm’s CEO, who is often referred to as Yu Rui, said in an interview with Bloomberg TV. While the pandemic-induced disruptions may not last long, the Covid-19 crisis has accelerated a shift to online shopping globally, creating new business opportunities for companies like JD Logistics, he added.

JD Logistics, which raised $3.2 billion in a Hong Kong initial public offering in May, joins other internet giants in snapping up their own jets. Amazon.com Inc., for one, is considering purchasing used long-range cargo jets in a bid to directly fly imports from China, Bloomberg News reported last week.

To grow its international business, the Beijing-based firm plans to beef up its overseas warehouse network, and will prioritize building highly automated delivery facilities in North America and Europe over the next two years.

“We want to serve the cross-border logistics market through and through,” the CEO said.

The company also plans to reduce its environmental footprint, saying on Monday that it will invest 1 billion yuan ($155 million) in low-carbon supply chain technologies over the next five years.

(Updates with supply chain investment in eighth paragraph.)

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