April 6, 2021 – Cainiao Smart Logistics Network, (“Cainiao”), the logistics arm of Alibaba Group Holding Limited, today announced a Special Prorate Agreement (SPA) reached independently with Atlas Air, a subsidiary of Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW), and LATAM Airlines Group S.A. (“LATAM”) to launch a seamless flight operation program linking Hong Kong, China to Bogota, Colombia and Lima, Peru, with Santiago, Chile or Sao Paulo, Brazil as the connection point.
As Cainiao’s first SPA in support of transportation across Latin America, the agreement carries strategic significance of achieving economies of scale for win-win situation for the three parties involved.
This collaboration ensures that the time taken for customs clearance, repackaging, container change and temporary warehousing in Santiago or Sao Paulo can be reduced as parcels delivered by Atlas Air will be seamlessly transferred to LATAM flights heading to Bogota and Lima, packed in the same container. Merchants and customers can track the order with the same shipping label back from Hong Kong. The most popular products for Latin consumers from China are electronic devices, toys and beauty products. The overall shipping time to Colombia and Peru will be reduced by nearly 50%, and parcels can arrive in as fast as 10 days from China.
The daily parcel volume to South America transported via Cainiao in March grew 14% compared to that in February as global trade resumes, driving up the demand for air freight, which is almost returning to pre-pandemic levels. According to International Air Transport Association, demand in January rose 3% from December and was 1.1% higher than in January 2019. However, the cargo space is in short supply and the price remains elevated.
“The pandemic has resulted in a shortage of cargo flights from China to South America, and our collaboration with Atlas Air and LATAM can help meet the robust demand and raise logistics efficiency,” said William Xiong, Cainiao’s Chief Strategist and General Manager of Export Logistics. “This year, Cainiao plans to launch over 3,000 chartered flights to safeguard cross-border logistics and help Chinese merchants sell globally.”
“We are pleased to be the chosen partner for Cainiao’s intercontinental operations connecting China to North and South America,” said Michael Steen, Executive Vice President and Chief Commercial Officer for Atlas Air Worldwide. “Our scale and global footprint make us an ideal partner for Cainiao as they continue their efforts to reduce delivery times to their customers around the world.”
“LATAM’s participation is a recognition of the robust network, which has positioned LATAM Airlines Group and its Cargo carriers as the best alternative to, from, and between South America, and of the flexibility offered to adapt to the needs of our customers. The collaborative and efficient work between LATAM and Cainiao, in addition to the interline agreement reached with Atlas Air, will allow the implementation of a logistics chain that will satisfy the high demand of e-commerce and reduce delivery times from Hong Kong to Bogotá and Lima by 50%, a result that is of direct benefit to the end customer,” commented Jorge Galvez, Director of Marketing and Development of LATAM Cargo.
As previously announced by Cainiao, beginning last November, Atlas Air started operating three weekly charter flights dedicated to Cainiao, linking China with Brazil and Chile. In March 2021, Cainiao partnered with Saudia Cargo to operate five weekly flights from Hong Kong to Liege in Belgium, with Riyadh city as a connection point.