JD Logistics Buys Airplanes Due To High Freight Demand

jd logistics buys airplanes air freight demand

JD Logistics, the logistics arm of China’s e-commerce giant JD.com Inc., plans to buy more planes and set up an air freight business to tap the growing demand for Chinese goods overseas. Richard Liu, the company’s billionaire founder said in a recent interview with Bloomberg TV.

“We are looking into purchasing some cargo jets that can fly directly from Shanghai or Beijing to Sydney or New York,” Richard Liu told Bloomberg in an interview last week. “There is still so much potential.” Richard Liu did not disclose how many planes he is looking to buy or his budget for the purchase, but he said it would take JD Logistics two years to get up and running. Richard Liu also said that he has been in talks with Boeing Co., Airbus SE, and other plane manufacturers about co-investing in cargo jets.

Liu’s plans come as China ramps up exports while trying to keep its economy on an even keel amid a trade war with the United States economic power that threatens global growth. The country was already struggling last year due to weaker foreign demand after President Donald Trump and Joe Biden slapped tariffs on hundreds of billions of dollars worth of Chinese products – part of his strategy aimed at leveling the playing field for US manufacturers.

Richard has been looking to capitalize on the country’s shifting trade flows since JD Logistics started building its own warehouses in places such as Russia and Brazil over the past few years. Liu said during an interview at a Beijing office last week. After initially focusing on China-to-Europe deliveries, Liu plans to add more destinations after adding four Boeing 747 freighters that can fly direct from Shanghai or Beijing to Europe and North America, Liu said. Richard has been looking for pilots and crew to fly the planes, but he didn’t say how many he is planning to add. Richard told Bloomberg TV that JD.com will focus on building up its own global footprint before buying stakes in third-party businesses abroad.

This shows a considerable shift from earlier this decade when JD focused mainly on e-commerce business domestically. The focus was after raising billions of dollars from investors including Tencent Holdings Ltd., Japan’s SoftBank Group Corp., Walmart Inc., and Alphabet Inc.’s Google, Liu said in an interview last week at his office overlooking Beijing National Stadium – also known as the Bird’s Nest. The company started with just three people now employs more than 400 million workers across China through recruitment and training programs. Richard said he is looking to expand its workforce further as a top Chinese business.

“We want our employees to grow with us,” Liu told Bloomberg TV in an interview at his office overlooking Beijing National Stadium – also known as the Bird’s Nest. “That way, they can keep challenging themselves.” JD plans for future growth depend on how well it manages working capital tied up in incoming orders and fulfilling them out of warehouses. The warehouses are increasingly becoming more automated with robotic cars shuttling around picking items off shelves, Liu said.

JD Logistics has recently been expanding beyond China by investing in businesses across Southeast Asia. One of the investments is a stake worth about $200 million in Singapore-based RedMart Ltd., which will help facilitate deliveries from Chinese suppliers into Indonesia.

Richard said JD.com has been in talks with Walmart Inc. to help it expand into Southeast Asia, but he declined to comment on the progress of those e-commerce business discussions. Richard also told Bloomberg that his company is looking for acquisitions and investments across Europe and Latin America as well as the United States – just not any “big” ones because they are too expensive at current market values due to liquidity issues facing private companies such as itself after a long stretch of fundraising from equity markets around the world.

Richard added that the company is more likely to buy out smaller Asian companies, grow organically or acquire stakes in other businesses instead of big deals this year unless there are “very good opportunities.”

“We will still be looking for new investments,” Richard told Bloomberg TV. Richard also warned about risks facing global growth due to rising interest rates and protectionism while saying he is not overly concerned because JD.com can adjust its business model according to changing macroeconomic conditions – although it could face some challenges during a downturn if fewer people shop online on ecommerce websites.