Cainiao Network has reached a special prorate agreement (SPA) with Atlas Air and LATAM Airlines as the company aims to address the limited cargo space between China and the Americas to deliver e-commerce parcels.

The agreement will allow connection flights linking Hong Kong to Bogota, Colombia and Lima, Peru via Santiago, Chile or Sao Paulo, Brazil, where Atlas Air currently operates charter flights for Cainiao.

The agreement is Cainiao’s first SPA on the Latin America route and carries ‘strategic significance of achieving economies of scale,’ providing a 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,” Alibaba’s logistics arm explained.

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Merchants and customers can track the order with the same shipping label back from Hong Kong, Cainiao noted, with parcels expect to arrive in as fast as 10 days from China. Popular products for Latin consumers include electronic devices, toys and beauty products.

Caniao said its daily parcel volume to South America in March grew 14 percent compared to that in February as the recovery in global trade drove up the demand for air freight. But given the limited cargo space, air freight rates have remained elevated, it noted.

“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.

Jorge Galvez, director of marketing and development at LATAM Cargo, said the work between LATAM and Cainiao, plus the interline agreement 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 percent, a result that is of direct benefit to the end customer.

Since end of November last year, Atlas Air has been operating three weekly charter flights dedicated to Cainiao linking China with Brazil and Chile. This year, Cainiao plans to launch over 3,000 chartered flights to ‘safeguard’ cross-border logistics and help Chinese merchants reach global markets. The logistics company cited data from IATA reflecting a mild return in air freight demand to pre-pandemic levels, as demand in January inched up 3 percent from December, 1.1 percent higher than in January 2019.