Dive Brief:

• Lufthansa Cargo announced the launch of a new wholly-owned subsidiary called "heyworld" last week that will be solely dedicated to serving the cross-border, e-commerce market.
• "Our shipping solutions cross borders and combine airfreight with last mile delivery," heyworld's website states. "Our services range from moving stock to warehouses abroad to direct shipping to your customers around the globe."
• Heyworld will integrate into Lufthansa's existing cargo services and also include offerings such as a heyworld API that will integrate with customers' existing ERP systems, tailored pricing options and customized shipment tracking "at the package level" in addition to "simple customs clearance."

Dive Insight:

Heyworld's launch is the latest sign that rapidly increasing cross-border e-commerce parcel volumes are shaking up the air freight industry. "Ongoing digitization has resulted in new standards with multiple layers, especially in the e-commerce segment, that go beyond the conventional core business of a cargo airline," Lufthansa's press release states, and as a result, the company is banking on creating more value for the growing e-tailer and direct to consumer brands that want to expand to international markets by reducing some of these barriers.

Cross-border e-commerce shipments require additional customs duties, tracking and processing protocols and other supply chain complications that are amplified by a highly diverse market of individual online retailers and customers (as opposed to a more consolidated customer base of traditional brick-and-mortar companies).

The double-edged sword of the e-commerce market is that your customer can be anyone, anywhere, with an internet connection. As a result, the e-commerce market continues to boom, but as more consumers come online in Africa and Southeast Asia, establishing reliable delivery networks to those locations can be a challenge. The brands that figure out how to deliver the fastest and most reliably will have a distinct competitive advantage. 

E-commerce is expected to be a growth driver for the air freight industry going forward. Amazon has entered this space with Prime Air, and FedEx Express' recent split from the giant e-tailer has some wondering if the race for air cargo dominance is beginning anew.

Lufthansa's offering of services beyond airport-to-airport transfer demonstrates a focus on customer service and a desire to cater to the needs of a growing market.