New Silk Road Network’s member Airmax Cargo Budapest Zrt. has been providing tailor-made solutions in air, sea and road forwarding of products requiring special care and precision since 1996. As one of the top privately owned Hungarian freight forwarders, their flexible solutions, international network and a wide variety of different industry experiences are just a few of their many secrets to success. Our team had the pleasure of talking with both Attila Nagy, Head of Business Development and Diána Merczel, Head of Sea and Rail Freight about the philosophy behind Airmax’s success, the services they provide, how they are navigating the challenges in the automotive sector, and of course the effects of Covid-19 and the Russia-Ukraine conflict. Ultimately, we learn about the story of Airmax, a place where the happiness and wellbeing of their people are seen as the key centerpiece towards everything...
In conversation with Attila and Diána…
NSRN: AIRMAX Cargo Budapest provides services in a wide range of sectors and there seems to be a particular appetite for sectors that require special knowledge and handling, from biotechnology to perishables, livestock and even aerospace and aviation. As a company with over two decades of experience, this expansion into different verticals is quite remarkable. Can you give us an overview of how you built up this service portfolio? What would you say is your philosophy towards growth?
Diána: Airmax Cargo Budapest started off back then with a strong focus on airfreight and today this is still one of our core strengths. In 2022, we were No. 1 amongst all IATA certified agents in Hungary based on shipment numbers, and the only independent Hungarian logistics service provider amongst the top 10. We have been operating for 26 years and the growth continues with the backing of impeccable financial stability and a full plethora of freight forwarding and logistics competence.
Of course, it was not always this way. As mentioned, we started of basically with air freight, but then we gradually expanded our services. We also had a unique advantage of having one of the first pharma-suitable warehouses in Hungary. The philosophy remains the same from the very beginning: serving our customers and the customers of our customers by understanding and learning their business, and then coming up with tailor-made solutions. As many would know, quite often it is not enough to just follow the customers’ requirements. You need to keep ahead in the game by foreseeing possible trends and being prepared before the actual enquiry comes. We initiated the launch of live animal air transportation as a product, and we have been serving Hungarian low-cost air carriers with spare parts logistics and AOG services for more than 12 years. On top of this, we can offer second to none 24/7 time-critical delivery for partners in the automotive and electronics industry.
In short, we believe the more services you provide, the more stable your business is. If you provide a diversified portfolio with a wide range of services, you can gain your client’s trust and appreciation, and most importantly, you have a huge range of tools to solve individual problems and provide multi-faceted solutions. If you think with an “Airmax mind”, growth is not a goal of ours but more likely a natural consequence of our company’s philosophy. We want to create value, we want to be one of the best in logistics and freight forwarding. Professionalism is our target. Growth and profit are just natural by-products of the fact that we are doing well.
Attila: Just to add to Diána’s comment, Airmax is actually the only Hungarian-owned company in the IATA top 10 carrier list, all others are multinationals. We have always considered our colleagues as our main asset. We continue to believe in the personal touch, which is not necessarily the trend nowadays. We don’t do something just to feed our portfolio, but what we do, we do on the highest possible level. There is no compromise on quality.
Our customer base consists of small, medium and large Hungarian companies as well as multinational clients. While competing in the automotive, healthcare, chemical, high-tech, perishables and aerospace industry segments, these loyal customers prefer our reliable, flexible, effective, honest, sometimes uncomplicated solutions over the overpriced and underperforming services of the standardized multinational competitors.
NSRN: We recall, when you first joined the network, one of the first news we reported on Airmax was a transportation of vaccines. Was this a successful prediction in terms of the pharmaceuticals trend? Did you say “we are going to launch a new service in vaccine transportation and be prepared” or was the expertise already there?
Attila: Once Covid-19 became a recognized global pandemic, many people saw a business opportunity. It was not different in Hungary. There were people who thought the transportation of vaccines would be an easy operation, however they tried and failed. Once they realized any mistakes could cost a fortune and it wasn’t just about chartering flights, they finally turned to professional support, which is how Airmax stepped into the picture. We performed the job properly, obtaining all permits, taking care of documentation, customs clearance and other nuances. Of course, we had to learn new things on the job, but we did it successfully, thanks to our colleagues. We cannot underline enough that good quality work can only be done by motivated, dedicated and professional colleagues.
NSRN: We recently saw that you received a great review from Mitsuba as a logistical service provider for their auto parts. First of all, congratulations! Could you tell us about the details of this collaboration? What are the key aspects when it comes to serving the automotive industry?
Attila: Airmax is in a delicate position. We are a local hero, but it is very difficult to gain multinational clients because most of the time the decision is made outside of Hungary. Large corporates tend to look for service providers that also have offices in all the locations they operate in. Therefore, even though Airmax has partners all over the world and can provide greater flexibility, the service portfolio does not fit. It is very difficult to get into the picture, however we are trying.
We approached Mitsuba quite some time ago, however we only managed to get a foot in the door during the pandemic, which heavily impacted their supply chain. On one side, their existing vendors could not meet the desired deadlines, thus delaying the supplies. On the other side, their centrally contracted logistics service providers could not entirely cope with the changing circumstances and delays. Here came the opportunity for Airmax. Through our committed team, we could provide flexibility, efficiency, proactivity, and a can-do attitude with personal style, easing the daily burdens of the overloaded procurement team. I would also like to underline another important component, namely our independence. While our multinational competitors must use their own branch or office in each country, even if it is underperforming in terms of cost, service quality, or reliability, Airmax is free to select global partners without constraints, the only criteria being performance. This liberty also means better backup options in case of business continuity. A flexible network, where our chosen partners embody the same philosophy of providing the best customer service, helped us to provide Mitsuba with timely and proactive information. This allowed them to plan ahead as best as possible, which for the automotive industry is crucial, as delays can cost a fortune.
NSRN: As we all know, the automotive industry was also one that was heavily impacted by the Covid-19 pandemic, from factory lockdowns to delays in parts delivery. Being at the very front of action, can you give us some insight on how the supply chain is right now? How is AIRMAX maintaining its service quality in such trying times?
Attila: I suppose that the world will never be the same as 2 years ago. The Covid-19 pandemic re-wrote the basics of logistics as we know. Standardized, KPI-driven processes do not work anymore, exceptions became rules. The whole industrial segment tried to reshape their sourcing policy, they revisited the critical questions of inventory management and started to build up stock, but more importantly, the logistics managers started to receive invitations to the management meetings. In other words, it became obvious that logistics is not only a necessary bad cost component, but an opportunity to save a considerable amount of money and avoid standing production lines, not to mention the unpredictable “cost” of customer dissatisfaction. Unfortunately, Airmax is still not driving either the shipping or the aviation world, we have to cope with the available carrier services. However, what we try to concentrate on is proper classification and selection of carriers and subcontractors, this, combined with clever route selection, can help a lot. Our experienced team can also act as a consultant identifying eventual bottlenecks and possible measures, as well as backup plans for critical operations.
Another key point is that bad news is also information. After the second wave of Covid-19, we set up a customer survey. The results suggested that the most important component for our customers is a proactive information flow. There will always be problems that neither Airmax, nor anyone else for that matter can mitigate completely, from deteriorating service levels to the lack of space, non-accountable transit times, hiked rates etc. However, all stakeholders within Airmax understand the necessity of managing and adapting to specific and nowadays drastic changes, and our internal processes must be flexible enough to comply with our customers’ objectives.
If we talk about the concept of the New Silk Road Network, it’s about a combination of all kinds of transport modes that are available. This could mean switching from sea to rail, from rail to air or back from air to rail. Sometimes the customer doesn’t know what is better for them and that’s why logistics is a profession. Sometimes we can show alternatives and the alternatives do not necessarily cost more than the more commonly adopted idea.
Diána: Exactly. On the other hand, the ideas and information must also reach customers with open ears. They need to believe that we are trying to solve the problem and ultimately save costs for them. This is not always easy, especially when introducing something new. They have gotten used to specific routes and transit times in the past, and it can be hard to change to different modalities. But I think we are getting there, and customers are more understanding now.
The hardest thing in logistics is always to handle uncertainty, especially due to a lack of reliable information. For example, when the pandemic first started, many of our clients heard about the New Silk Road Express rail services for the first time and requested this service. Back then sailing schedules broke down and information about departures and even arrivals was not accurate. Transit times also doubled. We therefore started working with the China-EU Rail, however, later that also became congested. In addition, tracking is also not up to standards. You cannot really access real-time data on the shipment. This was a problem for automotive customers, who expect daily tracking information. You can imagine this can be difficult when we have lockdowns in China. You cannot really find the correct person in charge to inform you about the trains position. Another issue that customers had trouble understanding was the constant delays at the Kazakh border. Sometimes we had to contact people from the embassy to get information. We really pushed to turn every stone and used every source of information we could find.
NSRN: Bringing it back to people, we have heard that the average tenure at Airmax is quite long compared to industry norm. What do you think is the secret to this?
Attila: Well, I am relatively new because I joined 5 years ago. Time really flies! Airmax was established 26 years ago by our two founders, both are still very much active in the office, so I guess they also set an example.
Diána: I have been working at Airmax for 12 years. Of course, we are expanding and new people are always joining. We have 120 colleagues right now, back when I joined, we were only 18. We also upgraded from a small office to 3 full levels in an office building next to our warehouse. We have a lot of new business, and we need people to keep up the pace. As Attila mentioned, our colleagues make everything work. Our success is based on our colleagues, after that we have systems and the relationships, but ultimately, we have to keep the good people and maintain a good atmosphere.
NSRN: The recent conflict between Ukraine and Russia as well as China's continuous zero-Covid policy has led to many operational processes being disrupted and delayed. Being based in Hungary, a neighbouring country to Ukraine, how are these external forces impacting your current operations? How is AIRMAX positioning itself to face the uncertainty coming?
Diána: First of all, with the Russia-Ukraine conflict, sadly there is a bad impact, not just in operations, but also morally. You must decide if you will still use certain routings through Russia. This is also something quite complicated, and has not always something purely to do with legislation. With the current sanctions, you really need to know each and every person involved in a given business to be 100% sure that your processes do not violate any sanctions imposed by the EU and other nations or international bodies. You even have to know the owners of each and every company, which can be difficult. So, most companies decide not to transit via Russia at all, even if the transit times have recovered, with less traffic and waiting times. Finally, your cargo can arrive on time, but it then comes back to the question of morality and information. Am I allowed to transit via Russia? Who is responsible for conducting due diligence on the participants? How do I know if my information is correct? Many don’t want to deal with these questions or bear the risks in case of bad decisions. Clients are now searching for alternate solutions. So far, we have learnt that the middle corridor routing is another way to get from China to EU, but the complications make it not really a fully capable alternative. The New Silk Road should continue to exist, and China is also trying to push it. Unfortunately, information about insurance cover is still unclear. I recently heard at the Rail Freight Summit that the Chinese Government has an insurance paper regarding the terms of liability and costs when cargo from China cannot pass through Russia. However, such documents are in Chinese only and need to be translated. Another thing is that war damages are currently not covered with insurances. We still have a few shipments by rail, but it decreased a lot, now our focus is more on air and sea freight. After the war, I’m sure we will come out stronger. As you know, rail tracks are severely damaged in Ukraine, but after the war, this could also be a chance to rebuild better and have superior railway connections. I’m afraid this is not something that will happen within just a few years’ time.
Attila: While talking about the situation in Ukraine, almost all of us have our private stories through relatives, friends over the border or refugees who were compelled to leave their beloved ones and belongings behind. One of the first actions we did was to set up an internal policy for storing and handling humanitarian shipments, which allows us to react to the unfolding crisis and help our neighbour with great agility in the most humane way possible. We are also continuously checking new developments and preparing ourselves for the desired reopening.
As for Covid-19, it has already surprised us several times, and from the looks of it, it is far from over, as much as we would like to return to a predictable and boring life. We are constantly monitoring the news, utilizing our wide scale of the network presence, grabbing each and every piece of valuable information, while sharing the same with our customers on a regular basis. We concentrate on keeping our flexibility on a high level, be it adapting our processes to the changed circumstances, or having an agile decision-making process not encumbered by unnecessary bureaucracy. Our colleagues will go the extra mile to make sure that supply chains still perform as excellently as possible, especially in the case of unforeseen events and difficult situations, like the unexpected lockdowns in China, which I must admit are sometimes hard to follow and understand.
NSRN: The success of these projects of course cannot happen without the contribution of its people. This has been a constant theme in our interview today and it seems only fitting to end with this. If you can use one sentence to describe the company culture and its people, what would it be?
Diána: My sentence is very simple. Maybe you have heard this before: “We are more together”, which is also our motto. This really means a lot to us. This is what we teach newcomers, that everything can be solved by cooperation.
Attila: I stole my sentence from our owner (laughs): “Serve your customers in a professional and proactive manner, have fun, the profit and growth will come automatically.”
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