A talk with René Droese, Chief Property and Cargo Officer at BUD

“BUD’s vision is to become the main cargo airport for the CEE region”

Budapest Ferenc Liszt International Airport is the international airport of the Hungarian capital and has been following an ambitious program to further increase its cargo business. We took the completion of BUD Cargo City as an occasion to invite René Droese to talk to us about the most recent developments in airfreight, the airport's further expansion plans as well as their expectations of the most recent additions – including a new cargo-partner warehouse and office in the airport's cargo area.

“We are certain that with our new air cargo facility, BUD Cargo City, and with our upgraded infrastructure, we will reach the 150 000-ton threshold very soon.”

The airport's ambitions are clearly geared toward growth.

 

Interviewer: 2018 was a very successful year for Budapest Airport with a new record in freight volumes and a plus of 14.9 %. How do the figures for 2019 look, can you give us already a first look on the trends and developments of last year's business?

René Droese: Indeed, 2018 was an excellent year for us. We handled 146,113 tons of cargo at BUD, an all-time record with a 14.9 % growth compared with the previous year. In line with the global situation – the USA/China trade conflict, downturn of the automotive industry, and other factors – 2019 meant less of a boom and a more stable year for us, we handled 135,521 tons of air freight, 7.2 % lower than 2018 but still 6.6% above 2017. Last year started slowly for us, but cargo traffic recovered well in the last quarter, our strongest month in 2019 was November, with 13,044 tons, which was also the third highest cargo handling volume month at BUD. We see several positive effects, and the good news is, we saw rapid stabilization in November-December 2019, and we expect to grow again in 2020. We are certain that with our new air cargo facility, BUD Cargo City, and with our upgraded infrastructure, we will reach the 150,000-ton threshold very soon, and this year, 2020, will be above 2018 in respect of cargo volumes.

Being an airport in the heart of Europe, what are BUD's goals and vision for upcoming years? How do you rate the airport’s ambitions in the field of air cargo after implementing the BUD 2020 development program, and what potential do you see for this particular business activity? Are there already any next steps planned after BUD 2020?

Talking about the air cargo business, BUD’s vision is to become the main cargo airport, an air cargo gateway for the Central Eastern European region, and a more important cargo bridge between East and West. With the recent developments, we believe we are on the right track. Within our catchment zone – 8-10-hour trucking time – you can find air cargo volume of 1.5 million tons per annum. We have had a 10% market share of this, and we would like to increase it. We are a really cargo-friendly airport, but certain conditions like the infrastructure had to be improved in the interest of cargo development. There are other improvement actions on our list that we plan to implement soon, and these will help us to create an ideal air cargo environment for freight forwarders, shippers, cargo airlines – for the whole industry.

With BUD Cargo City we have a great momentum to attract more volume from our catchment zone. We feel this can be a real game changer for BUD and our partners in the competition. The transport industry in our region is looking at BUD Cargo City, and when it begins to operate, it must work efficiently and in a service-oriented way, offering high-quality and fast service, so we will draw more volume to us. Everybody knows this, and it means that especially the handlers and we the airport must do our best right from the start.

Now we have a state-of-the-art facility with sufficient capacities that freight forwarders and airline partners can use in order to provide the highest quality service for their customers. Everybody will notice in a wider network that distributing and collecting cargo via BUD is working flawlessly, and more and more partners will use it instead of the well-known larger hubs in Western Europe. We are very glad and thankful that cargo-partner supported this vision, and the trust goes vice-versa.

cargo-partner views Hungary as one of the most important hubs for its business operations in the CEE region. Additionally, the company has recently expanded its capacities at Budapest Airport, further confirming the country’s importance for the company’s worldwide network. And cargo-partner is not the only company with this approach. How do you explain that your hub located in the heart of Europe plays such a vital role in transport and logistics?

It is very good to know this, as we consider cargo-partner as one of our most important air cargo forwarder partners. The local cargo community has been well aware of the potential of Hungary and Budapest Airport – to act as a hub for the CEE region. Hungary is doing an excellent job to attract FDI and new investments to the country, and most of them are air cargo relevant. BMW, Samsung, Bosch, SK Innovation, Lufthansa Technik, Airbus etc. – there are many recent announcements about new projects that will bring business for us, on top of the very strong air cargo related industrial power in the region especially in the automotive, electronics and pharmaceutical businesses. The geographical location is ideal, the motorway network is great and is being intensely expanded by the government, operating costs are favorable, high-quality educated workforce is available, other important factors for logistics, such as efficient and customer-focused customs clearance, are working well.

“cargo-partner has always been one of the most important partners of BUD Cargo, being part of our air cargo community from the very beginning. cargo partner was one of the first forwarder tenants to join our BUD Cargo City project which is highly appreciated by BUD. Our co-operation is excellent and very fruitful for both partners. ”

René Droese on the long-time cooperation with cargo-partner.

Budapest Airport and cargo-partner have a close and long-standing partnership. How do you see the cooperation between the two companies – and how is working with a mid-sized logistics provider such as us different from working with the “big players” in the industry?

cargo-partner has always been one of the most important partners of BUD Cargo, being part of our air cargo community from the very beginning. cargo partner was one of the first forwarder tenants to join our BUD Cargo City project which is highly appreciated by BUD. Our co-operation is excellent and very fruitful for both partners. It is about trust, support, an open-minded approach, teamwork, and good communication. I guess these are the cornerstones of any good partnership. The air cargo market is very competitive; there are several service providers and solutions for customers to choose from. You can become and remain successful, you can grow sustainably only if you are consistently customer-oriented, flexible, quick, reliable, and efficient. cargo partner proved its values in this field.

In the area of passenger transport, the air freight industry has undergone a transformation in the past decade: Flight status updates in real time, modern online booking systems, self-check-in, high transparency for passengers, and the elimination of paper tickets and related processes. On the other hand, the air freight industry is said to lag behind when it comes to digitalization, still relying on printed air waybills and the like. As an airport with a noticeable cargo volume, how high would you rank the need for innovation?

In comparison with the passenger transport business it is true that air cargo is still a bit “analogue”. People still move pallets by hand, and as of now (apart from the express companies) fully automated warehouses are still rare. The standard air freight industry must rely on other innovations. Industry 4.0 is bringing many new and exciting ones, service providers in Hungary are right now establishing their 5G networks. Warehouse gate management, digitization, smart tracking all across the chain, cloud solutions are all on the table for us to implement in our BUD Cargo City – these will be the key innovations. Innovation is very important for keeping up competitiveness and for increasing the efficiency and decreasing the environmental impact of the air cargo industry; innovation is a top priority and it is becoming more important every day.

These days, everyone seems to be talking about transporting goods with the aid of drones. Do you see these small cousins of the airfreight industry as one of the potential means of transport for the first or last mile? Will airports sooner or later get completely obsolete or be possibly downgraded to the role of just being “local drone hubs”?

Drones are one of the greatest innovations that are highly likely to have a major impact on the aviation industry. There is a wide range of products from the smaller drones with 5-10 kg cargo load and 50-100 km range to the aircraft-size long-range solutions. The topic of using drones is very complex, with plenty of safety and security issues. For instance, we can say that recently the drones are not warmly welcome at most international airports, they rather represent a threat for the operation and aircraft. Remember the airport closures due to drone activities in the UK last year?

But, for example, transporting goods by drones from smaller airports or special distribution centers to isolated, remote areas, islands, and farms can work.

Speaking of trends and challenges in airfreight – what are the most important ones of today and what will they be tomorrow? And, looking ahead to “the day after tomorrow”, where do you see BUD in, say, 10 years? How do you see Ferenc Liszt Airport positioning itself with the competitors in Vienna or Prague?

The first challenge is to comply with the demand for innovation. Digitization, automation, and improvement of service quality. The second challenge is to follow the changing requirements of the logistics market and transformation of customer expectations. The development of the e-commerce business worldwide and its very special logistics service requirements mean challenge and opportunity for air cargo at the same time. The third challenge is to have sufficient human resources for the operations, from pilots to logistics managers and experts, from warehouse staff to truck drivers. Automation, self-driving trucks, and robots can help, but it is a major challenge for the entire logistics industry. The fourth challenge is the environmental impact. We have one world to live in, and we must protect it as much as we can from the negative effects we cause with our activities.

In 10 years? Our cargo volume will be above 250,000 tons, and BUD will be the main air cargo gateway for the region. cargo partner will have a 10,000-square-meter air cargo facility working at full capacity at BUD.

Thank you for the interview and all the best for your upcoming projects.