To become a pioneer, one needs to have the right timing, says Tomasz Langowski, Vice-President and Co-owner of Langowski Logistics. Langowski Logistics, a founding member of New Silk Road Network (NSRN), is celebrating its 16th anniversary this month and on this special occasion we spoke to Mr Langowski on various aspects concerning the New Silk Road.
In our Polish newsletter edition this month, we touched upon the high relevance of Poland along the New Silk Road, the challenges it faces, and the upcoming possibilities of growth. As a well regarded and popular company, Langowski Logistics has pioneered the rail freight business in Poland, especially developing business along the various routes of the Belt and Road Initiative. We discussed with them their views on the current challenges of conducting business in these regions, as well as their company history and some trade secrets that have made them what they are today: a company of a solid reputation and strong connections.
In conversation with Tomasz Langowski...
NSRN: Langowski Logistics is a premier logistics company in Poland. Established in 2004 you have created a strong foothold for yourself in rail freight along the New Silk Road. We would like to know the history of the company and the subsequent expansion into rail freight..
Tomasz: We built the company with our mother from scratch in the year 2004, the year when Poland also joined the European Union. This Wednesday, September 30, we will celebrate our 16th anniversary. It was just my mother and I at the time, but my mother already had 20 years of experience in the logistics business. She worked in customs and is an experienced customs agent. Earlier on in her career, she was responsible for the bonded warehouse of Baltona, a famous Polish company. She then moved to another company where she became the manager of the customs agency, then a director. Finally, she created a freight forwarding company with two partners and looked after their customs agency. In 2001, I joined this company as a customs agent too. I was also doing some freight forwarding at the time, handling Volvo buses, which was some of my first freight forwarding activities.
My brother, mother and I are all licensed customs agents, certified by the Polish government. In 2004, we decided to create our own company and family business where we are responsible for everything and made our own decisions. We continued to focus on this division, and unlike other freight forwarders, we offer inhouse customs clearance services. Moreover, only a few companies have board members who are customs agents. The company started with two people, and now we are almost 200 in number. In the past 16 years, I can say that we have developed this company well.
I had to learn everything from scratch as I was studying telecommunications and management, not logistics.. Though our company began in a year that was significant for Poland, it was a difficult time for us. Our initial business idea was to offer customs clearance services. However when Poland joined the European Union, we could not provide intra-European customs service as it was not needed any more. That is why we needed to branch out and focus on freight forwarding as well.
We started with trucking and then added with ocean freight to our company, beginning with import which continues to be a big part of our business, coming to almost 80%. Another important event for Polish logistics, in general, was the opening of the Deepwater Container Terminal (DCT) in Gdansk in 2007, which could accept the largest container vessels. When Maersk opened their direct service from China to Gdansk back in 2010, it unlocked avenues for us to approach new customers and make offers of faster transit time. Moreover, what Langowski could offer especially was a simplified customs clearance at Polish ports, where the customer does not need to pay the VAT since only the customs duties are charged, making it a much cheaper affair in terms of better cash flow and comparing to fiscal customs clearance in Hamburg. With this, we could go to any customer, even those who didn’t know us and receive cooperation from them. Approaching companies became a lot easier for us. This was introduced in 2008, and over the years the access to simplified customs clearance has become much easier.
In 2011, one of our Chinese agents visited Poland as they needed help with their customers. It was an exciting meeting because that time for us travelling to China was utterly out of our imagination. When our Chinese agent arrived, it was a good learning experience for us too. They needed help with their customers in Ukraine, who booked a shipment from China to Ukraine via the Odessa Port. There was a problem because of the congestion and… corruption at the port. They asked us to move the supply chain from Odessa to the Polish seaports and then transport the containers onwards to the warehouses which were very close to the Ukraine border or directly to Ukraine. This gave us a chance to develop our component more.
Then in 2012, we made strategic connections with a Polish company that is situated close to the eastern border of Poland. That was when we first heard about the trains from China. We started our research, and in 2013, we partnered with Far East Land Bridge (FELB), to work along the New Silk Road. We were one of the first companies to offer regular rail service from China to Europe. In the beginning, we started with groupage wagons, as regular block trains only began in 2014. We already started in 2013, just when the OBOR was inaugurated! Later, when we were getting deeply involved with the players along the New Silk Road, we came across ZIH, Zhengzhou. At that time, they were also looking for partners in Europe. Yet again it was the right timing for us, and they approached us asking to dispatch and devanning their LCL containers. Based on my experience, I can tell you for sure that timing is crucial in business to be the pioneers. That is also why we joined the NSRN as a founding member.
NSRN: Those in the logistics industry do not have a typical 9-5 job. What does your day-to-day look like? And what are your roles and responsibilities in the company?
Tomasz: In Poland, we have the 8-4 timings (laughs), but now that I have my mobile with me, I am working most of the times. I am the vice president of the board, and I can say that I play an essential part of the company. Since we are a family company, I am one of the owners along with my mother and brother. On the one hand, we are owners, but we also manage the company. We are making decisions on a daily basis. I cooperate very closely with our financial and legal department. I am also responsible for business development in the company.
One of the main fields right now is developing the rail business along the New Silk Road. I manage the railway business but also look for opportunities to grow our other services such as warehousing. My brother on the other hand is responsible for military and project cargo. Last but not least, my job is also to represent the company and carry out networking.
NSRN: Poland is incredibly active along the New Silk Road, but at the same time, the Polish routes are fraught with congestion, that cause much delay to cargo reaching on time. What are your thoughts on how to tackle this situation, at an infrastructure level and the level of forwarders doing business along the route?
Tomasz: This is a good question. There are of course many big players trying to work on the situation, but since we are not that large, we don’t have too much influence on the case. Honestly, it is difficult to explain to the customers why the transit time has increased, as they usually would have their cargo in two weeks at best. Our record was nine days from Zhengzhou to Malaszewicze. It is an excellent service, but I say this often that the New Silk Road Service is a victim of its own success. In the beginning, we took a lot of time to explain to our customers that the service is safe, fast, and reliable. Nowadays, we do not have a problem to find customers who are interested in rail services, and the demand is much bigger than the supply. At the same time, the infrastructure is not ready for such a huge demand. During the pandemic, especially from March, the demand was huge! 90% of the air freight cargo moved to the rail, and we also noticed that many LCL shipments moved from ocean to rail.
The number of trains from China to Europe rose by 68% more in July 2020, as compared to the figures from July 2019. Chinese borders with Kazakhstan, Russia and Mongolia were severely congested, along with the Polish-Belarusian borders. Warehouses, ports and even trucks were jammed. Moreover, companies did not have enough workforce to deal with the rising volumes. We had to adjust to the situation, but still, the cargo numbers are enormous.
The solution to improve the situation is to implement more routes, via Breniewo or Siemianówka going to Hamburg or Duisburg. Along with PKP cargo, the government is developing infrastructure and improve these passages. Our state-owned rail operator is doing the best to avoid situations where Poland is wholly avoided, that will not be the right solution for us. Something like Slawkow would be good. Slawkow is not close to the border; instead, it is more central. It is also great because the broad gauge goes all the way. But of course, it can’t handle so much volume at the moment.
I also learnt that PKP is trying to run homogenous trains instead of multigroup trains. This allows the incoming containers on Russian gauge wagons, to move directly to the other train with standard rail gauge without unloading in the terminal. It will enable direct transhipment of containers from wagons, which helps reduce time and prevents breaking the wagons composition.
NSRN:Your recent development of handling military cargo has carved a space for your company in this niche market. What were the motivations to branch into military cargo, and what is the expertise required to operate in this area?
Tomasz: We are motivated to provide help when help is needed. So, when our partner from the UK contacted us with the request for exporting a tank and assistance with customs formalities, we offered solutions right away. With our in-depth analysis of the documents and excellent customs knowledge, we were able to provide him with the relevant support.
The news that we conducted such a cargo movement spread quickly on the market, and a few months later, we started receiving more requests to handle military shipments. We noticed the potential and decided to develop our competence in this area. One of the certificates that have great importance while handling military cargo is an Internal Control System. This allowed us to take shipments from the third country to another third country. We have also implemented ISO 9001, which made it easier to acquire the Internal Control System. My brother is mainly responsible for developing this side of the business.
It helps to have a good reputation and a stable company. We used to be a private company, but now we are a limited partnership company, which helps when dealing with our customers in the military business, because no one would like to work with a completely private company. This business is connected with many certifications, the more papers you have, the more stable and sound your company looks. Since there are not that many players in this niche, we think it is a good time for us to enter and develop this market, again the timing is vital for us. Also, as an addition to military cargo, we would like to establish project cargo because we have our own warehouse and equipment which can handle a heavy load.
NSRN:Langowski Logistics has often closely worked with Chinese logistics companies, which would make you a great candidate to bust some myths. What are the general misgivings that people have when it comes to conducting business along the New Silk Road? At the same time, what should logistic companies bear in mind while operating in this area?
Tomasz: Based on my experience, the most important aspect while working with a Chinese company is to build a good relationship. There is a word in Chinese called ‘Guanxi’, which is about having a mutual relationship.
My first trip to China was to meet with ZIH and to speak directly for cooperation. During the first meeting, I met most of the people of the top management. I was learning a lot then, and it was an exciting experience. With Chinese companies, meeting people at the same level as yours and making a strong connection helps to develop the business. It also helps to have my last name as the name of the company, which shows that I am an important person who can make decisions.
Finally, it helps that my company is already well known in China, which allows us to do business. Our company’s name was circulated to other Chinese companies, for example thanks to the people who switched jobs. Every Chinese partner expects a mutual win-win cooperation. Also, it pays to be honest with your company’s capabilities. That is the whole secret!
NSRN:Finally, as we hosted our first annual general meeting in Warsaw, what were your general impressions of the event and what was the experience like, in meeting the fellow members of the network? What were your major takeaways after the event?
Tomasz: I have attended many network meetings, as we usually participate in all of them. I am well versed with how the sessions go and how to create cooperation with others. That is standard. But the biggest impression for me was the staff and hosts of the NSRN team. You are such young people, who are so well educated and with already so much experience. Also, Ziwei is the right person in the right place to run this network – sometimes it’s hard for me to say if she is more Chinese or more European (laughs).
Moreover, the network members are also different in NSRN. They are not just typical freight forwarders; these are companies with expertise in a variety of sectors like trucking or warehousing. It was a set of good meetings, even when we spoke to our potential competitors, we found some common ground. That is why we were delighted with the meetings. I am very optimistic about this network, and I keep my fingers crossed that in the next AGM, we will have a chance to visit China.