Kara Mahoney, Vice President of Account Management in The Americas, joins the podcast to share her experiences with customers last year, the conversations she was having this year, and how to prepare to finish 2022 strong. We'll cover the must-haves, the don't-forgets, and surprising revelations.
Chris Parker: Hello, everyone, and welcome to the Expeditors Podcast, where we look at the logistics and freight-forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today's topic, disruption management. To quote Vice President of Supply Chain Solutions, Ian Mallison, he said, "Disruption is the new norm.". Now, doesn't that sound fun? But if this isn't going away anytime soon, what can be done to get ahold of the situations affecting you? What could you be paying attention to, whether it be internal or external factors, to navigate what's already been another... Well, it's only been a quarter, but it already feels like a couple of years. With me, today to discuss this topic is Vice President of Account Management in the Americas, Kara Mahoney. Kara, welcome.
Kara Mahoney: Well, thanks, Chris. Hi. Thank you for having me.
Chris Parker: Yeah, a pleasure to have you. Wanted to get to know you a little bit more before we get started. Would you walk me through your logistics career?
Kara Mahoney: Well, absolutely. So I have been in the logistics and overall supply chain and compliance industry for about 25 years. I'd like to say I started out working for the government, the Department of Commerce in Washington, DC, and the International Trade Commission specifically. And I kind of got a taste at that point of the whole world of trade and compliance and supply chain. So, that was really my first introduction to our world, our really kind of crazy world that we live in.
Kara Mahoney: I then started with Expeditors, and I started in compliance in our Minneapolis district. And then, I pretty quickly went into what I am currently in, which is in account management, working on customized solutions in the supply chain and logistics realm for our customers, and moved to several locations. And about 23 years later, here I am as the leader in our Account Management Program for the Americas. But my experience was primarily in the retail sector as an account manager myself. But since then, have definitely gone into other sectors, such as high-tech and healthcare and what we call manufacturing, et cetera. So it's been a great ride, but certainly, we've got a lot of runway ahead of us, especially... It looks long right now, Chris, with all this disruption that we are in at the moment. But it's been a great opportunity.
Chris Parker: What about account management excites you or makes you not even want to consider other parts of this space? You started out in compliance. What about account management said, "Goodbye compliance. I'm fine with where I'm going right now"?
Kara Mahoney: Well, account management, I'd like to... We always kind of joke that we have to be a jack of all trades. And in account management, the underpinning of all of account management is alignment with the goals of our customers. And what I loved about that is, by nature, I'm someone that kind of likes to solve problems and provide options and solutions. And in account management, our obligation to our customers is to listen, number one, and then number two, apply some of the experience and perspective that Expeditors has to help our customers solve problems. And that was a really exciting journey into account management for me, and I still love that to this day because, as our customers tell us, there is no one size fits all.
Chris Parker: No, totally.
Kara Mahoney: They experience things differently depending on the footprint of where they are sourcing from and where their customers are, et cetera. They expect from Expeditors to have a customized experience. And what our role is in the company is to help those customers navigate through our organization so they can get a customized solution that best serves them and helps them achieve their goals. So I love that. I love that.
Chris Parker: Looking at 2021, what were you seeing, and what were some of the conversations that you were having with customers? What did you start to notice coming from customers?
Kara Mahoney: Last year, in 2021, we were, of course, already in the midst of an unprecedented pandemic.
Chris Parker: Oh, yes.
Kara Mahoney: And while we were grappling with all of the ways that that shook us personally, we were also in the midst of a really massive shift from an industry perspective, where demand for different products really were at all-time highs, and the trickle-down effect of that really was disruptive for our industry. So all of a sudden, we are trying to deal with and navigate through some disruptions that we had never seen before. Certainly, we were trying to weave in different integration with technologies and geopolitical issues that were happening around the world. So really, customers were coming to us at that point just saying, "Hey, Expeditors, number one, service from the steamship lines, from the airlines, they are not where they need to be. It is difficult for us to plan our inventory around what is happening in the market. And hey, Expeditors, we need help planning and to control what we can control.".
Kara Mahoney: So this has been two years in the making, where, all of a sudden, everything we once assumed was to be true is no longer true. And then everything was turned on its head. So customers really engaged us in a different way and looking for different options and solutions and also saying, "Hey, what are you doing, Expeditors, to help solve some of these problems?". And certainly, that has been a big piece of our conversation with customers over the last, what, I guess, going on three years now, and that's carried over in 2022, for sure.
Chris Parker: Yeah. What would you say is a, I guess, like a surprising thing that you found yourself having to educate or explain to help customers understand their situations better?
Kara Mahoney: I think the number-one thing that I found us explaining a lot is that our customers found themselves in a very elevated position within their own organizations. In previous years, supply chain, while always a critical portion of every company, it was kind of taken for granted because there are a lot of hardworking people that made things work. And certainly, there were disruptions, but it wasn't like we're experiencing now.
Chris Parker: Right.
Kara Mahoney: So all of a sudden, our customers are, in C-suites throughout their own organization, having to tell a story about what's going on in the market and what they're doing to control what they can control. So one of the things I found myself doing a good amount is working with customers to help them, number one, understand what's going on in the market; number two, understanding what areas they can control, what levers they have to pull; and number three, being able to put that together into a narrative that resonates within an executive level of these massive companies, so they can tell the story of what the logistics teams within these companies are doing to navigate through this time. And so, I found myself working with many of our customers on helping them craft that message.
Chris Parker: Wow.
Kara Mahoney: So it's been an interesting time.
Chris Parker: Yeah. Being asked what you do at a party and being asked what you do by a C-suite or executives are two totally different answers, right?
Kara Mahoney: Two totally different... But the beauty of where we are now is that now when you go to the party and say that you are in supply chain, everyone's like-
Chris Parker: Oh, everyone knows.
Kara Mahoney: "I know exactly what you do. You don't need to explain any further. I totally get it."
Chris Parker: Now that Q1 2022 is over, we're a little ways into Q2; what does the rest of the year look like?
Kara Mahoney: Well, we're still in the grips of some of the fallout, if you will, of the change in demand and in sourcing of the pandemic. Of course, we are working our way through the pandemic. We're so encouraged with where we are, but I do like Ian's quote that "disruption is now the norm". And it is the foundation from which all planning is done in logistics and in supply chain. So in the rest of 2022, of course, we are looking at several different things, and we're talking to customers about several different areas.
Kara Mahoney: Number one is there are still massive backlogs and delays in most massive ports around the world. Of course, the situation in Shanghai with COVID lockdowns and the total shutdown of Shanghai is a hugely disruptive event that no amount of planning could prevent fallout from that. But we're now going to have to deal with what comes next in working through all of the challenges dealing with... Shanghai is one of the world's largest ports in the world.
Kara Mahoney: So you've got all of the port operations. You've got still increased demand. You've got the upcoming negotiations on the US West Coast of the ILWU negotiations that... Well, we certainly don't know how that's going to go or where that's going to go. The planning to navigate through that time has already begun. Customers have already started executing on contingency plans around that. We do know that our industry is targeted in large part from cyber attacks. We have to do planning around contingencies in the case that one or more partners in supply-chain functions have cyber-attack events. Our customers themselves have experienced cyber-attacks. Certainly, that has been disruptive.
Chris Parker: Yeah.
Kara Mahoney: So, in a lot of ways, 2022, at least the first part of 2022, is a mirror image of what we saw in 2021. And again, the underpinning of that is disruption. And unfortunately, if there is a change in any of these things working out in the next several months, it's because demand has decreased, whether that be a result of changing in the economy. Certainly, inflation is something that's front of mind for many companies. Demand, if it does go down, will allow some room for some of this congestion and the disruption to kind of settle into perhaps a more normal cadence. But there's really no telling if and when that will take place.
Chris Parker: Yeah. I remember Karl Francisco talking to me, doing like an ocean market update and saying like the demand has to go down. That's the only way this will ease up.
Kara Mahoney: Yeah. And there's good reason. It's a very physical challenge right now, where there's physically no room for the amount of demand and volume that is being pumped through the major arteries around the world. It is a very physical challenge that there is just... There is really no room. And so yes, demand does have to go down, but there's also going to be investments. There has to be investments in infrastructure by countries around the world, including the United States. And that will be a part of this that's several years down the road. But all of these pieces, you hope, at some point will come together, where there are more predictable outcomes in the supply chain versus where we are right now.
Chris Parker: So, looking at either solutions that we've proposed or that customers are proposing, what would you say are some of the best practices that you're seeing? What is prevailing? What's working right now in this world of disruptions?
Kara Mahoney: Well, I think one of the things I like to say is that I love the idea of controlling what you can control, but it's also... I think we have to say that no one, no company, even the best companies in the world, are getting through this time without major challenges. So there's no one who is going through this with just shining like, you know.
Chris Parker: We've got to figure it out.
Kara Mahoney: Yeah, exactly. There's none of that because it doesn't... Everyone is feeling this pain, and there is some kind of... There is something good that comes from that, that at least you know you're not alone. If you're challenged during this time, you're not alone. But what I like to talk about is, again, under that element of control what you can control. Number one is to start at the very fundamentals of your supply chain and of your logistics program and to look at your data. And when I say look at your data, I don't just mean look at the output of the data, but I'm encouraging customers to look at where are you getting the data. Is the data a reliable source of information? How often are you getting it? How fresh is the information? What validation points do you have to layer on top of the data that you are receiving?
Kara Mahoney: So when you go to make the decisions that you undoubtedly will have to make in a time of disruption, you have a reasonable, reliable source of information. So that is kind of the fundamentals, what I tell every customer. Just start there. And it's really pretty remarkable that even though our industry has evolved and is very progressive in a lot of ways, we still have to ask the question if you have a reliable source of information. So that would be my number-one suggestion, is to start basic and fundamental with that.
Kara Mahoney: My next suggestion is, again, going into control what you can control, is saying if the unthinkable happens, whether that be further disruptions in ports or a cyber-attack or a natural disaster, where is your plan that you can and will deploy if some of these things happen? Because again, we've learned that in our market, in our industry, even the things you don't think can and will happen, they can and do happen. And so you have to have a stress-test plan they can pull out. And certainly, it's going to change. And certainly, you're going to say, "Hey, that looked good at the time, but now we're going to deploy this instead". But you need some kind of plan. And certainly, we would encourage our customers to do that and to work with us because I think we have a unique and an interesting perspective to bring to the table in that area, and we would encourage customers to do that.
Kara Mahoney: The other... And there's several things that customers can and do do in the interest of planning, but to really look at partners when it comes to their service providers and ask, "Do I have the right capacity access? Do I have what we refer to as a wide carrier footprint?", meaning you're not locked into one particular area, that you have access to any and all capacity when things change and are disrupted. So you go through that inventory of who are your partners? How are your partners performing? What gaps do you have in those performances? And most importantly, in an area where capacity is everything, what are your avenues to get capacity when you need it?
Chris Parker: And this can be all the way down to the container level, right?
Kara Mahoney: Oh, for sure.
Chris Parker: I mean, this is... Yeah.
Kara Mahoney: For sure it is. And depending on if you're mostly an ocean freight consumer or air freight or a trucking, consuming trucking services, it applies to all of those areas. So, it is about just asking those series of questions and making sure that, in the end, you have the go-to plan that you can ask the right questions to the right partners to get you through a challenging time.
Chris Parker: So then when you talk about trying to create contingency plans and trying to account for what you can't account for, I imagine a lot of modeling, testing, simulating what has to happen in order to pull out a component and say, "Does this still work?". How do you approach that?
Kara Mahoney: Yeah. I really should have mentioned this when you asked about some of the best practices and what companies are doing because one of the prevailing trends that we're seeing is exactly what you mentioned, Chris, which is a simulation of contingencies. And the digital twin technology trends in our industry is a real thing, number one, and those companies that had the capability of creating a carbon copy of their supply chain only in a digital form were able and are able to move into work simulations that allows them to make more informed decisions about what they want to do with their supply chain, what risks they're willing to take and what levers they have to pull. So yes, technology. We've been trying to fit in the integration of new technology in this time of massive disruption.
Chris Parker: Right.
Kara Mahoney: This has been one that it was like it met us right at the right moment because we needed the ability to simulate and to digitally re-create our customer supply chain. And having the ability to do that with customers who engage with us in that way certainly that enabled them to make decisions that they were more informed about. So that was a really exciting technology that met us in the moment. That's for sure.
Chris Parker: Yeah. You talk about having control over what you can control. How does one even begin to understand what they can control?
Kara Mahoney: That's a great question because I think one of the things that we hear from a lot of customers is that they feel an absolute absence of control, and that can be a very frustrating feeling for-
Chris Parker: And when you're put in front of executives, that's not the answer you want to be giving.
Kara Mahoney: Right. If you walk into your CEO or your CFO's office and he or she asks you, "What are you doing about it?", to not have a whole list of options is a very frustrating thing. However, we and they do have some options. So the idea of starting with the data, doing the contingency plan, certainly looking at the risks and the pros and cons of different things, that is certainly one thing. But one of the areas that I really like to stress with customers is why transit time is so important. It's arguably, in logistics specifically, it's one of the most important ways that we measure success of a logistics program. And now we kind of... When everything is disrupted around transit time, we have to really take a deeper dive into transit times, and it's looking at segmentation of transit-time performance. So long is the days of a 60-day overall transit time, and that would be a long transit time. But let's say a 35-day transit time.
Chris Parker: Right. Right.
Kara Mahoney: You can't think that way anymore. You're not going to meet a 35-day transit time any longer, at least not with any level of predictability and accuracy. Instead, you need to break that 35 days into, let's say, three or four segments. So your dwell time at origin, let's focus on that. Where are you falling short? What can we do to control that? Are you sitting too long in a CFS station? Is it sitting too long at your vendor's facility? Let's move the needle there. So let's cut that down from three days to maybe two days. Okay, there's one day there.
Kara Mahoney: Then we look at the dwell time at the port. And a lot of times, that is an area where we don't have a lot of control, especially because of the congestion at both ports, both the origin port and the destination port. But let's understand that. Let's understand how many days we need to buffer that segment of the transit time.
Kara Mahoney: So you go through the rest of the segments of your overall transit time, and you develop strategies and plans for each one of those segments. And then you can start to chip away at that overall 35 days. While you may not have control of two segments of that transit time, the origin port and the destination port, certainly there are segments of that transit time that we do have more control of, and let's tackle that. So making the focus much more pointed and much more specific is something that we really have been encouraging our team, our account managers at Expeditors, and our customers to really dig into, all in the interest of having some level of control. That's a big recommendation.
Chris Parker: What would you say are some of the must-haves then, whether in transportation or in compliance? And I want to kind of look back into your history of compliance as well to answer this. What would you say are the absolute must-haves in order to do things, get creative, but then do things properly by the books so that you don't end up in trouble?
Kara Mahoney: Absolutely. And one of the things we talked about is that this has been a very physical, a very physical challenge. The supply chain is a very physical world right now, but we cannot overlook the importance of compliance. While all of this has been going on, there have been several major compliance changes that our customers have also had to be aware of, and to plan for, and to integrate into their physical supply chain.
Kara Mahoney: So when you look at the beginning of 2022, there were some pretty substantial changes in HTS codes. That was another area where our customers had to have their arms around and to plan for. That was certainly not anything that any customer or company could overlook. That's been an area of focus for us. And the other is with the relations with China and the focus on the compliance around forced labor. Our customers have had to have acute awareness of vulnerabilities that they may have strategies and planning around that to make sure that they don't unknowingly get into a situation where they have additional audits and areas of concern in that area.
Kara Mahoney: So compliance has been going along this whole time. It's just that all of the news and the articles that we read tend to be about the overall logistics and physical nature of our supply chain. So it's a great question and also something that our customers certainly have had to plan for, and they continue to do so into next year.
Chris Parker: What are the must-haves then for the physical side of things?
Kara Mahoney: On the transportation side, the must-haves is looking at the different modes of transportation that every company uses to really question and understand what is going to be the future use. So, for example, air freight used to be used by relatively few companies in comparison to the overall modes of all transportation and customers. But now, as the delta between air freight costs and ocean freight costs has gone down, the delta is now, depending on what market you're looking at, but somewhere around four times the cost to move air freight versus ocean freight, which is still a big difference.
Chris Parker: Yeah, but it moves a lot faster.
Kara Mahoney: Absolutely. And at a time when there's unpredictable transit times on the ocean side, many customers are having to switch gears to move more air freight than they have in the past.
Chris Parker: Wow.
Kara Mahoney: So, looking at the various modes and how much you utilize each mode would be a strong suggestion. What we have and we always understand that projections are very difficult for many customers and companies to generate, but even rough estimates of projections to share with service providers is hugely beneficial. So then we, as a service provider, can go out and procure the capacity, have a little bit more predictability of cost, and be able to do that on behalf of customers based on what they are expected to use in those various modes of transportation. So definitely looking at and going into that detail.
Kara Mahoney: The other is a very kind of tried-and-true strategy, which is pulling orders forward. And customers are very accustomed to doing this at this point, meaning if you used to calculate 120-day overall lead time on an item, on a particular product, that 120 days is now likely more, and in some cases much more than that. So pull those orders forward, and that is kind of the most reliable way to make sure, depending on what sector you're in, you have the right product to your customers at the right time in the right place, is just by simply overestimating the amount of time that you're going to need. We don't want our customers to get into a situation where they have too much inventory. Certainly, that is a risk that you have when you pull inventory forward. We don't want to go there.
Chris Parker: No.
Kara Mahoney: But we have to plan for these additional days that have now become a standard in the supply chain. So that is another area that you really need to focus on.
Chris Parker: Yeah. My last question to you then is, I guess, more of like an introspective one here. So when supply chain professionals or people who are managing supply chains for their organizations are looking internally at their own company as a good starting point, what would you say are some of those good things to look at to manage disruptions internally?
Kara Mahoney: Yeah. I would think that number one having the awareness of how consequential having a strong and reliable supply chain is for companies. Having that awareness and recognizing the investments need to be made into companies' supply chain capabilities, whether that comes from talent, whether that comes from new technologies. Really, supply chain investments are here to stay for the next many, many years because of the importance that we know this sector of the company has for a company's overall success. So invest in the area of supply chain and supply chain expertise and supply chain technologies. That's number one.
Kara Mahoney: And the other is partnership. And of course, I come from probably a biased point of view here, where in logistics and in supply chain, oftentimes you have this relationship between service provider and customers, and the dynamic really has to be fundamentally about solving problems and collaborating. And when companies and customers take that collaborative approach, which, Chris, by the way, the majority do. I mean, our customers are hugely collaborative in their approach with Expeditors, and we're so grateful for that because we can achieve great things together when we take that approach.
Kara Mahoney: But we are quite literally in this challenge together. We rely on our customers, and they frankly are relying on us, on our capabilities, our knowledge, our expertise, our perspective. So we are trying to solve challenges together. And when we approach those challenges that way, while this is a gigantic challenge for us to get through, I'm very confident that when things stabilize a bit, we will find ourselves in an area that we will be stronger and better and more partnership-oriented with better results. Not to mention, and one thing that we haven't talked a lot about, but our obligation and responsibility around sustainability, we can solve massive challenges together when we align properly.
Kara Mahoney: I know that this has been a really difficult time, and we're very weary. If you're in the supply chain industry and logistics specifically, we are tired. We are weary, but we are also entering a phase of being re-energized about what can happen and what we can do together to get through this and to come out as a stronger, more informed industry.
Chris Parker: That's excellent. Kara, thank you so much for your time and for talking me through this. If folks wanted to get to know you more, reach out to you, talk more about account management, where can they find you?
Kara Mahoney: Well, they can find me on LinkedIn. My email address is kara.mahoney@Expeditors.com. Please reach out to me. I'd be happy to talk. And we'll just keep talking about supply chain in 2022, Chris. That's what it's all about.
Chris Parker: All right. Well, thank you so much for the time. I appreciate it.
Kara Mahoney: Well, thank you, Chris.
Chris Parker: Yeah. Take care.
Kara Mahoney: Bye.
Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.