The New Age of Automobility [PODCAST]

Written by Expeditors
20 minute read

Episode 4 Assets-04

“We’ve seen a shift from just-in-time to just-in-case, and that’s really pulled forward the whole industry.” Breakthroughs in automotive and mobility have changed manufacturing and how products are brought to market, whether it be from start-ups, electric vehicles, or recently, the COVID-19 pandemic. Karen Kinsella, Global Director of Automotive & Mobility Vertical at Expeditors, joins Chris to talk about how these three forces are impacting logistics and supply chains to bring the transportation and the automobility industry to new levels of service.



Chris Parker (Host): Hello everyone, and welcome to The Expeditors Podcast, where you can hear about front-of-mind topics in the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today's topic, the new age of automobility. The Benz Patent-Motorwagen, built in 1885 by Karl Benz, is considered the world's first production automobile. And over the last 135 years, developments and breakthroughs in energy efficiency, accessibility, affordability, and power have not only changed and reinvented the vehicles we use today, but also how they're made, how they get serviced, and how we get them home. And being curious to know more, I have invited Karen Kinsella, Global Director of Automotive at Expeditors, to teach me a thing or two. Welcome Karen, how are you doing?

Karen Kinsella: I am fantastic, Squire. Great to talk to you.

Chris Parker: Squire. Thank you. I can't get over that. I love all the little, fun nicknames. Chap, Squire, they are all very much appreciated.

Karen Kinsella: Absolutely. Great to speak with you today, Chris.

Chris Parker: Yeah. What's going on with you? What's new in your life lately, aside from working from home?

Karen Kinsella: Well, working from home battling through COVID. Yeah. There's a whole host of things. It's a good job we’re in logistics. That's all I say.

Chris Parker: Yeah. Absolutely. Tell everyone a little bit about yourself. Who are you, and how did you get to where you are today dealing with the Automotive vertical?

Karen Kinsella: Well, I've been working for, and I'm going to make a confession here now, Chris, I've been working in automotive for over 30 years and it has changed dramatically, I have to tell you. And since my time in Expeditors, which is about six and a half years, obviously, the world has changed even in that short space of time. So I came into the business within our vertical environment. And maybe I'll give you a little bit of an overview about what we're doing in that vertical space because it's a term, not just for people that stand up all day. It's the term that we give to a group of industry experts, I have to say.

Karen Kinsella: We've been working in automotive, we've got a very knowledgeable team of people that talk about automotive 24 hours a day. And we really provide the specialism within the sector that we call Automotive and Mobility now. And we're pivoting across all of our different business stakeholders. And we're really, really front-facing in front of our customers to translate what the industry requirements are back into the market-leading solutions, for instance, the Expeditors office. So the vertical term is something that the industry recognizes quite well.

Chris Parker: Right. When I think of pharmaceuticals, I'm thinking of refrigeration, special equipment, and protocols to make sure that various medical supplies are getting to where they need to in the most safe manner possible. Why does automotive has its own special kind of attention? Like what makes you so special, Karen? 

Karen Kinsella: Well, firstly, we all talk our own language. And so every industry has a whole host of acronyms, and each of those facets, really, if we're talking about a production environment, we'll talk about a line stop or the things that keep the industry awake. So translating that language into quite a unique set of processes is really what we do. That's why the industry is very complex. And what we do is we break down the barriers of the language and the terminology that the customers and the industry uses per se. And we put that back into our world. So we all love acronyms, and our industry is no different.

Karen Kinsella: The whole industry is around the way that it responds to the customer's demand. So we use forecast data, we use that production demand, and that drives the supply chain, all of the suppliers, the global suppliers scattered all over the world. They will all use that information in order to be able to deliver the right product at the right time. So that's talking about the just-in-time method of working, of course. So everybody is always balancing between efficiency, inventory, and obviously, the adherence to that just-in-time process. And the COVID period, if we take the COVID period, has really thrown everything 180 degrees because of course-

Chris Parker: And then some.

Karen Kinsella: ... Yeah. You could have a supplier in Mexico, but your production facility is in Germany. And obviously, what we've seen is that planning has really thrown everybody on its head because you may not necessarily get access to the parts that you need in order to keep your production working efficiently. COVID, for instance, 90% of all of the industry stopped at one point, which was a natural outcome to what we had to face during that time. And as we see different geographies restarting at different points, some parts were available, some parts weren't available. So manufacturers really had to really, really be agile through this period to make sure that they can keep their production and all of their parts around them when they need them. So we've seen a shift from just-in-time, for instance, Chris, to just-in-case, and that's really pulled forward the whole industry to make sure that they can get access to what they need.

Chris Parker: Right. In case another shutdown has to happen, or some kind of major, major disruption at a factory or manufacturer, those parts that are needed will be available.

Karen Kinsella: Yeah, yeah. Principally that means the interaction between managing the demand and the availability of those parts, whether it's through COVID-related or just capacity constraints that we see in the market, that's really thrown a lot of challenges. So each manufacturer will balance what they need versus putting that security around them. And so we've seen a huge shift to just-in-case, and that allows people to take out maybe a little bit of the risk mitigation.

Chris Parker: Because just-in-time sounds like it was a lot more spry, a lot more, I mean, lean essentially. Right. To some extent? Right? There's no need for a warehouse space because things are arriving just as you need them, and you don't have to store them anymore or worry about that.

Karen Kinsella: Yeah. So, customers will always use, you know, “Warehouse on Wheels,” as an example, and then supply-

Chris Parker: I like that.

Karen Kinsella: ... Yeah. “Supply Chain Engineering” will then help customers optimize their flows. And we're seeing a huge increase in the way that customers that maybe have operated in a certain way for years and years have really been challenged through this. So it's been phenomenal to see how some manufacturers have really course-corrected the way that they're working. We also see through COVID, probably this will continue into 2021 until things start to stabilize, but yeah, it's really challenged our teams and everybody working in it to think differently.

Chris Parker: I'm actually curious, and I wanted to talk a little bit more about COVID along with other challenges that we'll be facing, but while I have it at front of mind, the balance between just-in-time and just-in-case, do you feel like it's going to be something of a permanence? Like this was a big, these are lots of lessons learned, and so customers will be increasing how much they're holding or how much they're storing in order to be able to account for big disruptions like this or is it just a temporary thing well then once the dust settles, and we can get back to normal, we'll kind of revert back to the just-in-time method?

Karen Kinsella: Great question. I wish I had a magic wand. I would say we will probably see a reverse back to a just-in-time over a period of time. But of course, the buzzword that everybody is using at the moment is resiliency. So what any manufacturer that works with 200 to 450 suppliers, you only need one part to stop production. So what they will do obviously is look at mitigating the risk. And this is the support, I suppose, is giving the visibility of what's around them. Visibility is the new buzzword that's come out of this. If you've got inventory around you, you want to know where anything is at any one time.

Karen Kinsella: And in terms of your original question, "Is just-in-case going to continue?" I would say yes. A lot of companies are challenging their sourcing. We're seeing a shift from maybe global sourcing to near sourcing to take away that risk. A lot of companies are looking at how they can put their sourcing behaviors or sourcing patterns a lot closer to where that manufacturing consumption is going to be. You can't do that overnight. So you need to build your inventory and then perhaps look at alternative sourcing patterns to take away that ultimate supply chain risk.

Chris Parker: Okay. Going to, I mean, we've obviously covered COVID quite a bit, and I think I have some more questions later on, but what are some other big disruptions that are affecting the automotive industry today?

Karen Kinsella: Well, the industry, and this is also true of Expeditors, we've rebranded, recognizing the shift in the industry has really transformed itself into what it's calling mobility. So mobility is effectively the movement or the transportation of people, products, et cetera. And a lot of the automotive market now is looking at mobility in a completely different way, and really that's underpinned by technology. So the interaction of new vehicles that are coming into the market really are computers on wheels. I mean, everything that we see, whether it's a truck or a passenger vehicle, or even a motorcycle or e-bike, it's all underpinned by technology. So we've seen in the past couple of years, and notably within COVID, there has been a significant shift into the mobility space and not only-

Chris Parker: It's not just cars.

Karen Kinsella: No.

Chris Parker: It's anything with wheels at this point.

Karen Kinsella: Absolutely. And this is really, really transformational. It's very exciting to see the shift of a lot of traditional technology companies coming into the space of automotive. And that's really going to be the long change that we see in the future over the next three, five, ten years. I think one of the areas as we see the emergence of technology, not only in the new vehicles that are being produced, of course, that's transposed itself into the logistics landscape as well. So a lot of companies that are working in that space are now looking at using the technology platforms, the technology tools that are available to them. And that has shifted us from what you would classify as a traditional forwarder, per se, into a digital logistics.

Chris Parker: Digital, yeah.

Karen Kinsella: It's developed its own terminology and its own little language that's going on in the industry, which is also quite exciting. So we're working in the mobility space. Really we are now seeing customers, the pursuit of real time, is really everything that everybody is chasing at the moment. So coming back to what underpins the industry with that just-in-time, visibility is crucial. Visibility is the holy grail.

Chris Parker: In the last couple episodes, I've been hearing digital forwarder or traditional forwarder, and they definitely approach things. One seems to be in evolution of another, but they're still servicing the same customers more or less. How do both differ when they service the automotive industry or the automobility industry?

Karen Kinsella: Well, let's take a look at the traditional forwarder. Their primary focus is moving product from A to B, and you are right. They will always exist. The efficiency that they bring in moving product, there will always be the requirement for A to B. In an automotive world, the material flow is crucial in order to be able to get those parts or those components to the right place at the right time. But what is becoming even more apparent is the information flow. So you've got really the information flow and access to that data enables the customer to make decisions about their business at any one time. So we're seeing paramount importance is not only moving the parts in the material flow as we call it, but also the information flow, and that's where digital forwarders come in. They provide that link and they provide access to that information.

Karen Kinsella: Now, you will probably see a conversion of both of those environments. Expeditors, for instance, we focus on the material flow and the information flow as equally important to a customer, but you do have to have two distinct sectors that are setting themselves apart. One is we move your stuff, the other is we move your information. I think the combination of both of those is very, very powerful to an automotive business.

Chris Parker: Moving your information, an article that you had sent over to me in preparation for this talked a lot about startups, and one of the key things about startups as a new customer that is emerging in the automobility space is that they don't have, they seem to lack a lot of historical data that a lot of the older, bigger parties have. When it comes to digital forwarders and using this information, how are they able to, I guess, bring startups up to speed?

Karen Kinsella: Yeah. So I think startups not only with the type of product that they're bringing to market, which is really niche, if you look at one of the classic startups producing a new electric vehicle over ten years ago, you would say Tesla was a disruptive in the market. Whereas you had traditional manufacturers already producing electric vehicles or hybrid vehicles and using new fuel technology. So it wasn't new, but their approach to the whole manufacturing process was as a technology company. And you are right. The agility that a startup needs, they come to the market with no data, no historical data. So what they're looking for is something very agile, and we would term that as almost dynamic planning. They want to be able to take that customer demand - so you're walking into your dealership, and you want your purple car with your yellow wheels and your orange steering wheel, Chris -

Chris Parker: You know my tastes so well.

Karen Kinsella: There you go. And you could have a trillion different varieties of those components. So that brings complexity to any manufacturer. So it's going to be practically impossible to keep all of those parts at your disposal on the shelf nearby.

Chris Parker: Of course, yeah.

Karen Kinsella: So what you do is you move into a dynamic planning mode. So hence coming back down to the question of visibility, access to data, startups really are challenging the norm because they're not working in the same way that maybe a traditional forwarder did many years ago because of their appetite for using technology in their logistics landscape, for instance, the way that they do their planning, they will really spin on its head the use of that data. And they need to be very, very fluid because obviously a startup is in "cash is king," it's really vital for them fulfilling what goes onto their shelf or what they sound to a customer versus keeping that production line going.

Chris Parker: So what lessons have traditional forwarders or digital forwarders learned from startups that can impact or benefit more established or traditional auto manufacturers? Like we're obviously having to learn how to work with startups now. Are there any lessons being learned that we can then take to how we service other customers?

Karen Kinsella: Yeah, I would say a startup firstly requires a very consultative approach. They require their business to be agile, as I've said, and they will course-correct very quickly. So maybe they start off with a supply chain that looks like this today, but in three months or over six months period, it will look entirely differently. So they need to work with a partner that's very agile and very consultative in its approach. So I think one of the things that we've seen the migration of the traditional OEM (Original Equipment Manufacturer) is they're looking at a startup, and fundamentally all of the major manufacturers at the moment are changing to produce new vehicles and new models. So they're changing their processes as well, and they will actually have no data. So similarly to a startup, they will have no data to play with. Nobody really can predict what that demand is going to look like.

Chris Parker: Sure.

Karen Kinsella: So probably there is going to be a migration and meeting of minds in the middle. But one of the things certainly from a logistics point of view is everybody now recognizes that if you want to be agile, if you need to be able to control where your production is, and your inventory, and how your suppliers respond to change in today's environment, you really, really need to rely on information flow. And that comes back down to that digital logistics.

Chris Parker: What would you say startups are looking for when it comes to a freight forwarder?

Karen Kinsella: Oh, so, well, there's various different types of startups, Chris. Let's have a look at what startups are bringing to the market. There's been billions of investment in startups, either underpinned by traditional manufacturers or players that are coming into the market, but they're all applying to a niche in the market and they're putting in significant investments. So on the fact that a startup will come with no data, very little history, they are most certainly looking for something which is agile in its approach. And so, the ability to be able to flex is going to be paramount to them. And what they start up looking like today will be completely different in six months.

Karen Kinsella: And a technology company that really is investing in new processes, has put technology at the center of everything they do. So they are probably looking for a logistics partner that also has that same focus on technology or digital solutions, let's call it. So that's certainly something that we're seeing with the new startup that's emerging in our industry, very, very tech-savvy, and a lot of these startups are coming from the technology space as well.

Chris Parker: What kind of compromises have startups had to make in order to fit in line with traditional or digital forwarders and how we typically do things? When I think of startups, the processes aren't as cemented yet, the historical data is not there quite yet. So where are they, I guess, kind of pushed into areas where they may not be quite settled into?

Karen Kinsella: Well, I think that's where the experience comes from. We can help a startup, for instance, and a startup may require support with suppliers, making sure that suppliers are shipping when they need to be shipped against a production demand. They will need some support because otherwise, you need to put lots of people in place around the world to make sure that things are moving as they should be doing. So that oversight and the visibility of their supply chain becomes even more important for them. So one of the things that a startup will require is support in establishing those processes to mitigate the exceptions and to be able to make business decisions very, very quickly. That's most certainly what startups are looking for.

Chris Parker: What ways are we extending or exerting more efforts to make these moves successful for our customers? Be they the startups or the traditional forwarders.

Karen Kinsella: Well, let me answer that from an Expeditors' perspective and also from a market perspective. We've seen a whole host of new startups within our industry, for instance, which are selling software solutions, which are selling platforms, digital solutions, which is fantastic. It's an area that Expeditors invests in and has always invested in technology solutions because we offer part-level visibility as a standard. I would say to customers for many, many years. I would say it's how the customers use that information that they have access to, which is going to be the biggest challenge. It's fantastic seeing a dot on the map, but unless you know you have a process to be able to react to that, and you're working with a partner that helps you understand what that information needs, be it predictive analytics, or we all use the word of big data. We've seen a lot of customers now are using that to drive their business decisions. And I suppose that's where a lot of customers now are asking for information that they can use more in an analytical way.

Chris Parker: Right. That puts us more in that consultative position.

Karen Kinsella: It does, it does. And it drives the industry more towards a new buzzword that's been used, that digital twin. It's taking us into a space that really nobody spoke about maybe five, ten years ago. And all of that is being driven by new digital solutions that we can offer to customers.

Chris Parker: You mentioned the expansion of automotive into automobility, you talked about scooters or e-bikes - sorry - which means we've got electric vehicles now to think about. They're big batteries with wheels. How is that changing things? Because from the training that I've done, or little I know about it, dangerous goods is something that needs a lot of care and attention. And I'm assuming moving these big batteries around with wheels is going to require some special attention or some evolution in process on the automotive side of when we service our customers. So what kind of changes are you seeing with that?

Karen Kinsella: Yeah. I'll step back slightly, and we're going to talk about mobility. So there's four components that we classify within mobility, and it's called ACES, Chris. So this isn't a card game. This is what we term as Autonomous, Connected, Electric, and Shared, and obviously, the E signifies electric, but really it lends itself to alternative fuels. And what we've seen is a shift in consumer demand – where people live, how they buy, they buy online. Also, the view that customers have about ownership. The ownership of a vehicle is no longer a primary goal. You can get access to moving yourself and also your product in completely different ways. So that's really borne itself into what we call mobility solutions.

Karen Kinsella: I would say that the shift to electric has come around because consumers are having more access to information. They're becoming more environmentally aware, of course. And it's building a new generation. I don't know. Let me ask you a question.

Chris Parker: Sure.

Karen Kinsella: Would you purchase your car because it was the cheapest, or would you purchase a car because it has the lowest emission?

Chris Parker: Oh gosh. I mean, I'm a millennial, it's going to be both.

Karen Kinsella: There you go. And I think this is what we're seeing. People are becoming more aware.

Chris Parker: Yeah, absolutely.

Karen Kinsella: And they want to see that they're making an impact. Now, obviously, there is a cost to that. And producing technologies such as electric vehicles has a different cost to that. But as the market expands, the cost will reduce. A huge component of driving an electric vehicle, whether that's a shared vehicle or one that you're going out and buying, is the ability to be able to charge it. And not everybody has the luxury of having a charging point at home, for instance, so if you go on a journey and you're calculating that journey, you know at some point that you may have to refuel. And so we're seeing now the ability to be able to choose an electric vehicle is becoming more and more evident as charging infrastructures are coming into place.

Karen Kinsella: This is developing its own industry in itself. The energy companies are coming into this, which is quite exciting. And you've got a whole new cluster of businesses that are coming into play as well as the looming threat of legislation because obviously, a lot of governments are now using this as one of their policies in order to be able to drive this change forward. So manufacturers are responding extremely well. And then coming down into our world, moving batteries is probably the most complex product that you can think of.

Chris Parker: And slapping wheels on it makes it even more complex.

Karen Kinsella: Oh, absolutely. So, there are various different types of components that go into producing a battery, lithium is one of them, and this is probably the most, one of the most tightly controlled from an airline's perspective or an ocean carrier. They most definitely will want to make sure that the compliance and the security of all of their customers is not put at risk because of a risk of a fire due to a battery, for instance. So there are very strong industry guidelines to keep all customers safe and move this type of product. The awareness about moving this type of dangerous goods probably fluctuates. And this is one of the things that we do as a Vertical team is make sure that we bring this to the head so customers are aware of their responsibility and accountability. And also ours as a logistics company. So yeah, it's thrown COVID into moving batteries, and it's quite exciting.

Chris Parker: Absolutely. Definitely keeps you on your toes. I imagine a lot of sleepless nights and sleepful nights for you. There's no regularity at all.

Karen Kinsella: There's no regularity, but it is I mean, quite honestly, Chris, this is quite exciting to see the forecast that we see for the next generation is 40% of vehicles will have a battery of sorts. There will be for sure new developments to eliminate maybe the component of lithium. And that's already something that manufacturers are looking at that research and development to eliminate that. But the world that we're living in now is making people aware that moving batteries is not as simple as just moving something from A to B.

Chris Parker: Right. And the government controls that are involved too can definitely complicate those things and make it that much more of a challenge to make it accessible and affordable and all that.

Karen Kinsella: Yeah. Yeah. Very exciting. And then the next, obviously with the battery directive, and that will throw us into a completely different conversation that we can talk about recycling because where we look at the industry a couple of years ago, the recycling of lithium batteries was close to 2%.

Chris Parker: Wow.

Karen Kinsella: And we do see that this is now going to build also consumer awareness.

Chris Parker: Absolutely.

Karen Kinsella: And obviously, there will be certain legislation and regulatory controls that are put into place to make sure that you recycle safely.

Chris Parker: Yeah. I mean, there's so many countries that are making announcements around goals to become carbon neutral or reducing emissions as much as possible. I imagine that's going to affect the automotive industry. That's going to affect how many cars are out on the streets and what kind of vehicles will be out there. It sounds like you've got a lot of fun things to consider coming your way.

Karen Kinsella: Yeah. Yeah. I look forward to 2021, and yeah, quite exciting. But it was good to talk about some of these topics with you today.

Chris Parker:

Yeah, absolutely. One last thing, I guess, sounds like there's a lot to think about on your side, and you're constantly learning and as the industry is evolving. What helps you sleep at night when it comes to working in automobility?

Karen Kinsella: Well, regardless of what the vehicle looks like, we will all still be moving, whether it's on two wheels, three wheels, or four wheels. And I think, people sometimes talk negatively or positively, but I'm excited about a future where the next generation of vehicles will be lifted off the ground. And then we'll be talking to our aviation team because this is not, probably not so far away, maybe not in my generation, but certainly, it's quite exciting. So I like the challenge of evolution. And I think our industry is at a forefront of this. And so it's great to be part of it. So yeah, apart from that, I sleep quite soundly. So thank you for asking.

Chris Parker: Dreaming for the future. I like that. If people want to reach out to you or find you, where's the best place that they can get in contact with you to learn more about this stuff?

Karen Kinsella: Through normal media channels, Expeditors' contact, LinkedIn, et cetera. We've got teams across the world spread in every geography. So all of our teams would be really happy to have the same type of conversation.

Chris Parker: Absolutely. Well, thank you so much for your time, Karen. It was really fun to chat about this and to chat with you.

Karen Kinsella: Oh, fantastic, Chris. Great to talk to you.

Chris Parker: Thanks for listening to today's episode. If you've got 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 Take care and I'll see you next time.


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Blog was originally posted on December 8, 2020 10 AM

Written by Expeditors

20 minute read