Porsche Cars North America Inc.
Porsche is the standard-bearer for luxury and performance in the automotive world. The company’s reputation for precise German engineering, uncompromised standards and a world-class driving experience have helped it become one of the most respected and recognized luxury automobile brands in the world. Porsche’s global success lies behind the quality of its products, but there are many behind-the-scenes factors that contribute to the company’s profitability.
For example, the task of bringing Porsche’s German-built cars to North America is described as “importing,” but most people don’t give it another thought beyond that single word. For Justin Newell, Porsche Cars North America’s manager of vehicle logistics and port operations, that one word contains myriad responsibilities and challenges that rarely are known by the general car-buying public.
Newell oversees Porsche’s ocean freight shipments from Germany to the United States and Canada. As the 14-year veteran of the company explains, once a car is loaded by Porsche AG onto a vessel headed overseas, it becomes Newell and his team’s responsibility.
Although this can be a daunting task with the complications created by issues on both sides of the Atlantic Ocean, Newell says Porsche applies the same level of precision and efficiency to this area as it does to engineering its cars, and says the company continues to find ways to streamline its operations and become more efficient.
Lean and Mean
Efficiency is one of Porsche’s greatest strengths on the factory floor, and Newell says the company’s port operations and logistics are no different. Because the company is relatively small by automotive OEM standards, Porsche is able to make decisions quickly, without needing to go through a long chain of command.
“We probably have the leanest throughput process of any OEM,” Newell says.
Another major reason why Porsche is able to keep its logistics running smoothly is because the manufacturer doesn’t allow customization before cars are loaded onto the vessel or while they are at the port.
Other manufacturers, who build lower-priced vehicles for import to the United States, add customization elements to their cars once the vehicles arrive in North American ports because the labor costs are lower. However, this can result in longer processing times in port while vehicles are being customized.
Although some minor items like floor mats were once installed at the port, Newell says Porsche now insists on keeping its logistics process as streamlined as possible. Not only does this result in fewer processing delays, but it also allows dealers to offer car buyers more options and greater control over the buying process. Newell says the company wants to ensure that the cars buyers drive off the lot are of the highest quality possible.
“Our engineers insist that all options must be added either in the factory or at an authorized Porsche dealership,” Newell says.
Newell says capacity is perhaps the most significant logistical challenge for Porsche, as it is for most OEMs at the moment. Rail capacity problems in Europe and the United States are forcing many OEMs to turn to increased over-the-road trucking for their needs.
Newell says Porsche avoids these problems by contracting with carriers that have open and enclosed equipment. Additionally, Porsche remains in close contact with its carriers and keep an ear to the ground for new carriers that may be able to assist with Porsche’s growing needs, Newell says.
Communication is the key to maintaining strong relationships with their supplier partners, according to Newell. This is another benefit of a relatively small company: Carriers work directly with those in charge at Porsche Cars North America, including Newell. This means that any challenges that come up along the way receive the full attention of the company’s top decision-makers.
Newell says Porsche is also dealing with challenges involving fuel and surcharge expenses passed along from carriers without passing those additional costs along to car buyers. The company uses vendors like Wallenius Wilhemsen Logistics (WWL), which work to reduce sulfur emissions from vessels to comply with environmental restrictions in the United States.
However, low-sulfur fuels cost more, and regulations along the Eastern Seaboard require the use of this fuel within 100 miles of the shore. Newell says sleeker, more aerodynamic and more fuel-efficient vessels are on their way as shown by WWL and others, although it will be a few years before they will be put into use.
Newell says Porsche is dedicated to reducing its fuel usage in the coming years not only to keep its own costs down, but also to reduce the impact the company has on the environment.
To keep Porsche at the top of the luxury automotive market, the company’s operations must work in sync, much like the engines in Porsche’s sports cars. Through the efforts of Newell and his team in logistics and port operations, Porsche Cars North America has a solid foundation for success in the future.