Episode 555: GXO CEO Patrick Kelleher on AI, Robots, and the Future of the Modern Warehouse

SPEAKER_1 (0:12)

Welcome into a new episode. Today's guest is Patrick Kelleher. He is the CEO of GXO. Patrick, thanks so much for joining us. Happy to have you here.

Patrick Kelleher (0:20)

Thank you for having me. It's really great to be here.

SPEAKER_1 (0:22)

So I want to start with what's really on everyone's mind. That's obviously AI. It's impacting and disrupting industries of all sorts, not just logistics. But in 2025, GXO launched GXO IQ, an AI intelligence platform, excuse me, built for the logistics industry, obviously. And your CTO went on record in July calling AI the next frontier. For you personally, what is your view on the technology and how do you explain to customers and to the, frankly, the team as a whole, the enormity of the technologies impact in your eyes?

Patrick Kelleher (0:57)

Yeah, so I think first to confirm, I really think AI is that big. It is permeating in all parts of our lives. From a supply chain perspective, we're seeing its benefits everywhere.

I'll start with the big strategic planning of supply chain and the way an AI is looking at data to determine where inventory should be located, how inventory should flow. There are big decisions that are made in supply chains around whether or not products should leave the Port of Yantian in China on a seven day boat or a 14 day boat. The costs are different. You can ship on a high cube 40 foot container, a low cube 40 foot container.

SPEAKER_1 (1:40)

A lot of data is taken into account.

Patrick Kelleher (1:41)

The number of permeations and the way to execute supply chain solutions is just exponential. And around that planning activity, AI is playing a huge role. We're then applying AI in the warehouse environment. AI is helping us to decide how to meter work onto the production floor. That in and of itself is creating productivity within the warehouse. AI is helping our associates do their jobs. Many of our associates, when they're picking product, wear maybe Google glasses. Those Google glasses are making decisions around what the best path is for an associate to walk through a warehouse, what order they should pick product, and how they deal with issues when they come up, which makes their job much easier. AI is making it much easier for us to train people in their roles, because it is dynamically engaging with people, helping them identify when they've made a mistake, correct a mistake, becoming better at their jobs, so productivity gets better, quality gets better. But then it gets even bigger. We've deployed 45 pilots on humanoids. It is AI, that is the training agent behind the humanoid. So we plug a humanoid in, but it doesn't know what to do.

We actually can train a humanoid using film of an associate performing a similar task or using somebody who is manually controlling the humanoid to record those movements. And AI is continuing to code the humanoid to be learning. And so recently in one of our pilots in Southern California, we taught a humanoid to pick cosmetics.

So it knew how many cosmetics were required for the order, and it had the dexterity to make individual cosmetics, put them in a box and send it off to be shipped.

That was not possible. That level of training a robot was not possible even five years ago without AI where it is today. So from my perspective in supply chain, AI is not going away. AI is going to be a big feature of how supply chain solutions are executed.

I always say people are not going to lose their job to AI. People are going to lose their job to people who use AI. It's going to be the same from an industry perspective. So at GXO, we're passionate about the role that AI plays, and we are going to win competitively because we have great execution on AI.

SPEAKER_1 (4:21)

What do you find is the right balance for a company like GXO when you have the human and technology coexisting? Because you talk about how an associate can put on Google Glasses, and the technology can help better find the best route to get from one product to another. You talk about how it could help train more efficiently, then you talk about how it could help train these humanoids. What do you find is the best balance between the two?

Patrick Kelleher (4:47)

Yeah, I don't think it's about finding the best balance. I think you have to allow the right solution to emerge. But first, we have an industry challenge. It's not just GXO.

In warehousing, and this is true across 26 countries we operate in, in warehousing, there is a shortage of labor. We have 25% turnover in our warehouses on a regular basis. That is industry standard. So there are not people available to do the jobs that are necessary.