Digitalization and Customer Satisfaction at APM Terminals

Introduction

In business, the significance of customer satisfaction cannot be overemphasized. With increasingly many firms providing similar goods or services, dissatisfied customers can easily look for alternatives. Accordingly, firms do whatever it takes to retain customers and keep them happy (Kumar, 2016). With tremendous technological advancements over the years, firms are ever more relying on information technology (IT) as a valuable driver of customer satisfaction (Mithas, Krishnan and Fornell, 2005; Ryding, 2010; Deloitte, 2013; Jan and Abdullah, 2014; Meige and Schmitt, 2015). Whether it is processing a customer order or automating luggage handling, firms in diverse sectors and industries have adopted modern technologies in an attempt to enhance process efficiency. Most organizational processes have now been digitalized — they require just a click of a button or little manual work. While digitalization has generated important benefits for organizations in terms of reducing operational costs, it has also created immense value for their customers, thereby increasing customer satisfaction.

One context where digitalization can have enormous value for the customer is the port industry. The industry is concerned with a plethora of services ranging from container handling and shipping to port management and inland logistics (Branch, 2012). Industry players have increasingly adopted digital technologies in an effort to serve their customers better. Among other technologies, cargo tracking systems, surveillance systems, sensor technologies, wireless technologies, mobile equipment, drones, 3D printing technologies, and analytics technologies are gaining popularity in the port industry. These technologies have proved valuable in ensuring timely shipping and cargo delivery, guaranteeing cargo security, maximizing port capacity, improving process efficiency, and reducing operational costs for both port operators and their clients (Accenture, 2016; Heilig, Schwarze and Vob, 2017).

Nonetheless, there is little empirical evidence of the relationship between digitalization and customer satisfaction in the port industry. Focusing on APM Terminals (APM), the present study sought to fill this gap in the literature. The study specifically sought to examine how the organization can make use of digitalization to improve customer satisfaction. APM is a Dutch multinational container terminal company. With its headquarters in The Hague and under the ownership of the global conglomerate Maersk Group, APM provides terminal operations, cargo support, port management, and container inland services to hundreds of customers in more than 60 countries around the world. The company boasts over 70 port and terminal facilities as well as more than $4 billion in revenue as of 2016, making it one of the largest container terminal and port operating companies worldwide.

Conceptual Framework

Customer relationship management (CRM) literature strongly emphasizes the importance of healthy relationships between businesses and their customers (Ryding, 2010; Jan and Abdullah, 2014). In the business world there has been a remarkable shift from product-oriented business to customer-oriented business (Mithas, Krishnan and Fornell, 2005). This shift has been driven by the need to attract new customers and maintain existing ones through long-term relationships. For a business organization, creating enduring relationships with customers entails undertaking activities aimed at establishing and maintaining a mutually beneficial relationship. The organization benefits through customer loyalty and profitability, while customers benefit by having their needs satisfied in accordance with their expectations. For any prudent business organization, customer satisfaction is the prime goal (Bhatnagar, 2016).

The use of technology can drive customer satisfaction. Technology influences customer satisfaction by transforming customer service processes, increasing service quality, enhancing information exchange between businesses and customers, and boosting the organization–customer relationship (Ryding, 2010; Jan and Abdullah, 2014; Bhatnagar, 2016). Further, technology enables business organizations to lower operational and transaction costs, deliver offerings at a lower price, reduce delivery or wait times, and increase the perceived value of products or services (Mithas, Krishnan and Fornell, 2005). These effects carry positive implications for customer satisfaction. Essentially, the study was grounded in the idea that technological adoption on the part of an organization drives customer satisfaction.

Problem Statement

Digitalization offers a valuable opportunity for enhancing customer satisfaction (Mithas, Krishnan and Fornell, 2005; Ryding, 2010; Jan and Abdullah, 2014). However, much of the literature in this area has focused on the impact of IT investments on tangible organizational performance measures such as productivity, profitability, and market value. In other words, there has been little attention paid to the connection between IT investments and intangible aspects such as customer satisfaction.

The scarcity of scholarly attention to the impact of digitalization on customer satisfaction is particularly pronounced in the port industry. Much of the literature in this area focuses on organizational metrics such as container capacity, output, and cost savings, giving little or no attention to customer satisfaction and other customer-centered metrics (Branch, 2012; Lee, Tongzon and Kim, 2012). This scarcity of research within the port industry context may be partly attributable to the fact that the port industry has been relatively slow in adopting digital technologies compared to other industries. Indeed, the port industry has remained largely unchanged for the past 50 years and has been slow to embrace new technology. This means that industry players continue to miss important opportunities to increase customer satisfaction. In the port industry, digitalization can be valuable for improving the efficiency of processes — from forwarding and clearing to cargo operations, shipping management, and inland transportation. Without robust digital platforms, managing these processes can be a daunting task, to the disadvantage of not only the port company but also its clients.

Even so, the limited literature available indicates that digitalization in the port industry can positively affect customer satisfaction (Lee, Tongzon and Kim, 2012; Port Technology, 2015; Pernia and Santos, 2016; International Container Insurance [ICI], 2016; Accenture, 2016; Heilig, Schwarze and Vob, 2017). In the port industry, customers constantly require seamless movement of their cargo. Digitalization can enhance cargo movement through cargo tracking systems and related technologies, thereby improving the customer service experience. While this literature provides important insights regarding the impact of port digitalization on customer satisfaction, empirical evidence in this area remains scarce, and the few available studies may not be readily generalizable beyond the contexts in which they were conducted.

For APM specifically, no research has been conducted to examine the link between digitalization and customer satisfaction. Since customer satisfaction is an important hallmark of organizational performance, it is crucial to understand how IT investments can influence customer satisfaction at the organization. APM serves a wide range of customers, including clearing and forwarding companies, export and import companies, and logistics firms. For these clients, inefficient processes resulting from inadequate digitalization may mean delays in cargo delivery, loss of cargo, and even loss of revenue — ultimately resulting in customer dissatisfaction. Although APM has implemented various technologies such as cargo tracking systems, no evaluation has been conducted to assess the impact of these technologies on customer satisfaction. It is therefore imperative for the organization to understand the value of digitalization, particularly from the perspective of customer satisfaction.