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 technology as a valuable driver of customer satisfaction. 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. In fact, 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 customers, thereby increasing customer satisfaction.

One context where digitalization can have enormous value for the customer is the port industry. The industry encompasses 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 Voss, 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 proposed study seeks to fill this gap in the literature. The study specifically examines 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 worldwide. The company boasts over 70 port and terminal facilities and more than $4 billion in revenue as of 2016, making it one of the largest container terminal and port operating companies in the world.

Problem Statement and Research Aims

Problem Statement

The port industry has remained largely unchanged for the last 50 years and has been slow to embrace new technology. This means that industry players continue to miss important opportunities to increase customer satisfaction. This is particularly true for APM. Digitalization offers a unique opportunity for enhancing customer satisfaction. Within the context of container terminal operations, digitalization can be valuable for improving the efficiency of processes — from forwarding and clearing processes to cargo operations, shipping management, and inland transportation. Without strong digital platforms, managing these processes can be a daunting task, to the disadvantage of not only the port company but also its clients.

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 a lack of or inadequate digitalization may mean delays in cargo delivery, loss of cargo, and even loss of revenue, eventually leading to customer dissatisfaction. If APM is to enhance customer satisfaction, digitalization is an important priority. In essence, digital innovation is essential for the firm to remain competitive.

Research Aim

The aim of this study is to examine how the use of digitalization can enhance customer satisfaction at APM.

Research Questions

1. What digitalization techniques has APM implemented?

2. What is the level of customer satisfaction at APM?

3. In what ways can digitalization affect customer satisfaction at APM?

Research Objectives

1. To identify the current digitalization practices at APM.

2. To evaluate the extent of customer satisfaction at APM.

3. To understand how APM can use digitalization to improve customer satisfaction.

4. To make recommendations for the improvement of digitalization at APM.

Literature Review

Digitalization generally denotes the incorporation or employment of digital technologies into day-to-day processes (Meige and Schmitt, 2015). Within the context of an organization, digitalization refers to the computerization or automation of processes, systems, and jobs with the aim of improving accessibility and efficiency (Lee, Tongzon, and Kim, 2012). Virtually every organizational process today involves some degree of computerization — from human resource processes and payroll management to customer relationship management, procurement, sales and marketing, forecasting, finance and accounting, and operations management. Digitalization is enabled by pervasive computing (e.g., cyber systems and the Internet of Things), delivery models (e.g., cloud computing), data analytics, social media, and mobile computing (Heilig, Schwarze, and Voss, 2017). These IT systems transform processes, information flows, and people by facilitating the collection, processing, management, retrieval, and distribution of data.

The digitalization of processes is essential for enhancing the customer experience, which consequently increases customer satisfaction (Deloitte, 2013). Though there is no universally accepted definition, customer satisfaction essentially refers to the extent to which the goods and services provided by a firm meet or exceed the expectations of customers (Kumar, 2016). For businesses, customer satisfaction is crucial for enhancing customer retention, customer loyalty, and customer lifetime value. Indeed, customer satisfaction is an important driver of organizational performance. This explains why the adage "the customer is king" remains so popular. Prudent business organizations invest a great deal of time, effort, and resources to ensure customer satisfaction. They understand that in a fiercely competitive business environment, customers can easily switch to alternatives where their needs are more effectively met.

From the telecommunications industry to the financial services industry and the healthcare industry, digitalization has been shown to have a tremendous impact on customer satisfaction (Deloitte, 2013; Meige and Schmitt, 2015). Digitalization makes the process of serving customers easier, quicker, more seamless, and more interactive. In the port industry, experts have touted digitalization as crucial for fulfilling the needs of customers, who constantly require seamless movement of their cargo (Port Technology, 2015; Pernia and Santos, 2016; International Container Insurance [ICI], 2016; Heilig, Schwarze, and Voss, 2017). From cargo tracking systems to robots, drones, data analytics, sensor technologies, and e-commerce platforms, industry players now have a broad array of digital tools at their disposal to deliver a more fulfilling service experience to their customers (Accenture, 2016).

In their survey involving 21 shipping companies in Korea, Lee, Tongzon, and Kim (2012) found that the use of digital technologies in container port management positively influenced customer satisfaction as well as port competitiveness. The port in question employed digitalization by installing an e-workplace, a security management system, and a customer relationship management system. This study provides important empirical evidence relating to the impact of port digitalization on customer satisfaction. However, generalizing its findings beyond the specific context in which it was undertaken may be difficult.

On the whole, the connection between digitalization and customer satisfaction remains a largely under-researched area, particularly within the context of 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-facing metrics (Branch, 2012; Lee, Tongzon, and Kim, 2012). The scarcity of research in this area may be due to the fact that the port industry has been relatively sluggish in adopting digital technologies compared to other industries. More specifically, no research has examined the link between digitalization and customer satisfaction at APM. This study will therefore have significant implications for APM and the port industry as a whole.