Terminals and Ports and Digitalization Essay

Pages: 45 (12247 words)  ·  Style: Harvard  ·  Bibliography Sources: 20  ·  Level: College Senior  ·  Topic: Business

SAMPLE EXCERPT:

[. . .] As Jens Meier, CEO of Hamburg Port Authority, noted in a 2013 interview, "If there is the worldwide recession when we see the number of transportation going down, we try to use that time to fix some infrastructure plans and some new projects which makes us fit for the future when the numbers are growing up. And if the infrastructure is ready, then you can go little bit more aggressive to the market to try to get more volume if you want to. It is a very special Hamburg approach." What Meier (2013) indicated was that the port industry needs to address infrastructural issues in down times so that it is ready to meet customer demands when customers do come back. The benefits of digitalization are still being tested -- but the possible upside is evident as Bonney (2017) has noted: "A trial shipment completed last week between North Europe and the East Coast of North America is a sign of digitalization's potential to simplify shipping, and take a humongous cost out of the supply chain." The possibility of making the shipping process easier for consumers through digitalization could revolutionize the way ports and terminals like APMT operate.

The port industry has remained mainly unchanged for the last 50 years, and has been slow to embrace new technology (Meier, 2013; Bonney, 2017). This means that industry players continue missing important opportunities to increase customer satisfaction. This is particularly true for APMT (Bonney, 2017). Digitalization offers a unique opportunity for enhancing customer satisfaction (World Maritime News, 2017). 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. APMT serves a multiplicity of customers, including clearing and forwarding companies, export and import companies, and logistics firms. For these clients, inefficient processes due to lack of or inadequate digitalization may mean delays in cargo delivery, loss of cargo, and even loss of revenue, eventually resulting in customer dissatisfaction. If APMT is to enhance customer satisfaction, digitalization is an important priority. In essence, digital innovation is essential if the firm is to remain competitive.

Cruz and Sarmento (2016) are worth quoting in full as their findings identify the nature of the problem and the possible solution at one and the same time (p. 18):

Digitalization will allow for the large investments in infrastructures to be optimized and will lead to an increase in mobility and efficiency. This could be achieved by management providing real time information, or by increasing tolls to enable operators to be more flexible and to be able to respond to market and consumer changes, and to be more proactive. The transformation that has occurred in Portugal in the transport sector over the last decades has been an impressive effort to close the infrastructure gap that the country suffered. However, new challenges ahead focus mainly in reducing costs, improving quality, and increasing mobility. There is a large role for digitalization in this effort.

What this means is that in the face of infrastructural demands for the port and terminal industry, a solution is needed that help the industry to refine its role, increase customer satisfaction and maintain economic growth and well-being. As Portugal has shown through its investment in infrastructure, the results are positive and digitalization can help to close the rest of the infrastructural gap that remains for the country's ports (Cruz and Sarmento, 2016). Indeed, Helig et al. (2017) have shown that "as actors in world-wide supply chains, seaports are particularly affected by technological change. Due to the high requirements in the logistics sector, e.g., regarding costs, efficiency, security, and sustainability, digital innovation is essential to stay competitive" (p. 1341). Not only therefore have researchers identified a need for ports to upgrade infrastructure, they have indicated that digitalization is the way to do it most effectively.

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

However, the scarcity of scholarly attention to the impact of digitalization on customer satisfaction is particularly true for the port industry (Cruz and Sarmento, 2016). Much of the literature in this area focuses on organisational metrics such as container capacity, output, and cost savings, giving little or no attention to customer satisfaction and other customer metrics (Branch, 2012; Lee et al., 2012). The scarcity of research within the context of the port industry may be due to the fact that the port industry has been relatively sluggish in adopting digital technologies compared to other industries. Indeed, the port industry has remained mainly unchanged for the last 50 years, and has been slow to embrace new technology. This means that industry players continue missing important opportunities to increase customer satisfaction. In the port industry, 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.

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

For APMT, no research has been done to examine the link between digitalization and customer satisfaction. Since customer satisfaction is an important hallmark of organisational performance, it is crucial to understand how IT investments can influence customer satisfaction at the organisation. APMT serves a multiplicity of customers, including clearing and forwarding companies, export and import companies, and logistics firms. For these clients, inefficient processes due to lack of or inadequate digitalization may mean delays in cargo delivery, loss of cargo, and even loss of revenue, eventually resulting in customer dissatisfaction. Though APMT has implemented various technologies such as cargo tracking systems, no evaluation has been conducted to examine the impact of the technologies on customer satisfaction. It is imperative for the organisation to understand the value of digitalization, especially from the perspective of customer satisfaction.

According to consumer satisfaction theories, such as the Value Precept Theory and Contrast Theory, consumer satisfaction is not as simple to gauge as taking, so to speak, a measurement of engine oil using a dipstick. Value precept theory for instance holds that "what is expected from a product may not correspond to what is desired and valued in a product, and thus, values may be better comparative standards as opposed to expectations" (Yuksel and Yuksel, 2008, p. 1). Contrast Theory holds that "when actual product performance falls short of consumer's expectations about the product, the contrast between the expectation and outcome will cause the consumer to exaggerate the disparity" (Yuksel and Yuksel, 2008, p. 4). Both of these theories can be applied to the case study in the following manners:

Value Precept Theory can be applied because while shippers may have one set of expectations about what type of service they are likely to receive from a terminal firm, these expectations may not align with the values that the customer would like to see promoted by the same firm. This theory is used herein to explain the findings obtained through interviews of participants regarding their experiences at APMT. The idea behind it is to show that while consumers may not want to accept service that is not on par with what they value, their expectations can be so minimal that they accept working with the provider in spite of the poor quality of service.

Contrast Theory is applied to help explain the opposite phenomenon -- namely, that when consumers have high expectations and are disappointed, their reaction is exaggerated to emphasize their disapproval. The purpose of applying both theories to the findings of this study is to maintain a balanced perspective with regard to how participant responses should be judged -- neither accepted nor rejected at face value one way or the other. Reactions… [END OF PREVIEW]

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