Alignments between strategic content and process structure: the case of container terminal service process automation

Abstract

During the last three decades, technological innovations in cargo handling equipment have made it possible to automate operational processes in container terminals. Despite the increasing trend in terminal automation, little work has been done to develop theoretical guidelines for evaluating the benefits of this industrial practice. We assess terminal automation by focusing on whether strategic content and process structure are aligned. In this study, we explore the reasons that these results are mixed in the context of service automation. Have market competitiveness and operational performance been enhanced by automation in seaports? We focus on two key strategic elements and their proper alignment to produce the best performance for a port. The first element is the overall business strategy and strategic content adopted by the port. In this study, we look at Porter’s (Competitive strategy, Free Press, New York, 1980) generic strategic classification of low cost, differentiation, or focus strategies. The second element is the process structure of the port, which may have been impacted by technological innovation. Using the framework of contingency theory, we explore the interface of strategic content and process structure and how this interface impacts the service process automation. A multiple case study is conducted on a sample of 20 container terminals, selected from the list of 2014 Journal of Commerce’s Top Productive Terminals. We come up with three important findings. First, a port’s strategic market position determines the choice of overall business strategy. If a port is strategically positioned as an international gate, then it should adopt an overall cost-leadership strategy, whereas a transshipment terminal should adopt an overall differentiation strategy. Second, we find that the process structure adopted is associated with the level of automation, and a differentiation strategy is dependent on the level of flexibility, speed, and reliability. Higher market uncertainty requires higher flexibility, while lower market uncertainty requires greater speed and reliability. Third, the level of process automation depends on throughput volume and stability. Closer relationships with maritime supply–chain partners help increase throughput volume and reduce throughput uncertainty.