Cargotec strategy progressed in 2020, importance of sustainability increases
Our current strategy period runs until end-2021. We have made good progress in services, digitalisation and productivity. The importance of sustainability continues to increase.
Cargotec’s present strategy aims to secure profitable growth by focusing on customer centricity, services, digitalisation and productivity. Additionally, we want to incorporate sustainability more strongly into our business strategy and continue to shape our industry for better everyday.
In May 2020, Cargotec committed to the United Nations Global Compact’s Business Ambition for 1.5°C. By making this commitment, we strive to mitigate climate change through making the logistics industry more efficient and in developing solutions to enable a low-carbon economy. In terms of our own actions, we aim to reduce the CO2 emissions of raw material sourcing and product use phase by at least 50 percent from the 2019 levels by 2030, and reach carbon neutrality in our own operations by 2030.
In our strategy work, the aim in 2020 has been to embed the climate ambition into Cargotec’s existing functional, divisional and strategic business unit strategies and to collect ideas for new business opportunities. Our divisions and functions have analysed the climate ambition implications in terms of their strategies, with a target to embed the needed actions into daily business and operations over the next few years.
Even during the COVID-19 crisis, the strategy work and the climate ambition strategy work have continued. There was a temporary hiatus during spring, as the focus was on steering the ship through the uncertain COVID-19 crisis. As the outlook stabilised, the work continued in August.
Let’s now take a closer look at how we have progressed in services, digitalisation and productivity.
Services - efficient use of equipment data benefits customers and enhances our offering
Cargotec’s service sales have increased steadily during the recent years (2013: MEUR 729, 2019: MEUR 1,062, a 46% increase). Our target in service and software sales is 40 percent of net sales - in January–September 2020, the share of service and software sales of our total sales was 34 percent.
We want to extend our service offering towards intelligent solutions that enable us to serve our customers wide across their solution life cycles. Our advancements in service offering are indeed digital: Our equipment data provides valuable insight to our customers in terms of how their equipment is performing in the operations. In addition, historical data analysis provides valuable predictions of the future performance. This makes it possible to pinpoint services operations to an exact time and place where it is most needed.
The equipment data also gives us a good visibility on the activity levels in the cargo flow and logistics in different segments and geographical locations. This has been valuable when we estimate how our industry is coping in the midst of the COVID-19 crisis, for example.
A good example of our advancements in services is MacGregor’s remote service centre in Gdansk, Poland. The centre was established in 2017, with a target to improve customer experience by faster responses, harmonised processes, and smarter pricing. The centre also aims at providing workforce flexibility and thereby higher service hours. Ultimate targets were to reduce overall costs and create a new culture in our customer service organisation.
Results have been promising. We have seen a faster inquiry processing, faster quote turnaround, while personnel costs have also reduced. All in all, revenues have improved through a better customer experience.
Gdansk is the main hub that serves all MacGregor service customers globally, routing their requests and orders and managing spare parts orders, for example, Asia - the most important market for MacGregor - is being specifically serviced from a regional Singapore hub established in 2019.
In 2020, when the COVID-19 pandemic started to affect the global maritime industry, the service centre moved to a remote work method within one day. This way the business interruption was minimal, and we were able to serve the MacGregor service customers to high standards throughout the spring and onwards.
Digitalisation - supporting customers achieve optimal performance
Cargotec’s research and development investments focus highly on digitalisation as well as projects that aim to improve the competitiveness, cost efficiency and eco-efficiency of products. These investments have grown steadily over the recent years. For example, in 2013 R&D-expenditure was ca. 63 million euros, while in 2019 it was around 102 million euros.
A good example of our digital ambition is the Digital Solutions Hub (DiSH), based in Tampere, Finland. With DiSH, we accelerate the digitalisation of Cargotec's businesses. DiSH provides digital solutions to Kalmar, Hiab and MacGregor, providing them an efficient way to develop new software and applications and turning ideas quickly to profit.
In a typical case, real time data from equipment and systems is ingested and stored in cloud, aggregated and analysed with machine learning and artificial intelligence to create valuable KPIs or predictions. Results are then shared with customers, which allows them to evaluate their fleet performance and plan possible adjustments to achieve optimal performance.
Productivity - developing our business operations and common platforms
We want to enhance our productivity by focusing on activities that add value and benefit our customers and us by developing our business operations and common platforms. The development of our Cargotec Business Service (CBS) is a good example of this.
We opened our global CBS centre in Sofia, the capital of Bulgaria in early 2018. With CBS, we aim to develop and deliver world-class global business support services in the fields of finance, human resources, information management, as well as indirect procurement.
CBS started with 130 people in Bulgaria, and has since established regional hubs to Perrysburg, USA, and most recently to Singapore. CBS functions are also implemented in Stargard, Poland, where this CBS satellite supports Stargard Hiab and Kalmar activities in finance, HR, and other agreed areas.
CBS enhances productivity at Cargotec in many ways. It currently provides services to 20 countries on four continents, harmonising and improving the ways of working (processes, controls, tools), creating cost efficiency and scalability, as well as centralising support processes and enabling a deeper focus to business.
To minimise the effects of the coronavirus pandemic, about 6,000 Cargotec office workers from all business areas and corporate functions shifted to a four-day working week in April–August. The rapid change in reducing work time with corresponding salary reductions would not have happened so fast without the efficiency of a centralised CBS organisation and a joint HR platform.