Global shipping crisis and customer satisfaction: Why businesses may struggle to keep customers happy

The Ever Given, the 220-ton cargo ship that can carry 20,000 containers, is no longer wedged in the Suez Canal. That’s the good news. The bad news? The six-day blockage of one of the world’s largest container vessels could have long-lasting ramifications.

According to Northeastern University professor of political science Stephen Flynn, “The disruption of a week of this size is going to continue to have cascading effects … it’s got to be at least 60 days before things get sorted out and appear to be a bit back to normal.” 

Ports will see added congestion, and ships will be thrown off their usual schedule. And worse, supply chains, which had already been heavily disrupted since the beginning of the COVID-19 pandemic from a worldwide container shortage, will be further compromised. Eventually, the consumer is going to bear the brunt of this dilemma in the form of higher prices. 

When this inevitably comes to fruition, customers, who have dealt with their fair share of goods shortages over the past year, are not going to be enthusiastic about the additional strain on their wallets.

It starts with freight costs

The reason consumers will be facing rising costs of goods stems from increased freight costs. 

Over 80% of global trade is transported by sea. And supply chain disruptions have made this process much more expensive

In June 2020, the average cost to ship a 40-foot container was $1,040. On March 1, 2021, that number soared to $4,570, per S&P Global Platts. This caused container shipping costs of U.S. imports to jump from $2 billion in February 2020 to $5.2 billion in February 2021, according to S&P Global Panjiva.

“At the moment a lot of these costs are within the supply chains,” said Chris Rogers, a research analyst at S&P Global Panjiva. “I think it’s inevitable that it will be passed on to consumers — it’s just going to take time.” 

Supply shortages already a problem

Peloton has experienced the double-edged sword of high demand. While customers crave the bike and exercise equipment, they get equally enraged when these products are delayed, or worse, don’t show up at all. According to a New York Times report, Peloton customer service can’t help much of the time.

But Peloton isn’t the only retailer feeling the supply chain squeeze.

Despite leading department and discount stores in customer satisfaction for the fifth straight year with a score of 81 (out of 100), per the most recent Retail and Consumer Shipping Report, Costco is having difficulty stocking imported cheese and patio furniture. Its customer satisfaction has also decreased 2% year over year.

Meanwhile, Dollar Tree, which also experienced slumping satisfaction, down 4% to 74, reveals its supply chains have “been stressed.” According to CEO Gary Philbin, the retailer has “$1 billion in the pipeline somewhere,” and more products are on their way. Foot Locker’s inventory was down nearly 24% at the end of Q4 because of port congestion. 

The list goes on and on.

The biggest loser in all this is going to be the consumer, who may be forced to pay more for high-demand products on short supply.

What can businesses do to soften the blow to their customers?

Manufactured goods like food items and appliances typically score higher for customer satisfaction than service-oriented businesses, like banks, airlines, or subscription TV. But delivery delays and rising prices threaten that favorable position. 

The last thing companies need in these trying times is for customer satisfaction to wane amid frustration with supply chain issues. The question is what can businesses do to soften the blow?

Peloton’s answer is to invest $100 million into air cargo in the hopes of speeding up delivery. Said Peloton CEO John Foley

“On average, in the coming months, we will be incurring a transportation and delivery cost that is over ten times our usual cost per Bike and Tread, including, in many cases, shipping them by air instead of by sea. We are making this investment because we are as frustrated as you are that you don’t have your Peloton Bike or Tread yet.”

While this investment might not be enough to curb the current crisis, it’s a step in the right direction. Customers want to believe their voices are being heard and businesses are taking steps to fix the problem. Organizations that fail to even address the issue are going to struggle to maintain the trust of their customers. This could cost them now and in the future.

Consumers should expect to see the price of goods go up. But businesses – especially retailers – have a responsibility to try to lessen the effect. Those that do will, hopefully, earn the patience, respect, and good will of their customers. Those that don’t, well, your brand reputation will be like that of the Ever Given in the Suez Canal: in need of a rescue.

Flying during COVID-19: How the airline industry keeps passenger satisfaction soaring

COVID-19 had the airline industry reaching for the panic button.

According to a Franklin Templeton-Gallup poll conducted in 2020, over half (52%) of Americans who flew at least once in 2019 admitted they were now uncomfortable flying because of the pandemic. Sadly, passenger and revenue numbers soon reflected this growing desire to remain grounded. 

International passenger travel plummeted 60% in 2020, per The International Civil Aviation Organization (ICAO), and U.S. airlines’ net losses are projected to be more than $35 billion.  

Yet, despite the turbulent times, there is one area where the industry soars: customer satisfaction.

In our most recent Travel Report, passenger satisfaction with airlines has never been stronger, climbing 1.3% to its best ACSI score ever at 76 (out of 100). It is the only travel industry to experience customer satisfaction gains years over year.

How are airlines managing to score satisfaction points with passengers amidst these tumultuous times? Let’s find out.

You can’t put a price on comfort

Seat comfort has the lowest score among customer experience benchmarks with an ACSI mark of 73. Yet, it’s also the only aspect of airline travel that improved during the pandemic, rising to an all-time industry high.

Per ACSI data, seat comfort reviews were even better at the beginning of COVID-19, as the whole industry incorporated the practice of blocking middle seats during flights.  

Delta, which ties Southwest as the industry leader after jumping 3% to an all-time high of 79, put forth a thorough plan to prioritize social distancing – a plan that also included eliminating middle seat usage. And while other airlines began letting passengers buy middle seats, Delta is keeping the policy in place and limiting capacity on all flights through April 30, 2021.

Passengers have become less satisfied since airlines started filling the middle seats again. However, seat comfort has been steadily improving over the last five years, so at least airlines are making a concerted effort to address this common pain point.

Putting safety first

The fear of contracting COVID-19 kept many frequent passengers out of the sky. To ease these concerns, the “Big Four” – American Airlines, United, Delta, and Southwest – took strong safety measures, starting with “cleanliness.”

American Airlines partnered with Purell and Vanderbilt University Medical Center to start its Clean Commitment. United teamed up with Clorox and the Cleveland Clinic to forge its CleanPlus program. Delta launched CareStandard with the help of the Mayo Clinic and the Lysol manufacturers. The Southwest Promise features a partnership between the airline and the Stanford School of Medicine, as well as the use of high-efficiency particulate air (HEPA) filters.

The airline industry also sponsored a study from Harvard’s School of Public Health. The report showed that the risk of getting COVID-19 from flying was much lower than shopping or eating out at a restaurant.

Although customer satisfaction with cabin and bathroom cleanliness drops slightly to an ACSI score of 78, the airlines’ attempts to make their passengers feel safe and secure most likely kept this decline minimal.

Not business as usual for the leisure crew

Before COVID-19, 32% of business passengers complained to the airline. Yet, they were relatively satisfied, with an ACSI score of 79. During the pandemic, however, that changed. 

The percentage of complaining business passengers rose to 38%, but their satisfaction declined 10% to 71. This was not the case with leisure travelers.

Pre-pandemic, just 11% of these individuals complained, but they were far less satisfied at 65. Fast forward a year, and while 17% complained to the airline, their satisfaction level was much higher, up 6% to a score of 69. 

It’s difficult to pinpoint what exactly changed to make these passengers more content. Maybe they’re showing kindness to the airline, or perhaps, the airlines are grateful that people are traveling the skies again and want to express their appreciation. Whatever the reason, a satisfied customer is good for everyone.

Gradual improvement for airlines over time continues 

While airlines have taken specific steps to improve comfort and safety during the pandemic, the industry overall has been making positive strides over the last few years.

Since 2018, customer satisfaction with airlines has risen 4.1% to reach an all-time industry high. So, it’s not as if things weren’t heading in the right direction.

However, the COVID-19 pandemic presented unforeseeable challenges that threw the industry for a loop. And, with strict travel restrictions in the beginning and consumers remaining hesitant to fly once they were loosened, airlines could’ve easily buckled under the pressure. But they didn’t.

Since April 2020, the number of Americans passing through TSA checkpoints has slowly grown. Of course, while more people are traveling, airlines can’t get too cozy. They must continue making safety a top priority, while also maintaining the level of comfort passengers have grown accustomed to. If not, we could be looking at less friendly skies in the future.