Companies Seen Passing the Buck on Green Logistics Costs

Most companies seeking to make their logistics operations more environmentally friendly want someone else to cover the costs, Transport Intelligence/Kewill survey finds


Guildford, UK — August 13, 2008 — Most companies seeking to make their logistics operations more environmentally friendly want someone else to cover the costs, according to new research by Transport Intelligence and Kewill.

Despite many companies' avowed commitment to "greening" their logistics operations, it seems that most expect their subcontractors to pick up the bill, according to the findings of the latest survey by Transport Intelligence examining how companies were reacting to environmental concerns.

The "Logistics & Transport Industry Environmental Survey," sponsored by Kewill, a provider of global trade and logistics software, found that three-quarters of respondents who awarded logistics contracts included sections on environmental compliance in their tender documents.

However, most (54 percent) failed to make provision for the extra costs that could be involved. That could be a source of annoyance for many logistics companies, which will see the environmental measures they are forced to adopt as another cost burden pushed on to them by their clients.

On the other hand, it seems there is little that logistics companies can do to avoid investing in green initiatives. In the survey, 70 percent of companies awarding contracts said that environmental compliance was either "reasonably important" or "very important."

Environmental Enthusiasm

Survey respondents also were probed about whether their companies' environmental enthusiasm would change in the coming years, given the chances of an economic slowdown. The overwhelming sentiment seemed to be no, but according to two-thirds of respondents, that is largely due to the "win-win" of implementing green initiatives that bring operational efficiencies and also cut costs.

The number who said they would continue to pay more for an environmentally friendly alternative (17 percent) was balanced by the proportion who said they would base their sourcing decisions on cost alone.

When asked about the specific areas in which they were undertaking green initiatives, the highest proportion (33 percent) identified transportation. That included driver training, hybrid engines and better management of empty running. Equally important, with about a quarter of responses each, were more efficient planning through IT tools and increased administrative efficiencies. Perhaps surprisingly, warehousing was identified by only 15 percent of respondents as an area on which they were focusing.

Passing on the Costs

Commenting on the findings, John Manners-Bell, Transport Intelligence's CEO, said: "The survey results will not surprise the more cynical in the industry who believe that the cost of these types of initiatives always gets passed down the line. However, it seems that 'green logistics' is not a passing fad."

Bell continued: "The business case for implementing environmental initiatives cannot be doubted due to the cost savings they bring, especially when they offset the rising cost of oil."

Evan Puzey, chief marketing officer at Kewill, added: "The survey reinforces the fact that technology can play an important role in helping make logistics more environmentally friendly, particularly in the area of carbon footprints, where 79 percent of respondents cited technology as an important tool for reducing carbon footprints."

A summary of the findings of the "Logistics & Transport Industry Environmental Survey" sponsored by Kewill can be obtained by visiting www.kewill.com/greensurvey.

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