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Paying more for “green” transport?

May 8, 2014
Here’s an interesting postulation: are consumers willing to pay more – and wait longer – for goods to be delivered by “green” transportation services? If a new study produced by consulting firm West Monroe Partners is to be believes, the answer is “yes.”
Here’s an interesting postulation: are consumers willing to pay more – and wait longer – for goods to be delivered by “green” transportation services? If a new study produced by consulting firm West Monroe Partners is to be believes, the answer is “yes.”

And maybe – just maybe – that opens up another avenue for trucking to gain much-needed freight rate increases.

West Monroe polled over than 600 U.S. consumers for its Need for Green or Need for Speed study to determine what compromises they’d be willing to make to get “sustainable” or “climate-friendly” delivery of products purchased online.

Some of the firm’s findings include:

  • More than half of consumers are willing to pay at least 5% higher prices for products ordered online if they’re delivered sustainably.
  • Another 12% of U.S. consumers would pay up to 10% more for sustainable delivery.
  • Some 76% of consumers would wait at least one extra day for “climate-friendly” transport of their goods.
  • Annual income was not an influential factor in consumers’ willingness to pay more for sustainable delivery. In fact, respondents who earn over $100,000 a year were slightly less likely to accept higher prices for climate-friendly transport.
  • Similarly, age had only a minor impact on attitudes toward sustainability, with 18-25 year olds slightly less likely to pay more for climate-friendly transport compared to 26-35 year olds.
  • Overall, the study showed that – if knowledgeable about the options available to them – many consumers would make at least minor concessions for more sustainable delivery.
  • Yet though they seemed “positive” about “greener” delivery methods, the study found that U.S. consumers are mostly unaware such delivery options exist.
“Given the dominance of ecommerce and trends such as same and next-day delivery, order fulfillment’s impact on the environment is a significant one,” noted Yves Leclerc, managing director and leader of West Monroe’s supply chain practice.

“Consumers are willing to sacrifice for products delivered in ways that don’t yield damaging greenhouse gas emissions,” he explained. “They just need to be aware of these alternative delivery models first.”

Leclerc (seen at right) also pointed out that a similar study conducted by consulting firm BearingPoint involving 1,000 consumers in European mirrored West Monroe’s findings in the U.S., with nearly half of European consumers aware of “climate-friendly” shipping alternatives, with one in five of them saying they’d already used such transport options.

Further, BearingPoint’s poll found that almost 60% of those European consumers were willing to pay more for green shipping and 76% were willing to wait up to a whopping three days longer for sustainable delivery.

In short, West Monroe’s Leclerc noted that those findings indicate that the “modern consumer” in his parlance “is paying more than lip service to environmentally-conscious decisions these days.”

As a result they are “willing to put their money – and patience – where their mouths are,” he stressed.

“E-commerce shops and logistics providers offering options such as flexible delivery windows and transportation modes will miss out on a major opportunity unless they put more effort into educating their customers,” Leclerc noted. “In addition, companies that don’t implement sustainable delivery practices now expose themselves to shareholder and customer risk as legislation may continue to put limits on a company’s carbon emissions.”

In an email exchange, Leclerc noted to be that “sustainable transportation modes” can take different forms depending on if one is looking at last mile delivery or from the factory to the retailer, which can sometimes represent thousands of miles.

“Our survey did not specifically address bio fuel/natural gas options but in my experience electric vehicles come to mind when consumers refer to ‘greener’ transportation modes,” he told me.

“On the last mile delivery front, creating transportation ‘density’ through real-time route optimization seems to be fairly well received by consumers; it influences their behavior in picking a delivery day or time window to allow time to reduce mileage between deliveries thus making it ‘greener,’” Leclerc added.

One observation he said that comes out of West Monroe’s survey pretty strongly is that a significant number of people are not well aware of the available options when it comes to sustainable transportation modes.

“The industry – especially direct to consumer logistics providers – could benefit from doing a better job in defining, positioning and promoting their sustainable transportation options,” Leclerc stressed. “The survey really highlighted the willingness and desire for consumers to promote and support more sustainable delivery modes, but without pointing at a particular option. In other words, being more sustainable was the key objective, without any favoritism to one particular mode.”

Still, could this "green" stance by consumers help trucking companies that invest in natural gas-fired equipment or fuel efficiency efforts not only win more business but able to charge more for it as well? That’s the real key question in all of this, for only a higher rate of return will allow fleets to make the kinds of high dollar investments required to make “greener” transportation options available.

We’ll see if that happens.

About the Author

Sean Kilcarr 1 | Senior Editor

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