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Environmental sustainability key, but price more important

Catherine White | May 4, 2011
Sustainability has a definite level of importance in the 3PL industry but pricing premiums are not readily accepted yet


BOSTON, 21 APRIL 2011-A set of 18 CEOs from 3PLs representing the highest in revenue to a cross-section of medium-sized 3PLs (to provide for varying perspectives), were recently interviewed by Katharine O'Reilly, executive director of eyefortransport, and asked a series of questions on current industry trends and challenges. One of the subject areas involved environmental sustainability and the CEOs were specifically asked: 

Do you feel that environmental sustainability capabilities have the potential to be a key differentiator, and will customers really put this ahead of price?

Overwhelmingly and across the board the answer was the same -- yes, sustainability has a definite level of importance in the 3PL industry -- but pricing premiums are not readily accepted -- yet. This struck me as similar to consumers of organic food -- there are certain subsets of the population that will only purchase organic food and don't even blink an eye at the price because of the benefits to their health, the environment and the farmers they are supporting. Other consumers need to -- or want to - watch their bottom line more closely and realize an apple is healthy, whether it's organic or not. In other words, it's getting the job done.

Likewise, customers of 3PLs understand the importance of environmental sustainability and the 3PLs themselves want to provide the option of a sustainable service for their customers -- but not everyone is ready to spend that extra dollar to go green. Government regulations are helping to bring environmental sustainability to the forefront, such as emissions standards, but major customers are also a driving force. Influencers such as Walmart, even if they're not ready to pay a premium -- yet, can help to foster compliance regulations providing the necessary momentum for all 3PLs to provide these services to customers.

The interviews for the most part fell somewhere in the middle in terms of opinion but each end of the spectrum was represented. Jeremy Davidson, managing director of NYK Logistics took more of a wait and see approach stating, "Not until the Western economies genuinely emerge from recession and people feel more secure about jobs and growth." NYK Logistics felt that the economic environment companies and customers are still facing simply can't support the premium placed on environmentally sustainable services. 

On the flip side DHL has set a definitive goal they would like to reach in terms of sustainability, and has made it a priority in their organization, as noted by Hermann Ude, CEO of DHL Global Forwarding & Freight, "In consumer oriented markets you see the need for greener, better documented supply chains evolving fast. Deutsche Post DHL was the first logistics provider to set itself a target to increase its carbon efficiency by 30% by 2020 and 10% by 2012. We have the product portfolio to achieve the target through mode management, better carrier management and innovative services."


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