Sustainability is high on many companies' agendas, but firms often lack concrete implementation measures and sustainable logistics offerings. A survey of 100 B2B companies in Europe that use logistics service providers shows that customers want environmentally friendly logistics to be the standard in the future.
The latest Green Logistics* study by global strategy and marketing consultancy Simon-Kucher & Partners shows that 55 percent of companies consider sustainability to be a very important topic, with importance varying slightly across Central Europe (64 percent), Southern Europe (55 percent), and Western Europe (44 percent). The majority of respondents, however, rather focus their sustainability initiatives on reducing the emissions they produce, directly or indirectly: When it comes to selecting a logistics service provider, only 31 percent of companies consider this topic still very important (Central Europe: 34 percent, Southern Europe: 36 percent, Western Europe: 25 percent). One reason for this could be the lack of real offers from the logistics industry. “Even though almost all major logistics companies worldwide have set clear emissions targets in line with the Paris Agreement, hardly any monetary commitments have been made to meet them. It’s still unclear who is going to pay in the end,” says Kornelia Reifenberg, Partner in the Logistics practice at Simon-Kucher.
Developing sustainable logistics products is challenging
When creating a sustainable logistics product, there are several components to consider, including emissions targets, measures, product design, communications strategies, and pricing. Currently, measures to cut emissions in logistics aren’t sufficient to achieve carbon neutrality, so carbon offsetting is still the order of the day. According to the study, companies still don’t have a clear preference as to which measures to take. Twenty-eight percent of respondents rate avoidance of emissions as the most important measure, but both carbon offset schemes (20 percent) and even “greenwashing” through certificate trading (20 percent) are considered nearly as important. As a result, it’s unclear whether the market is ready for cost-intensive but truly climate-neutral logistics solutions, such as the use of Sustainable Aviation Fuel in air freight.
Monetizing carbon-neutral logistics is the key to success
Customers want simple solutions, such as a single standard product for all customers that’s environmentally friendly (40 percent). They prefer that even over a voluntary carbon surcharge or an optional CO2 product option – the decision to “go green” should preferably be left to the logistics companies. According to the study, willingness to pay for sustainable logistics differs greatly across segments, ranging from “The Solvent Activist” to ”The Ignoramus”. “Offering only one ‘green’ product is not the optimal solution,” adds Sven Wengler, Senior Director in the logistics division at Simon-Kucher. “The challenge is to meet customer demand for simple solutions while developing an offering that is as tailored as possible to each segment.”
Improving sustainability in the logistics industry is crucial
The study shows that companies need to improve how they set goals and proactively sell sustainable logistics solutions. “Due to the overall low margins in the logistics industry, the costs for more sustainability must be passed on to customers and/or end customers. Many customers still don’t recognize the added value of emissions avoidance. The crucial question is whether logistics service customers will be willing to pay higher prices for more environmentally friendly logistics in the future. If not, governments will be called upon to tighten their regulations. In any case, it hardly be possible for logistics companies to just take over the additional cost without passing them over to the customers.,” says Kornelia Reifenberg.
*About the study: The Green Logistics B2B survey was conducted by Simon-Kucher in August 2021. One hundred companies in Europe that use logistics service providers were sent an online questionnaire.
Simon-Kucher & Partners, strategy & marketing consultants: Simon-Kucher & Partners is a global consulting firm with more than 1,600 professionals in 41 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has over 35 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.