Manufacturers Are Passing the Buck on Their Green Supply Chains

Aug. 7, 2008
Logistics companies are being asked to foot the bill for their customers' green initiatives.

Manufacturers have increasingly turned to third parties to manage their logistics operations so they can focus on their core competencies -- making stuff, rather than shipping and storing stuff. However, a dirty little secret uncovered by research and analyst firm Transport Intelligence is that many manufacturers are, in effect, passing the buck for maintaining a green supply chain on to their third-party logistics providers (3PLs).

According to a recent logistics and transportation survey conducted by Transport Intelligence, 73% of respondents who award logistics contracts include sections on environmental compliance in the contract. Only 46%, though, actually make provision for the extra costs involved.

"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," notes John Manners-Bell, CEO of Transport Intelligence. "However, it seems that green logistics is not a passing fad. 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."

That conclusion seems to be borne out by the responses to the question as to whether companies would invest in green services should the economy slow down (or get worse). Roughly 80% say they will continue to support environmentally friendly logistics, while 16% will look for the lowest cost services or infrastructure.

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