It's Not Easy Being Green

The EBN Velocity online theme this month is "green," which means different things to different people. There's lots of talk about the material that goes into electronic equipment, what those materials contain, and what to do with them once their usefulness is over.

The discussion is now going further, not only to the materials that are used, but to where those materials originate, the way those materials are produced or mined, and whether they originate in a conflict region. In all cases, those materials need to be transported via ocean, rail, truck, air, or most likely a combination of them.

I got to thinking about how the end consumer might view this matter. Consumers care about where their stuff comes from (fair-trade coffee, conflict-free diamonds) and how their stuff gets to them, as evident in "buy local" campaigns.

As I followed this trail of thought I was intrigued as to how transportation costs and carbon footprints might affect the purchasing patterns of consumers of electronic gear. Would a greener footprint lead to a tangible benefit for the producer, or would the consumer pay a higher price?

After reading a paper from David Hummels and Georg Schaur on the impact of transportation modes on a macroeconomic scale, I was faced with some interesting facts. The use of airfreight has grown 2.6 times faster than the use of ocean freight, is on average 6.6 times more expensive than ocean freight, and everyday the product is in transit adds 0.6 to 2 percent to the value of the goods, potentially making them more expensive. Add to that the fact that airfreight is over 60 times more carbon intensive than ocean freight, according to a paper published by TATA Consultancy Services, and you can clearly see both the cost and environmental advantages of ocean freight.

If a consumer believes that the use of ocean freight is more fuel efficient and produces a lower carbon footprint than air, I could be led to the conclusion that green-conscience consumers would be willing to wait for their products... but would they?

Summing up, it looks like this to me: When a new, hot electronic gadget is available, the consumer wants it now, with little regard to the carbon footprint. However, there is a concern as to how it was made, and where the materials and labor come from. On the other hand, when things are less time or emotionally sensitive, consumers will give more consideration to the overall green quotient of the product.

Each of these results has an impact on our supply chains, and on how we design them.