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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.

7 comments on “It’s Not Easy Being Green

  1. dalexander
    August 15, 2012

    Great statistics! Thanks for digging those up. I was wondering if you found anything on carbon footprint and train transport. I know the rail industry claims to move tons of freight per gallon and know that the last mile is by truck so can you post some comparison stats that will allow us to assess the comparison between ocean and rail as a function of weight and distance? I appreciate your evident initiative on this blog.

  2. Wade McDaniel
    August 15, 2012

    We're looking into that. We've had that question asked by quite a few others….

  3. Houngbo_Hospice
    August 16, 2012

    When a new, hot electronic gadget is available, the consumer wants it now, with little regard to the carbon footprint.  

    That is true, Usually, consumers don't care that much about what a product is made of as they think that is the duty of the regulatory agencies. But we have to start changing our mentalities and make “green awareness” everyone's fight. Most of time end users can't do that much at the production stage. but they can do a lot at the recycling stage.

  4. Wale Bakare
    August 16, 2012

    @HH, how best could the awareness of consumers achieved? Though, stakeholders pushing and championing for green footprints are unrelenting but i think, appealing strategic approaches for consumers not really in place.

  5. Wade McDaniel
    August 16, 2012

     The Tata report provides the basic numbers for rail, air, ocean and road freight. Road freight contributes about 65% of the total global logistics emissions, while ocean, rail and air contribute 19%, 11% & 5% respectively.  

    More to the point of to the CO2 efficiency of each mode, the Tata report measures it by kg CO2/tonne-km. Sea is the most efficient at 0.01, with rail next at 0.02. These contrast sharply with air at 0.65.

  6. bolaji ojo
    August 20, 2012

    There are certain things that consumers find difficult comprehending or even getting enough information about to make a reasonable decision. One of them is the impact of electronics on the environment. We don't even know for certain 100 percent whether our cellphones are harming us, for instance.

    That's why relying on consumers to police manufacturers is not a great strategy. It's not going to work. As Wade said, there are so many factors a company must consider when reviewing compliance with environmental regulations that achieving the “green” status becomes extremely difficult. A company must still consider its profit goals and too often these clash with the “green” goals.

  7. Daryl
    August 20, 2012

    “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.”

    Might I add, who cares about the carbon footprint.   If carbon dioxide is a pollutant (which it is not, it is a natural by-product of everyday life) then I would be concerned about CO2.    The only real economic advantage of lower CO2 is enumerated in your prevision statement in that it costs less to transport.  

    I would also add, the proper solution to the largest environmental depredator electronic waste (or waste in general for that matter) is in the WEE proposal with some augmentation.  Here it is: every electronic circuit manufacturer would be required to accept every piece they ever manufactured for recycling.   Everything…  There simply put…   Now wouldn't that be a stringent demand.    Large and small companies would be required to put money upfront so they could recycle the junk they produced.  Also put teeth into the laws so the founders and executives would be held accountable with prison time if they don't heed the law.     I know this is whole idea is very quixotic but I sure get sick of hearing about all this “green” initiatives when the real purpose of applying green is to forward an agenda.  Efforts like lead-free solder in ROHS are driven by politics of protecting the home turf electronic companies then interested in protecting the environment.   Talking about carbon footprint… is it a discussion of economics (more carbon = higher expense = more energy use) or is it a way for some third party to interfere with commerce by taxing everyone for the “common good” (whatever that means???). 

    End of bloviation….

     

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