Shippers? Willingness to Pay for Sustainable Freight Transport and Its Implications on European Freight Transport Policy



Shippers? Willingness to Pay for Sustainable Freight Transport and Its Implications on European Freight Transport Policy

Authors

N Fries, ETH Zurich, IVT, CH; Z Patterson, Agence metropolitaine de transport, CA; U Weidmann, Institute for Transportation Planning and Systems, Zurich, CH

Description

This research investigates, whether there is a demand for environmentally friendly freight transport. An SP survey was administered in Switzerland to estimate shippers? demand characteristics including their willingness to pay for such transports.

Abstract

In land freight transport, especially over longer distances, rail and waterway transport are most efficient concerning environmental impact but are often not used due to bad price and quality conditions. Environmental efficiency is nevertheless critical not only from the political perspective, but for all economic actors. In order to improve sustainability of freight transport chains, this research picks up an innovative approach currently discussed among forwarders and other involved players. It proposes to actively sensitise shippers to environmental concerns by providing them with information on freight transport?s environmental performance. Most shippers and forwarders do not operate their own transport vehicles but they have the power to decide, which transport service to use for which shipment. Today, their decision is based mostly on quality and cost criteria, rather than on environmental impacts. The additional environmental information could stimulate shippers to consider also environmental impacts in their choice of transport services and thus to meet the consumers? demand to assure environmental friendliness throughout the entire life cycle of their products. One possible solution to provide this information would be to create an eco-label for freight transport services.
A basic problem about raising freight transport?s environmental performance is the potential increase in production costs for the logistics service provider due to for example the use of alternative ? and often more costly ? transport modes (e.g. rail in favour of road transport). Logistics service providers would certainly offer such optimised services only if they would be able compensate the additional costs with higher prices. Therefore, to test the effectiveness of such a label as an instrument to sensitise shippers for freight transport?s environmental impact, the following general question must be answered: are shippers willing to pay higher prices for environmentally friendly freight transport and what price margins would they accept?
In 2008, a shipper survey was administered in Switzerland to evaluate relevant factors in shippers? choice for land transport services (including the role of freight transport?s environmental performance). The survey included for each respondent a Stated Preference experiment to test the shipper?s sensitivity to changing values of relevant demand factors. The experiments were based on real-world transport chains reported by the respondent during the interview. A logit model was used afterwards to estimate shippers? willingness-to-pay for reducing the environmental impacts of their shipments. Special focus was laid on differences between types of shippers (types of commodities shipped, etc.) and on the impact on choice behaviour of ?conventional? quality aspects (such as on-time reliability, transit time, etc.).
The paper will start with a short introduction to particularities of the Swiss freight transport market. Section two will discuss methodological issues of the Stated Preference design. To answer the above question, section three will present the results of the logit model thereby focussing on specific demand characteristics of the different commodity groups concerning their willingness to pay. In section four the results of a cost-benefit-analysis on the potential of increasing freight transport chains? environmental performance will be discussed. Finally, a conclusion will be drawn in section five on the general appropriateness of the proposed label as a political steering instrument to sensitise shippers for environmental concerns in freight transport in Europe.
The results of this research contribute to a better understanding of freight transport demand in Switzerland and abroad and may pave the way towards higher environmental efficiency in the freight transport sector by providing important new insights on the development of alternative steering instruments able to drive freight transport towards higher sustainability.

Publisher

Association for European Transport