Effect of Carbon Emission Regulations on Transport Mode Selection Under Stochastic Demand

Companies are expiriencing new and more important reasons to pay attention to their carbon footprint. In this work we consider a 'carbon-aware' company (either by choice or enforced by regulation) that is reconsidering the transport mode selection decsion. Traditionally the trade-off has been between lead time (and corresponding inventory costs) and unit transportation cost but now emission costs come into the equation. We use a carbon emission measurement methodology based on real-life data and incorporate it into an inventory model. We consider the results for different types of emission regulation (including voluntary targets). We find that even though large emission reductions can be obtained by switching to a different mode, the actual decision depends on the regulation and other practical issues.