Freight consolidation and containerization strategy under business as usual scenario & carbon tax regulation

Abstract

With the increase of greenhouse gasses and climate change, international regulators faced a challenging task in determining carbon footprint regulations. With global greenhouse gas emissions from maritime logistics accounts for about 2.5%, this study would take to account for shipment containerization strategies under carbon tax regulation to explore the influence of carbon tax regulation on maritime logistics carbon emission reduction. The motivation of this study comes from a real case example of freight consolidation and containerization problem (FCCP) in Indonesia. This study tries to model an actual problem faced by a third-party logistics provider in consolidating goods into various sizes of containers while keeping the total transportation costs as low as possible. The most significant contributions of this study are to incorporate environmental factors into the FCCP model and to illustrate the impacts of various carbon footprints schemes on both cost and carbon emissions. Therefore, shipment containerization strategies under various carbon footprints schemes are formulated to minimize the transportation costs, as well as to lower the amount of carbon emission from maritime and land transport modes. The methodology used is a case-based approach; it depicts product delivery activities from one origin hub in Kaohsiung, Taiwan, to the biggest retailer stores in Jakarta, Indonesia. The aim is to incorporate environmental factors and illustrate how the proposed policy balances both cost and carbon emissions. Under the proposed policy, a new mixed-integer programming model is introduced considering the freight consolidation and containerization problem. Based on the different groups of numerical results, we found that the shipment containerization strategy under carbon tax regulation gives a better outcome in terms of total transportation cost and total carbon emissions compared with the business as usual policy.