Combining Facility Location and Routing Decisions in Sustainable Urban Freight Distribution under Horizontal Collaboration: How Can Shippers Be Benefited?

Abstract

This article investigates the potential economic, environmental, and social effects of combining depot location and vehicle routing decisions in urban road freight transportation under horizontal collaboration. We consider a city in which several suppliers decide to joint deliveries to their customers and goods are delivered via intermediate depots. We study a transportation optimization problem from the perspective of sustainability development. This quantitative approach is based on three-objective mathematical model for strategic, tactical, and operational decision-making as a two-echelon location routing problem (2E-LRP). The objectives are to minimize cost and CO2 emissions of the transportation and maximize the created job opportunities. The model was solved with the ε-constraint method using extended known instances reflecting the real distribution in urban area to evaluate several goods’ delivery strategies. The obtained results by comparing collaborative and noncollaborative scenarios show that collaboration leads to a reduction in CO2 emissions, transportation cost, used vehicles, and travelled distances in addition to the improvement of the vehicles load rate but collaboration affects negatively social impact. To evaluate the effect of the method used to allocate the total gains to the different partners, we suggest to decision makers a comparison between well-known allocation methods.