External cost effects on freight modal choice: research and application

Increased awareness of the environmental and social impacts caused by logistics and distribution has resulted in a sharper focus on this theme both in the literature and from industry. Research in this field has developed in order to take so-called 'green effects' into consideration when investigating distribution networks. However, few papers actually provide quantitative models to estimate external transport costs. Most of the contributions relate to qualitative and multi-objective research, trying to define and estimate external impacts, without providing any actual cost values. The present paper analyses a range of international researches and sets out an innovative quantitative model based on findings from the relevant literature. This model has been applied to a real industrial case in order to demonstrate the importance of considering the environmental impacts when designing a distribution network. A sensitivity analysis has been carried out in order to show how external cost variations impact on distribution network design.