Green supply chain evolution: A multimodal logistics strategy for capping carbon emissions

This paper examines a multi-modal global distribution network modeled with real-life data from a Fortune-50 retailer, exploring the cost tradeoff in utilizing electric vehicles and slowing of ships at sea to lower carbon emissions based on the best current technologies. This optimization model enables a holistic view of this tradeoff, minimizing manufacturing, distribution and inventory costs while imposing constraints on carbon emissions. A longer-term analysis incorporates nearshoring of manufacturing which shortens supply chains and reduces costs and emissions. The results reveal that the initial slowing of ships at sea has the most impact on cutting carbon emissions. The adoption of electric ground vehicles occurs later, allowing stable contracts with traditional transportation providers in the near term. Nearshoring manufacturing to Mexico in the longer term accelerates the use of e-vehicles. Exploring the cost for capping carbon emissions, management should opt to forego a full carbon reduction in favor of one that follows the Pareto principle instead, achieving 80%–90% of the possible carbon reduction for less than 20% of the full reduction cost. These results empower management to strategically make a combination of transportation and nearshoring decisions on the journey towards a reduced carbon footprint.