A calculation framework and applicable tools to estimate freight rate and carbon emissions for road transport - A study at Volvo Group Trucks Operations

Abstract

The high-quality estimation methods and results for the freight rate and carbon emissions of road transport are not only important to a company’s supply chain performance but also valuable to academia. In this research, a framework for estimating the road freight rate and carbon emissions is designed to meet the business and operational demand of the case company, Volvo Group. The framework is designed based on the cost breakdown theory, which consists of two sections. One section is used to estimate the road freight rate, while the other is to estimate carbon emissions. Firstly, all cost elements for both sections are identified. Each cost element is then studied and the most suitable estimation method for each cost element is selected. Besides, considering the constraints and settings of Volvo, specific sets of calculation methods are designed to acquire the estimated freight rate and carbon emissions for different transport set-ups at Volvo. In order to transform the theoretical framework into the applicable and user-friendly tool, two calculation tools based on Excel spreadsheets and Excel VBA respectively are developed for the case company. After that, verification of the framework is conducted through the estimation of a set of scenarios at the case company. The framework could clearly demonstrate the rate structure and the carbon emissions for the scenarios. Furthermore, it can help in identifying the root causes of the cost structure. The differences between the bids and the estimated results are analyzed and interpreted from the aspects such as potential savings, imbalanced flow, and operation-efficiency among carriers.