Growing pressure to limit greenhouse gas emissions is changing the way businesses operate. This paper presents the trade-offs between cost, service quality (represented by time window guarantees), and emissions of an urban pickup and delivery system under these changing pressures. A model, developed by the authors in ArcGIS, is used to evaluate these trade-offs for a specific case study involving a real fleet with specific operational characteristics. The problem is modeled as an emissions minimization vehicle routing problem with time windows. Analyses of different external policies and internal operational changes provide insight into the impact of these changes on cost, service quality, and emissions. Specific consideration of the influence of time windows, customer density, and vehicle choice are included.

The results show a stable relationship between monetary cost and kilograms of CO2, with each kilogram of CO2 associated with a $3.50 increase in cost, illustrating the influence of fuel use on both cost and emissions. In addition, customer density and time window length are strongly correlated with monetary cost and kilograms of CO2 per order. The addition of 80 customers or extending the time window 100 minutes would save approximately $3.50 and 1 kilogram of CO2 per order. Lastly, the evaluation of four different fleets illustrates significant environmental and monetary gains can be achieved through the use of hybrid vehicles.

The results demonstrate there is not a trade-off between CO2 emissions and cost, but that these two metrics trend together. This suggests the most effective way to encourage fleet operators to limit emissions is to increase the cost of fuel or CO2 production, as this is consistent with current incentives that exist to reduce cost, and therefore emissions.