An integrated risk assessment model: A case of sustainable freight transportation systems

https://doi.org/10.1016/j.trd.2018.07.003Get rights and content

Highlights

  • Proposes a novel framework for managing sustainability risks in FTSs.

  • Significant insights for incorporating sustainability in FTSs.

  • Innovative application of Intuitionistic Fuzzy Numbers & D-Number Theory.

  • Quantitative modeling of sustainability risks associated with FTSs.

Abstract

The major challenge in the development of sustainable freight transportation systems (SFTSs) is due to the involvement of numerous dynamic uncertainties and intrinsic sustainability risks. Sustainability risks are potential threats that can have undesirable impacts on the sustainability of a system. The main objective of this study is to identify and evaluate the sustainability risks associated with freight transportation systems (FTSs). Accordingly, a risk analysis approach is developed by innovatively integrating the intuitionistic fuzzy set theory and D-number theory to quantitatively model the sustainability risks. Intuitionistic fuzzy numbers can examine both the membership and non-membership degrees of an element while the D-number theory increases the objectivity of assessments by fusing multiple expert judgments. The proposed risk assessment model facilitates the managers in the development of SFTSs by ensuring visibility, predictability and measurability in freight operations. Unlike the conventional perception, the findings indicate that most of the high priority sustainability risks in FTSs are socially induced rather than financially driven and consciousness in people’s conduct is must to attain the positive results. The analysis alerts the freight managers toward the high priority sustainability risks and guides in pro-active strategy formulation and optimum allocation of mitigation resources to minimize disruptions in SFTSs.

Introduction

Freight transportation (FT) is the key to ensure seamless functioning of supply chain and logistics systems (Bai et al., 2017). The objective of freight transportation systems (FTSs) is to timely transfer the right quantity and quality of raw materials, inventories, finished goods etc. from the origin to destinations using different modes such as road, rail, air and water (Stank and Goldsby, 2000). FT accounts for about one third to two third of the total logistics cost, which is equivalent to 10–20% of a commodity’s price (Farahani et al., 2011). Furthermore, about 80–90% of carbon emissions in logistics operations are due to freightage activities (McKinnon, 2010). Hence, inefficient freight movements can have an ominous influence on the supply chain sustainability and can disrupt the economic efficiency of the whole system (Lindholm, 2010). As a result, freight operations are becoming the main focus of supply chain managers during recent years.

Globalization and outsourcing activities are lengthening the supply chains leading to a drastic rise in FT demands (Marchet et al., 2014). According to ERTRAC research and innovation roadmaps (2011), as compared to the GDP growth of about 2.5%, the FT demand is growing worldwide at a rate of about 2.7% annually. Furthermore, it is expected that between 2000 and 2050, the freight tonne-km will increase at a rate of 2.3% per annum (McKinnon, 2010). As a result, while the greenhouse gas (GHS) emissions from most of the sectors are reducing, the output emissions of the FT sector are still increasing (Goldman and Gorham, 2006). In European Union, 23.8% of GHG emissions and 27.9% of carbon dioxide are attributed to transportation. Estimates suggest that if FT continues to escalate at the current rate, the resulting CO2 emissions may increase by an additional 109 percent by 2050 (Piecyk and McKinnon, 2010). Concerns are mounting over these negative externalities of FT operations and immediate interventions are necessary to make it more sustainable (Demir et al., 2015). The conventional view to just focus on the cost minimization is therefore changing and organizations are becoming more responsive towards the adoption of sustainability in their strategies for the evolution of sustainable freight transportation systems (SFTSs). Sustainable freight transportation (SFT) offers a great potential to combine environmental stewardship with monetary benefits through cost reduction, revenue generation, customer retention, value addition and improvement in living conditions (Stank and Goldsby, 2000, Seuring and Muller, 2008, Abbasi and Nilsson, 2016).

Business Communities are characterized by rising levels of uncertainty with frequent unavoidable disruptions (Faisal et al., 2007, Heckmann et al., 2015). Apart from the conventional risks, growing awareness about sustainability issues including economic, social and environmental impacts of business practices on the society has resulted in the emergence of a new category of risks known as “sustainability risks”. Sustainability risks are potential threats that can have undesirable impacts on the sustainability of a system and act as impediments in the implementation of triple bottom line (TBL) framework. Recent global events like Volkswagen’s emission scandal, Brazilian mining tragedy, Horsemeat scandal in Europe, Rana plaza disaster, unhealthy working environment in Apple’s suppliers, Japanese tsunami in 2011, the Ebola outbreak 2014, the Uttarakhand and Chennai floods in 2013 and 2015, the Paris terrorist attack 2015 etc. have highlighted the adverse impacts of sustainability risks on supply chains (Giannakis and Papadopoulos, 2016). Similarly, uncertainties related to delivery, demand, infrastructure, cost, technology, legislations etc. can negatively affect the sustainability of transport operations and give rise to sustainability risks in FTSs (Rodrigues et al., 2010). These risks hamper the integration of sustainability in FTSs and result in undesirable consequences. Strategic management of sustainability risks is therefore essential for the development of SFTSs and to avoid the inherent consequences (Christopher and Peck, 2004, Fahimnia et al., 2015, Choi et al., 2016).

Accordingly, the study proposes a comprehensive framework comprising a sustainability risk management process, which needs to be institutionalized as an integral part of FTSs to control the associated sustainability risks and achieve the desired sustainability goals as shown in Fig. 1. The framework conceptualizes sustainability risk management elements in the context of FT by sustainability goals, FT actors and the risk management process. The coherence of these constructs is represented in Fig. 1 and described in detail with reference to the literature. Reflecting the implementation and coordination of sustainability across a logistics triad as suggested by Rodrigues et al. (2010), the FT-actors comprise shippers, carriers and customers linked by the flow of goods. The sustainability risk management process includes risk identification, risk analysis, risk evaluation and risk mitigation to ensure visibility, predictability, measurability and treatment of risks in FTSs (Giannakis and Papadopoulos, 2016). This process can amplify the implementation of SFTSs through regular monitoring and control of sustainability risks. It assists SFTSs in achieving the three pillars of their sustainability goals i.e. economic performance, environment performance and social performance (Carter and Rogers, 2008).

A large number of studies have addressed the sustainability and risk management concepts but, the research focusing on risk aspects in the context of sustainability is in infancy (Aven, 2016). The studies specifically focusing on managing and evaluating sustainability risks in FTSs are virtually non-existent. Some of the recent review papers have also acknowledged this research gap and have highlighted the need to investigate sustainability risks as shown in Table 1.

Accordingly, the need to investigate sustainability risks in FTSs is pertinent. This research seeks to address the pointed gaps in the literature by introducing a risk assessment tool to identify, evaluate and analyze sustainability risks associated with FT in accordance with the framework (Fig. 1). Sustainability risks are quantitatively modelled to determine the high priority risks that need to be mitigated for the successful integration of the TBL framework in FTSs.

The assessment of risks in FTSs is a very intricate and difficult process due to the highly unpredictable and ambiguous environment (Rodrigues et al., 2010). Subjectivity in expert opinions and fuzziness in linguistic evaluations are the two critical problems that need to be considered (Hsu et al., 2016, Zhou et al., 2017). Most of the risk assessment techniques present in the literature are inefficient to handle the level of subjectivity and vagueness involved. Furthermore, in the conventional techniques such as analytical hierarchy process (AHP), failure mode and effect analysis (FMEA), TOPSIS etc., expert assessments are mostly aggregated by taking an average, which results in the loss of information leading to imprecise results (Deng, 2012). Hence, the study introduces a novel risk evaluation methodology integrating the intuitionistic fuzzy set theory and D-number theory to overcome the abovementioned limitations. Intuitionistic fuzzy numbers (IFNs) can very well address the fuzziness in linguistic assessments using both the membership and non-membership degrees while the D-number theory increases the objectivity of expert evaluations by scientifically fusing multiple expert judgments (Oztaysi et al., 2017, Zhou et al., 2017).

This research adds to the expansion of knowledge and innovation of tools in the area of sustainable freight transportation (SFT). The contributions of this study are threefold: (1) development of an innovative risk assessment tool combining IFNs and D-number theory to evaluate and prioritize risks; (2) proposition of a novel framework for managing sustainability risks in FTSs, (3) identification and quantitative modeling of sustainability risks present in FT. The rest of the paper is arranged as follows: Section 2 presents an extensive literature review in the area of SFT. Section 3 discusses the methodology used in the presented research. The practical application of the methodology to analyze sustainability risks is discussed in Section 4. Section 5 covers the results and discussions followed by implications of the research in Section 6 and concluding remarks in Section 7.

Section snippets

Literature review

Sustainability has obtained recognition both as a research field and as a practice especially in the last decade (Carter and Rogers, 2008). The leading impetus for sustainable practices is majorly attributed to the enhanced environmental concerns such as scarcity of resources, growing pollution levels, global warming, flooded waste disposal sites etc. (Seuring and Muller, 2008, Mckinnon, 2010). Along with ecological issues, social aspects including child labor, health problems, gender

An integrated approach based on intuitionistic fuzzy set theory and D-number theory

An integrated approach draws conceptually and analytically from at least two approaches to overcome the limitations of individual methodologies or/and to strengthen the reliability of results. The involvement of a number of actors namely, uncertainty of sustainability risks, complexity of FTSs and unavailability of risks data necessitate the introduction of an integrated approach for better and reliable inferences (Aqlan and Lam, 2015). Individual approaches are mostly inefficient in handling

Application of the proposed IFNs-D-number theory based model for evaluating sustainability risks in FTSs

In this section, the research illustrates the practical application of the proposed integrated model in determining the priority ranking of sustainability risks present in SFTSs using the real data. India is the third largest CO2 emitter in the world after China and United States. Most recently India has signed COP21 and there is an urgent need to adopt sustainable practices to curb its emission. Accordingly, this study focuses on the development of SFTSs in the Indian context.

In order to

Results and discussions

As described previously, for the effective integration of sustainability in FTSs, it is necessary to control the sustainability risks inherent in SFTSs. In order to do so, organizations first need to be aware of various sustainability risks present in FTSs and the intensity of threat they pose to the sustainability of freight operations. Accordingly, the identification of sustainability risks has been done in this research to increase the visibility across the SFTSs. Furthermore, an integrated

Methodological implications

In this study, IFS theory has been innovatively integrated with D-number theory to develop a model for evaluating and prioritizing sustainability risks in FTSs. Risk evaluation becomes more strenuous when sustainability considerations are included in conventional risk models (Giannakis and Papadopoulos, 2016). Furthermore, in many situations, decision makers provide imprecise and incomplete assessments on the subject matter (Liu et al., 2014). While most of the approaches in the literature are

Conclusions

Due to the increasing burden of negative externalities coupled with FT operations, the need to integrate sustainability in FTSs is imperative. However, the pursuit for the development of SFTSs can be majorly disrupted owing to the various inherited sustainability risks. There is a need for the development of a risk assessment tool to investigate sustainability risks for improving the socio-ecologic-economic performance of SFTSs. This research addresses the gaps in the literature and proposes a

References (59)

  • B. Fahimnia et al.

    Quantitative models for managing supply chain risks: a review

    Eur. J. Oper. Res.

    (2015)
  • L. Gan

    Globalization of the automobile industry in China: dynamics and barriers in greening of the road transportation

    Energy Policy

    (2003)
  • M. Giannakis et al.

    Supply chain sustainability: a risk management approach

    Int. J. Prod. Econ.

    (2016)
  • T. Goldman et al.

    Sustainable urban transport: four innovative directions

    Technol. Soc.

    (2006)
  • J.H. Havenga et al.

    Freight logistics’ contribution to sustainability: Systemic measurement facilitates behavioral change

    Transp. Res. Part D

    (2018)
  • I. Heckmann et al.

    A critical review on supply chain risk-definition, measure and modeling

    Omega

    (2015)
  • W.K.K. Hsu et al.

    Evaluating the risk of operational safety for dangerous goods in airfreights–a revised risk matrix based on fuzzy AHP

    Transp. Res. Part D

    (2016)
  • M. Lindholm

    A sustainable perspective on urban freight transport: factors affecting local authorities in the planning procedures

    Proc. Soc. Behavioral Sci.

    (2010)
  • H.C. Liu et al.

    Evaluating the risk of healthcare failure modes using interval 2-tuple hybrid weighted distance measure

    Comput. Ind. Eng.

    (2014)
  • S.K. Mangla et al.

    Risk analysis in green supply chain using fuzzy AHP approach: a case study

    Resource Conserv. Recycl.

    (2015)
  • A.D. May et al.

    Developing a set of decision-support tools for sustainable urban transport in the UK

    Transp. Policy

    (2008)
  • S.M. Mirhedayatian et al.

    A framework to evaluate policy options for supporting electric vehicles in urban freight transport

    Transp. Res. Part D

    (2018)
  • S.C. Onar et al.

    Multi-expert wind energy technology selection using interval-valued intuitionistic fuzzy sets

    Energy

    (2015)
  • B. Oztaysi et al.

    Multi-criteria alternative-fuel technology selection using interval-valued intuitionistic fuzzy sets

    Transp. Res. Part D

    (2017)
  • M. Piecyk et al.

    Forecasting the carbon footprint of road freight transport in 2020

    Int. J. Prod. Econ.

    (2010)
  • H. Reefke et al.

    Key themes and research opportunities in sustainable supply chain management – identification and evaluation

    Omega

    (2017)
  • B.C. Richardson

    Sustainable transport: analysis frameworks

    J. Transp. Geogr.

    (2005)
  • G. Schliwa et al.

    Sustainable city logistics—making cargo cycles viable for urban freight transport

    Res. Transport. Bus. Manage.

    (2015)
  • B. Sennaroglu et al.

    A military airport location selection by AHP integrated PROMETHEE and VIKOR methods

    Transport. Res. Part D: Transport Environ.

    (2018)
  • Cited by (0)

    View full text