Transportation is key components of an efficient procurement system as it accounts for a significant portion of the delivered cost. One of the most critical factors affecting transportation is the interrelationship between feedstock sources and facility locations, including plants and off-plant transfer/storage facilities. The main goal of this study was to build an integer linear programming model that uses region specific data to minimize sustainable transportation costs from economic, environmental and societal factors. In addition, the upstream air emissions of forest residues include GHG, PM and NOx were calculated as a result of residues collection at forest, transloading, and transportation by truck or multimodally (truck and rail). The model was tested on a case study that evaluated feedstock transportation costs for nine alternative plant locations in the state of Wisconsin in the US. The study found that when equally weighed, external costs would add considerable portion to the economic transportation cost (approximately 60~80%). The study also found that while total upstream GHG and air emissions increased with the plant capacity due to the longer transportation distance, per unit emissions actually decreased when external costs were optimized.