Lane-Exchange Mechanisms for Truckload Carrier Collaboration

Authors:
Okan Örsan Özener;Özlem Ergun;Martin Savelsbergh
Affiliations:
Ozyegin University, 34662 Istanbul, Turkey;H. Milton Stewart School of Industrial & Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332;CSIRO Mathematics, Informatics, and Statistics, North Ryde, NSW 1670, Australia
Venue:
Transportation Science
Year:
2011

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Abstract

Because of historically high fuel prices, the trucking industry's operating expenses are higher than ever and thus profit margins are lower than ever. To cut costs, the trucking industry is searching for and exploring new ideas. We investigate the potential of collaborative opportunities in truckload transportation. When carriers serve transportation requests from many shippers, they may be able to reduce their repositioning costs by exchanging one or more of them. We develop optimization models to determine the maximum benefit that can be derived from collaborating. We also develop various exchange mechanisms which differ in terms of information sharing requirements and side payment options that allow carriers to realize some or all of the costs savings opportunities.