Joint route planning under varying market conditions

Purpose – To provide empirical evidence on the level of savings that can be attained by joint route planning and how these savings depend on specific market characteristics. Design/methodology/approach – Joint route planning is a measure that companies can take to decrease the costs of their distribution activities. Essentially, this can either be achieved through horizontal cooperation or through outsourcing distribution to a logistics service provider. The synergy value is defined as the difference between distribution costs in the original situation where all entities perform their orders individually, and the costs of a system where all orders are collected and route schemes are set up simultaneously to exploit economies of scale. This paper provides estimates of synergy values, both in a constructed benchmark case and in a number of real-world cases.