Shipper collaboration

The interest in collaborative logistics is fuelled by the ever increasing pressure on companies to operate more efficiently, the realization that suppliers, consumers, and even competitors, can be potential collaborative partners in logistics, and the connectivity provided by the Internet. Logistics exchanges or collaborative logistics networks use the Internet as a common computing platform to implement strategies designed to reduce ‘hidden costs’ such as asset reposition costs. Through collaboration shippers may be able to identify and submit tours with little or no asset repositioning to a carrier, as opposed to submitting individual lanes, in return for more favorable rates. In this paper, we focus on finding a set of tours connecting regularly executed truckload shipments so as to minimize asset repositioning. Mathematically, the truckload shipper collaboration problem translates into covering a subset of arcs in a directed Euclidean graph by a minimum cost set of constrained cycles. We formulate the lane covering problem, propose several solution algorithms, and conduct a computational study on the effectiveness of these methodologies.