Horizontal cooperation among freight carriers: request allocation and profit sharing

Horizontal cooperation among freight carriers: request allocation and profit sharing

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Article ID: iaor200911701
Country: United Kingdom
Volume: 59
Issue: 11
Start Page Number: 1483
End Page Number: 1491
Publication Date: Nov 2008
Journal: Journal of the Operational Research Society
Authors: , , , ,
Keywords: vehicle routing & scheduling
Abstract:

In modern transportation systems, the potential for further decreasing the costs of fulfilling customer requests is severely limited while market competition is constantly reducing revenues. However, increased competitiveness through cost reductions can be achieved if freight carriers cooperate in order to balance their request portfolios. Participation in such coalitions can benefit the entire coalition, as well as each participant individually, thus reinforcing the market position of the partners. The work presented in this paper uniquely combines features of routing and scheduling problems and of cooperative game theory. In the first part, the profit margins resulting from horizontal cooperation among freight carriers are analysed. It is assumed that the structure of customer requests corresponds to that of a pickup and delivery problem with time windows for each freight carrier. In the second part, the possibilities of sharing these profit margins fairly among the partners are discussed. The Shapley value can be used to determine a fair allocation. Numerical results for real–life and artificial instances are presented.

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