Cooperative Management in Full-Truckload and Less-Than-Truckload Vehicle System

In cooperative logistics, shippers can cooperate to improve efficiency and reduce the cost of product/package delivery services. In this paper, we consider the resource, i.e., vehicles, sharing problem to serve customers in the cooperative logistics environment. In the environment, small shippers cooperate by forming a coalition to create a vehicle pool and to allow sharing of their own vehicles with each other. The vehicles in the pool are used to deliver packages to customers. To minimize the delivery cost to the shippers, we propose a framework for the capacitated vehicle routing problem with time windows. The framework is composed of joint vehicle allocation, cost management, and overlapping coalition formation among shippers. For vehicle allocation, we formulate and solve optimization models to determine the number of vehicles and their delivery routes to meet customer demand and service time. The uncertainty of customer demand is taken into consideration. For sharing the delivery cost generated in the vehicle pool, i.e., cost management, among the cooperative shippers in a coalition, we apply the concept of Myerson value from the cooperative game theory as a solution. Based on the cost, the shippers then decide whether to cooperate and share the vehicles or not. The performance evaluation based on the test and actual road networks clearly shows the benefits of the proposed framework.

I. Introduction

The logistics businesses have faced increasing challenges due to the high competition among shippers, as well as high-expectation and uncertain demand from customers [15]. To reduce logistics cost and improve resource utilization, the shippers can cooperate with each other. Studies have evidently shown that small shippers with their own vehicles (trucks) and customers prefer to cooperate  [16], [18]. This is because a small shipper tends to suffer from vehicle underutilization or overutilization due to unpredictable and random customer demand. Consequently, if acting alone, the shipper may have to bear higher costs of underutilized or overutilized vehicles, e.g., maintenance cost [1] and outsourcing vehicle cost [2]. Therefore, to remedy the under- or overutilization problems, the cooperation of shippers is a promising approach to minimize the logistics cost. This cooperation can be referred to as the “consolidation strategy” [3]. Furthermore, the cooperation can be considered as a resource allocation problem in which efficient resource management methods are required to achieve the objective. This also has a significant implication to the environmental impact, i.e., less fuel will be used [4], [5].