An Iterative Request Exchange Mechanism for Carrier Collaboration in Less than Truckload Transportation

Abstract : In carrier collaboration, multiple carriers form an alliance and exchange some of their transportation requests to improve the overall profit of the alliance and the individual profit of each carrier. In this paper, we propose a mechanism for the request exchange with limited information sharing among the carriers. In each round of the mechanism, each carrier first outsources multiple bundles of requests with the corresponding transfer payments and then insources bundles of requests from other carriers. The auctioneer reassigns bundles of requests among carriers based on the outsourcing bundles and insourcing bundles of requests. The auction mechanism iterates until a certain criterion is met. Numerical experiments on randomly generated instances show that our iterative request exchange mechanism can provide high quality solutions.