Preventing the circulation of empty lorries and goods trains

The concept of pooling resources is spreading to the logistics industry: If you receive an order but do not have a vehicle in a particular location, you can cede the transportation to another company that would otherwise face an empty run. This benefits companies and the environment. However, the sharing economy means a paradigm shift for the industry. Companies are reluctant to reveal details about order volumes, costs and regular customers. A research team at the University of Klagenfurt is investigating how transport assignments can nevertheless be distributed efficiently between competing players.

“Our project focuses on horizontal collaborations in which companies at the same level of a supply chain share resources with their competitors by swapping specific transport orders,” Margaretha Gansterer explains. She teaches and conducts research at the Department of Production Management & Logistics at the University of Klagenfurt and heads the FWF-funded project “EMIL – Exchange Mechanisms in Logistics”.

Sharing can be organised via digital platforms that allow transport service providers to swap orders in such a way that their routes contain as few empty runs as possible. While such platforms are already in practical use, the existing mechanisms fall far short of exploiting the full potential of these kinds of collaborations.

If transport jobs are to be distributed efficiently between competing players, there are some hurdles: Companies competing with each other usually prefer to share as little information as possible. It is also challenging to split costs and profits fairly.

The project team is working on removing these obstacles with mechanisms that manage to get by with as little information exchange as possible yet still create a fair and cost-effective distribution of transport assignments. Among other things, they are relying on auction systems that are able to find efficient allocations of available capacities through a bidding process without the participating transporters having to disclose sensitive data such as costs or regular customers. The allocation mechanism should also be designed in such a way that a maximum number of transport service providers are incentivised to participate in a mutually beneficial way. One such incentive could be the fair distribution of jointly achieved profits. The question of what form such a distribution of profits should take is one of the main challenges of the project. And it is not only here that some initial results have been achieved: For example, in a recent paper the researchers have already been able to show the effects of integrating fair distribution into the optimisation process. The economic costs are less than 5 percent, and they decrease further when fairness is considered over longer time frames.