Modeling of Collaborative Less-than-truckload Carrier Freight Networks
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Modeling of Collaborative Less-than-truckload Carrier Freight Networks

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      Final Report
    • Abstract:
      Less-than-truckload (LTL) carriers, which operate on thin margins, have significant negative impacts due to empty trips, idled capacity on lots, and rising energy costs. The impacts can cascade to other industries; for example, empty trips may affect global food prices. Recent advances in Internet and information communication technologies (ICT) foster the possibility of innovative new business and operational paradigms within the small- to medium-sized LTL industry to address these concerns. One promising innovation is the concept of LTL carrier-carrier collaboration, which provides opportunities for LTL carriers to exploit synergies in operations (such as excess capacity), reduce costs associated with fleet operation, decrease lead times, increase asset utilization (power units), and enhance overall service levels. LTL carrier-carrier collaboration is a relatively unexplored concept within the freight domain, where past studies have focused on collaboration within the truckload (TL) carrier, liner shipping, airline, and rail industries. This research seeks to understand and develop LTL collaborative paradigms from the supply and demand perspectives, thereby filling a key gap in the current freight collaboration literature. Findings Based on a survey of freight carriers, we obtain the following findings. First, carriers show propensity for collaboration. Variables related to collaboration were found to be significant in the mixed logit model developed in the study, including “carrier’s concern for rising fuel prices”, “very likely to collaborate for increased fuel savings” and “non-unionized carrier collaboration.” The significance of these variables illustrates that LTL carriers are concerned with the potential economic impacts of fuel price fluctuations and the possibility of forming collaborative alliances. On the opposite side of the spectrum, the capital investment alternative was considered to be the least viable option. This implies that the LTL carriers surveyed are less likely to commit assets for the acquisition of additional capacity for meeting demand requirements under a short-term planning horizon. Hence, collaborative alliances can provide a critical strategy for the survivability of LTL carriers in a highly competitive industry, especially under economic downturns and fuel price fluctuations.
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