Competition and cooperation in pickup and multiple delivery problems

Logistics is a highly competitive industry; large hauliers use their size to benefit from economies of scale while small logistics companies are often well placed to service local clients. To obtain economies of scale, small hauliers may seek to cooperate by sharing loads. This paper investigates the potential for cost savings and problems associated with this idea. We study dynamic scheduling of shared loads for real-world truck haulage in the UK and model it as a dynamic pickup and multiple delivery problem (PMDP). In partnership with Transfaction Ltd., we propose realistic cost and revenue functions to investigate how companies of different sizes could cooperate to both reduce their operational costs and to increase profitability in a number of different scenarios