Models for Minimizing Backhaul Costs through Freight Collaboration

Abstract

The competitive nature of the trucking industry has forced trucking firms to develop innovative solutions to improve their operational efficiency and decrease marginal costs. One way carriers and shippers are accomplishing these tasks is by collaborating on operations through various strategies. Two optimization models are developed to route the carrier of interest's backhaul routes and select collaborative shipments to fulfill; one is formulated as an integer program, and the other is formulated as a mixed integer program. Two solution methodologies, a greedy heuristic and tabu search, are used to solve the two problems, and numerical analysis is performed with a real-world freight network. Numerical analysis reveals that the percentage of cost savings for backhaul routes can be as high as 27%.