What is the Right Size for Truckload Carrier Alliances?

Abstract

In spot markets for truckload transportation services, centralized collaboration among carriers is often regarded as an ideal way to determine which load (a.k.a. shipment) is delivered by each carrier. The challenge of getting all competing carriers to collaborate under a centralized system (instead of being rivals for loads) has prompted interest in collaboration modes that are on a smaller scale than complete centralization. In this research vein, this paper answers the following question: for the small-scale collaboration of decentralized load exchange among small alliances of willing carriers, how close do the performance results (profits, etc.) come to the purported ideal results under centralization? Our core finding from extensive computational experiments is that, by collaborating with the right load exchange partners, a carrier in a small and easier-to-manage alliance can achieve financial savings that closely match and sometimes even surpass the per carrier savings from a fully centralized system. This, and some closely related insights, comprise this paper’s main contributions to the literature. The practical relevance of the contributions is in facilitating decisions about how much effort is worth expending on having every carrier within geographic network participate in a centralized system.