Less-Than-Truckload carrier collaboration problem: modeling framework and solution approach

Abstract

Less-Than-Truckload (LTL) carriers generally serve geographical regions that are more localized than the inter-city line-hauls served by truckload carriers. That localization can lead to urban freight transportation routes that overlap. If trucks are traveling with less than full loads, there typically exist opportunities for carriers to collaborate over such routes. We introduce a two stage framework for LTL carrier collaboration. Our first stage involves collaboration between multiple carriers at the entrance to the city and can be formulated as a vehicle routing problem with time windows (VRPTW). We employ guided local search for solving this VRPTW. The second stage involves collaboration between carriers at transshipment facilities while executing their routes identified in phase one. For solving the second stage problem, we develop novel local search heuristics, one of which leverages integer programming to efficiently explore the union of neighborhoods defined by new problem-specific move operators. Our computational results indicate that integrating integer programming with local search results in at least an order of magnitude speed up in the second stage problem. We also perform sensitivity analysis to assess the benefits from collaboration. Our results indicate that distance savings of 7–15 % can be achieved by collaborating at the entrance to the city. Carriers involved in intra-city collaboration can further save 3–15 % in total distance traveled, and also reduce their overall route times.