Cooperation in Urban Transportation
Tom Van Woensel
/ School of Industrial Engineering - prof. dr. Tom Van Woensel
Menu for today
• Urban environments• Horizontal collaboration between LSPs
• Analysis and discussion• Planning and scheduling of their operations: Vehicle
Routing Problems• Gain sharing mechanisms
• Collaboration between public and freight transport
Caveat emptor: ongoing work !
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Urban Environments and Transportation
• Transportation demand is growing and expected to continue growing
• Last-mile logistics is more and more situated in growing urban areas:• Increasing urban population growth• (Over)congested• Difference with emerging cities
• Both internal costs and the external costs are key logistics drivers• Decarbonisation to reduce pollution
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Urban Environments and Transportation
• Quality (e.g. carbon footprint) and quantity (e.g. transport movements) of the distribution activities• Better orchestration of the different physical flows by
considering all relevant stakeholders− Retailers− LSPs− Government− Public
• Coordination and consolidation challenges are not new, but sound and sustainable solutions are not easily realized.
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(The lack of) Cooperation and coordination in urban transportation
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Routing and Scheduling in urban areas
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Two-index formulation for VRP
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\{ }
min ij iji V n j i
d x
0\0
2jj V
x K
Subject to
2 \{0}hi ijh i j i
x x i V
2 ( ) \{0}, ,hi ij
i S h i i S j ih S j S
x x r S S V S
{0,1}, , \{0},ijx i j V i j {0,1,2}, \{0}ijx j V
v0
( )E S
/ School of Industrial Engineering - prof. dr. Tom Van Woensel
VRP and Time windows
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=1 if vehicle k drives directly from i to j
The time vehicle k startsServicing customer j
cost trav. from i to j
demand at customer i
capacity of vehicle k
depot at start
depot at end
time to travel directly from i to jplus service time in i
large number
ASSIGNMENT
CAPACITY
FLOW
CONSER-
VATION
TIMEWINDOWS
dashboard LSP 1
Parameters1. > 3plts2. north NL3. HACCP4. Non smelling5. ….
Parameters1. unrestricted2. LZV only3. TLN member4. Digital VVA 5. ….
Parameters1. FTL only2. Digital VVA3. chilled4. ….
dashboard LSP 2 dashboard LSP 3
Three Dutch carriers
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Three carriers consolidated
Delta Absolute
Δ Cost-factor -4.8% -24.993
Δ Kms driven -4.7% -32.463
Δ Empty kilometers -15.2% -38.547
Δ Driving hours -4.9% -497
Δ Vehicles -12.9% -55
# Orders 6.762
# Routes 3.647
# Pallets 83.887
# Vehicles as-is 425
Gain sharing mechanisms needed
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Collaboration among Logistics Service Providers
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Distance Number of Trucks Utilization (avg)LSP 1 764.79 10 46%
LSP 2 750.28 9 49%
Total 1515.07 19 47%Cooperation 828.94 10 75%
Difference -45% -47% +38%
Some variants to the problem
Distance Vehicles usedLSP1 LSP2 Total LSP1 LSP2 Total
Equal (50/50) 764.79 750.28 1515.07 9 10 19
Unequal (20/80) 590.57 790.87 1381.44 6 10 16
Regional (C/R)No overlap
650.94 217.30 868.24 8 3 11
Regional (C/R)Minor overlap
642.98 297.09 940.07 8 4 12
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Cooperation: Distance = 828.94 with 10 vehicles
C/R = Country/Regional player
What about the cost savings?
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Total Km savings Km savings per dropLSP1 LSP2 Total LSP1 LSP2 Total
Equal (50/50) 255.49 256.70 512.18 5.11 5.13 5.12
Unequal (20/80) 316.02 95.20 411.22 15.80 1.19 4.11
Regional (C/R)No overlap
0.00 17.76 17.76 0.00 0.66 0.18
Regional (C/R)Minor overlap
48.28 23.20 71.48 0.69 0.77 0.71
• Cost savings are not always equal over all partners• Limited savings if no synergy in the networks
• Shapley value for player i:
• Allocates to each participant its average marginal contribution
• Complete random order of entering of participants• For two players:
• Equal allocation of the total value of cooperation• Regardless of the specific characteristics (e.g. size,
orders, etc.) of the two players
How to share the benefits?
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Side Payments are needed
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Total km savings Side paymentsLSP1 LSP2 Total LSP1 LSP2
Equal (50/50) 255.49 256.70 512.18 -0.61 0.61
Unequal (20/80) 316.02 95.20 411.22 110.41 -110.41
Regional (G/R)No overlap
0.00 17.76 17.76 -8.88 8.88
Regional (G/R)Minor overlap
48.28 23.20 71.48 -12.54 12.54
A transparent and clear cost accounting system is needed
What about shippers?
• Tariffs adapted following LSP collaborations• Proposal: follow Shapley allocation
• Two players: Shipper and LSP• 50/50 allocation rule
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No collaboration Collaboration – no sharing with
Shipper
Sharing with Shipper
Tariff 100 100 95 (-5 from coll.)
Costs 97 90 90
Margin 3 10 5
How certain are we about this?
What about time and stochasticity?
• Volumes offered to the coalition• Changes over time, contracts, tenders, etc.• How to cope with this if one partner falls behind?• Consequences are significant
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No collaboration Sharing with Shipper
Volumes in collaboration
Tariff 100 95 (-5 from coll.) 95
Costs 97 90 [92,97]
Margin 3 5 [3,-2]
What do we need?
• Sound concepts for gain sharing:• That survive over time and uncertainty• That are fast measurable/quantifiable throughout the
collaborations• That consider the dynamics and stochastics of the LSP
and shipper’s world• A gain sharing control tower?
• Neutral instance• Open bookkeeping with regards to costs
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A different cooperation
• Combine passenger transport and freight transport• Different levels:
• Share dedicated resources, e.g. priority lanes• Share equipment: taxi, bus, train, boat
• Some examples:• Passenger airplanes also carry freight• Norwegian Hurtigruten: mail, cargo and passengers• Dabbawalla
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Dabbawalla
• 0% fuel, 0% investment, 0% modern tech, 0% Disputes, 99.99% performance, 100 % Customers Satisfaction
• 400,000 transactions every day (including return), i.e. 400,000*25 days*12 months= 120,000,000 transactions per year
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Grant Road(12)
Churchgate(1-10)
Lower Parel(14)
2
3
7
4
5
6
Zones for destination
DistributionBy Carriersat lunchtimeTo offices
Point of AggregationAnd Sorting
C DB
A E
Collection from home
1
The Flow Logic: using trains!
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Using taxi’s for parcel deliveries
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Trail of one taxi in San Francisco (1 day)
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Trail of 30 taxis in San Francisco (1 day)
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/ School of Industrial Engineering - prof. dr. Tom Van Woensel
Taxis for parcel delivery
• Online optimization• Stochastic customers• Stochastic demand• Pickup and delivery problems
• Using taxis for parcels:• Utilized (with customer): time value?• Available (no customer): use the ‘dead’ time
• Joint work started with Connexxion for The Netherlands
• PhD research of Baoxiang Li
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Overview and summary
• Collaboration among LSP• Gain sharing principles• How to translate this into practice?• The role of shippers in the collaborations
• Collaboration between public and freight transport• Interesting research questions arise• Still an open research field
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Thank you.Any questions/suggestions/comments?
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