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Combinatorial Auctions for Transportation Service Procurement: The Carrier Perspective

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  • Regan, A C
  • Song, Jiongjiong
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    Abstract

    The procurement of transportation services is an important task for shippers because of the need to control costs at the same time as providing high service levels. When shippers with goods and/or materials to transport seek transportation services from outside companies they typically put out a request for quotes from a set of carriers. They then assign contracts based on negotiated service charges. This process is similar to a simple sealed-bid auction in which each bidder submits a sealed bid for a single item. In the past, when shippers need to procure transportation services for a set of distinctive delivery routes (called lanes) they would obtain quotes for each lane individually and repeat the simple auction process for each lane. Alternatively, they might negotiate for bundles of lanes with a single carrier at a time. However, in the last few years software has been developed to allow shippers to make all lanes available for bidding simultaneously and to allow carriers to simultaneously bid upon combinations of individual lanes. This method of awarding contracts, conventionally called a combinatorial auction, has been reported to result in significant cost savings for shippers. Our research examines the benefits of combinatorial auctions primarily from the carrier's perspective. Preliminary findings, based on a simple simulation model suggest that benefits for carriers can also be significant.

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    File URL: http://www.escholarship.org/uc/item/7sq003mj.pdf;origin=repeccitec
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    Bibliographic Info

    Paper provided by University of California Transportation Center in its series University of California Transportation Center, Working Papers with number qt7sq003mj.

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    Date of creation: 01 Jan 2003
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    Handle: RePEc:cdl:uctcwp:qt7sq003mj

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    Keywords: Social and Behavioral Sciences;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Ledyard, John O. & Olson, Mark & Porter, David & Swanson, Joseph A. & Torma, David P., 2000. "The First Use of a Combined Value Auction for Transportation Services," Working Papers 1093, California Institute of Technology, Division of the Humanities and Social Sciences.
    2. S.J. Rassenti & V.L. Smith & R.L. Bulfin, 1982. "A Combinatorial Auction Mechanism for Airport Time Slot Allocation," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 402-417, Autumn.
    3. Michael H. Rothkopf & Aleksandar Peke\v{c} & Ronald M. Harstad, 1998. "Computationally Manageable Combinational Auctions," Management Science, INFORMS, vol. 44(8), pages 1131-1147, August.
    4. Babaioff, Moshe & Feldman, Michal & Nisan, Noam & Winter, Eyal, 2012. "Combinatorial agency," Journal of Economic Theory, Elsevier, vol. 147(3), pages 999-1034.
    5. Frank Kelly & Richard Steinberg, 2000. "A Combinatorial Auction with Multiple Winners for Universal Service," Management Science, INFORMS, vol. 46(4), pages 586-596, April.
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    Citations

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    Cited by:
    1. Xu, Su Xiu & Huang, George Q., 2013. "Transportation service procurement in periodic sealed double auctions with stochastic demand and supply," Transportation Research Part B: Methodological, Elsevier, vol. 56(C), pages 136-160.
    2. Garrido, Rodrigo A., 2007. "Procurement of transportation services in spot markets under a double-auction scheme with elastic demand," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 1067-1078, November.
    3. Song, Jiongjiong & Regan, A C, 2003. "Approximation Algorithms for the Bid Construction Problem in Combinatorial Auctions for the Procurement of Freight Transportation Contracts," University of California Transportation Center, Working Papers qt3j7034z2, University of California Transportation Center.
    4. van Duin, J.H.R. & Tavasszy, L.A. & Taniguchi, E., 2007. "Real time simulation of auctioning and re-scheduling processes in hybrid freight markets," Transportation Research Part B: Methodological, Elsevier, vol. 41(9), pages 1050-1066, November.

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