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Are there economies of traffic density in the Less-Than-Truckload motor carrier industry? An operations planning analysis

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  • Keaton, Mark H.

Abstract

An operations planning model of less-than-truckload (LTL) motor carrier operations is developed. The model determines the number of terminals, and the routing of trucks between terminals, to minimize pickup and delivery, platform handling, and linehaul costs subject to service level constraints. Heuristic techniques are used, so the solution is only approximate. Analysis of a number of hypothetical LTL networks shows that there are substantial economies of traffic density. As traffic volume increases over a region of fixed size, average cost falls sharply, especially at the lower density levels. This finding is consistent with the behavior of the carriers which have expanded since de facto deregulation in 1980, and helps to explain why a few large carriers are coming to dominate the LTL market.

Suggested Citation

  • Keaton, Mark H., 1993. "Are there economies of traffic density in the Less-Than-Truckload motor carrier industry? An operations planning analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 27(5), pages 343-358, September.
    • Handle: RePEc:eee:transa:v:27:y:1993:i:5:p:343-358
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    Cited by:

    1. Keaton, Mark, 1994. "Economies of Density and the Structure of the Less-than-Truckload Motor Carrier Industry Since Deregulation," Transportation Research Forum Proceedings 1990s 319106, Transportation Research Forum.
    2. Keaton, Mark, 1995. "Economics of Density and the Less-Than-Truckload Motor Carrier Industry Since Deregulation," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 35(1).
    3. Ripplinger, David G. & Bitzan, John D., 2018. "The cost structure of transit in small urban and rural U.S. communities," Transportation Research Part A: Policy and Practice, Elsevier, vol. 117(C), pages 176-189.

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