Horizontal cooperation in logistics: Order sharing through joint route planning

Abstract

Transportation companies operating at the same level of the supply chain may cooperate horizontally to increase their efficiency levels. Analysis of existing scientific research on horizontal carrier collaboration reveals that the majority of logistics cooperation literature may be divided into two main research streams: order sharing and capacity sharing. In this paper one approach to order sharing is presented: joint route planning. Applying joint route planning, customer orders from all carriers are combined and collected in a central pool and efficient route schemes are set up for all requests simultaneously using appropriate vehicle routing techniques. The routing problem associated with horizontally cooperating carriers may be defined as a multi-depot pickup and delivery problem with time windows (MDPDPTW). The benefits of cooperative optimisation are demonstrated by means of a small numerical example. To conclude, solution techniques suitable to solve instances with a large number of requests are discussed.