Comparing cost allocation methods for consolidation in intermodal transport

Abstract

Policy makers at European as well as regional levels express the need to stimulate intermodal transport chains. A growing market share for intermodal transport should mean a shift towards more environmental friendly transport modes, less congestion and a better accessibility of seaports. Consolidation of freight flows is often suggested to improve the efficiency of intermodal operations Shippers attain scale economies and a better utilization of transport equipment through consolidation of freight inside a loading unit. Questions rise how benefits may be allocated among the participants in the cooperation. No studies have yet been performed on cost allocation methods for collaboration between shippers aimed to make use of intermodal transport. In this research, several cost allocation methods are presented to allocate the cost savings of consolidation among the participants in this type of cooperation. While economies of scale are an obvious advantage for the consolidation of freight flows as a whole, the benefits for a single member are not always clear. The allocation of the benefits of consolidation to the individual members may cause lack of commitment and hesitation to take part in the consolidation. Very simple and straightforward cost allocation methods are compared to more advanced methods based on cooperative game theory.