cooperation in urban transportation

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 3

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 5

Routing and Scheduling in urban areas

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 6

Two-index formulation for VRP

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 7

\{ }

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 9

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 10

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 12

Cooperation: Distance = 828.94 with 10 vehicles

C/R = Country/Regional player

What about the cost savings?

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 13

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?

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 14

Side Payments are needed

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 15

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 16

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 18

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 19

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 20

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!

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 21

Using taxi’s for parcel deliveries

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 22

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

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 26

Thank you.Any questions/suggestions/comments?

/ School of Industrial Engineering - prof. dr. Tom Van Woensel PAGE 27