Strategic Alliance In Freight Consolidation

Strategic alliance in transportation, telecommunication, and other network-oriented industries has been widely investigated. Freight consolidation is considered to be an effective approach in cargo transport, as it lowers transport cost by realizing economies of scale and improves the service level for small shipments.Logistics services providers compete in providing quality services to customers while attempting to save operational costs. In this study, we develop collaborative freight consolidation models, where collaborative partnerships are embodied in price competition and freight consolidation operations. A mixed dispatch policy, which combines the classic quantity based dispatch policy and consideration of shipment delivery time constraints, is adopted. It is assumed that shipments arrive at the logistics services providers'consolidation centres randomly. Each shipment is associated with a delivery time constraint and it must be dispatched before expiration of its shipment deadline. The aligned partners work cooperatively in dispatching partner's freight to fill up the available empty space in a dispatch, in order to cut operational costs on both sides.The study is developed in two stages discussing two related collaborative freight consolidation models. We consider competition among logistics services providers in cargo transport, where effects of strategic alliance between aligned partners, under competition with independent practitioner (outside the alliance), are examined. In particular, we consider price coordination in the cargo market and discount offers on transferred shipments among the aligned partners. The first study adopts a simulation approach to obtain the optimal design of freight consolidation and truck dispatch plan under specific market conditions. An analytical approach is introduced in the second study and the expected cost function is considered under a set of assumptions to simplify/approximate the expected costs. Substitutability and complementarities between the aligned partners are examined and the optimal design of freight consolidation and truck dispatch plan are obtained.The first study develops a collaborative freight consolidation model in cargo transport, where strategic alliance and full collaboration between two logistics services providers are examined. A collaborating pair forms a consortium in price competition, which enhances their ability to reduce operational costs. We examine the expected profits under three scenarios:strategic alliance, full collaboration, and independent mode. The economic shipment dispatch plan for a specific collaborative policy is obtained via a simulation approach. We also present a comprehensive managerial analysis examining the key factors which may affect profit performance.The second study is an extension of the first collaborative freight consolidation model, where the substitutive and complementary relationships among the aligned partners in the strategic alliance and the independent practitioner are examined. We adopt a stochastic method and develop a two-state Markov chain model to formulate the collaborative freight consolidation problem. The economic shipment dispatch plan for a specific collaborative policy is derived via an analytical approach. Strategic alliance and independent mode are evaluated under different operating environments.This thesis examines collaborative partnerships in freight consolidation in the cargo transport market, and the effects of partnership are studied in two aspects: price competition on the demand side, and the aligned operation on the supply side. Introduction of price coordination in the cargo market and consideration of shipment delivery deadlines provide a new dimension in examining collaborative freight consolidation. The proposed methods optimize the design of freight consolidation policy and enhance logistics services providers'productivity in the cargo transport market.