Iterative Combinatorial Auction for Carrier Collaboration in Logistics Services

Collaboration among carriers results in improved resource utilization and reduced costs. In this paper, we propose an auction-based model for carrier collaboration in transportation services. The model achieves carrier collaboration through negotiation among carriers over a group of shipping orders. The negotiation is conducted through a combinatorial iterative auction with the objective of minimizing the overall costs of carriers. Compared with one-shot auctions, the proposed mechanism has the properties of reducing carriers´ information revelation and accommodating dynamic changes during the bidding process. Experimental results show that the procurement cost performance and the quality of solutions computed using the proposed iterative auction model are close to that of the optimal solutions.