Collaborative shipping under different cost-sharing agreements

Abstract

We study collaborative shipping where two shippers bundle their shipments to share the same transportation vehicle (also known as co-loading). The goal of such a collaboration is to reduce the total number of transports, thereby reducing transportation costs and GHG emissions. To synchronize the replenishment of both companies, we adopt a can-order joint replenishment policy for both companies, and we analyze how the costs of each individual company are impacted by the collaboration. We consider different agreements to redistribute the costs (or the gains) of the collaboration, ranging from no cost redistribution at all, sharing the transportation costs (or its gains) only, to sharing the total logistics costs (or its gains) that are impacted by the collaboration, i.e., transportation + inventory costs. We show that the stability (and thus the long-term viability) of the partnership strongly depends on the cost-sharing agreement, in combination with the allocation mechanism used to share the costs (or gains) of the coordination. Whereas most companies focus on the redistribution of transportation costs, it may not necessarily lead to a win-win situation where each company benefits from collaboration.

About the presenter

Robert Boute is Associate Professor Operations and Supply chain Management at Vlerick Business School and University KU Leuven. He lectures the core Operations Management course in Masters and MBA programs and Supply Chain and Operational Excellence topics in executive education and company specific programs. Robert has taught in St. Petersburg (ISM) and Peking University (BiMBA), and was visiting professor at Kellogg School of Management in Chicago (Northwestern University). He is the Academic director of the Full Time MBA programme at Vlerick Business School. Robert received his PhD from the University KU Leuven, Belgium. He received the best paper award for his research on supply chain coordination, and has won several best teachers’ awards. To date, Robert has 20+ Academic publications in reviewed international journals. His research was presented at several international conferences and was invited to speak at research seminars in top universities, a.o. INSEAD, MIT Sloan, Tsjinghua, Kellogg, Ivey.
His research focuses on Global Supply Chain Management, Design for Supply Chain and Product Platforms, Service and Maintenance Optimization and freight bundling in horizontal collaboration partnerships. In his research, Robert strives to develop academically sound models for practically relevant problems. Among others his research was financed by IWT in collaboration with Barco, the Atlas Copco Research Chair in Service Operations Management and FWO-Vlaanderen.

More info about Prof. Robert Boute