Transportation pricing of a truckload carrier

Abstract

a b s t r a c tFreight transportation is a major component of logistical operations. Due to the increase in global trade, fierce competition among shippers and raising concerns about energy, companies are putting more emphasis on effective management and usage of transportation services. This paper studies the transportation pricing problem of a truckload carrier in a setting that consists of a retailer, a truckload carrier and a less than truckload carrier. In this setting, the truckload carrier makes his/her pricing decision based on previous knowledge on the less than truckload carrier's price schedule and the retailer's ordering behavior. The retailer then makes a determination of his/her order quantity through an integrated model that explicitly considers the transportation alternatives, and the related costs (i.e., bimodal transportation costs) and capacities. In the paper, the retailer's replenishment problem and the truckload carrier's pricing problem are modeled and solved based on a detailed analysis. Numerical evidence shows that the truckload carrier may increase his/her gainings significantly through better pricing and there is further opportunity of savings if the truckload carrier and the retailer coordinate their decisions.

Economic and environmental considerations in a continuous review inventory control system with integrated transportation decisions

“…In particular, we include explicit truck costs, capacities, and emissions in case of TL transportation. As noted before, TL transportation costs have been previously modeled in integrated inventory control and transportation studies (see, e.g., Aucamp, 1982;Lee, 1986;Toptal et al, 2003;Toptal and Çetinkaya, 2006;Toptal, 2009;Toptal and Bingol, 2011;Konur and Toptal, 2012). In calculating the TL transportation emissions, we explicitly consider the freight trucks and their loads.…”

“…On the other hand, in TL transportation, the retailer is charged on the number of trucks used for transportation, which requires explicit transportation modeling. TL transportation has been integrated with inventory control decisions in the supply chain and logistics literature (see, e.g., Aucamp, 1982;Lee, 1986;Toptal et al, 2003;Toptal and Çetinkaya, 2006;Toptal, 2009;Toptal and Bingol, 2011;Konur and Toptal, 2012). Following the modeling approach in these studies, we model TL transportation explicitly by taking per truck costs and per truck capacities into account.…”

“…The statistics on the fact that freight trucks are the main contributors to GHG emissions of freight transportation are not surprising as freight trucks are the most common transportation mode. Furthermore, considering the anticipated increases in freight transportation in both European countries and the U.S. (see, e.g., Toptal and Bingol, 2011;FHWA, 2008), it is important to consider freight trucks in transportation integrated with inventory control decisions to accurately model sustainable inventory control decisions.…”

Pricing decisions in a carrier–retailer channel under price-sensitive demand and contract-carriage with common-carriage option

“…We extend the results in Mutlu and Çetinkaya (2011) to consider a periodic setting under a nonrecurring (one shot) contract and alternative options for shipping the retailer orders, i.e., contract-and commoncarriage, while characterizing the optimal pricing and transportation-choice decisions. By considering price-sensitive demand and a linear price contract, we also extend the results in Toptal and Bingöl (2011) which examines a newsboy setting and studies the problem of a truck-load carrier, i.e., the problem of finding the per truck shipping price for full-truck-load (FTL) pricing. Since the demand-price relationship is simply ignored in Toptal and Bingöl (2011), our model is clearly more general and fundamentally different than that of the newsboy setting in Toptal and Bingöl (2011) in the sense that the freight rate set by the carrier affects the retail price of the item which, in turn, affects the demand volume.…”

“…We also explore the case where the carrier has alternative options of shipping the retailer orders, i.e., contract-and common-carriage, and then characterize the optimal pricing and transportation-choice decisions. It is worth noting that two carrier-retailer settings related to the current paper have also been examined from the perspective of CRCC in Mutlu and Çetinkaya (2011) and Toptal and Bingöl (2011). The results in Mutlu and Çetinkaya (2011) focus on long-term planning, i.e., the case with recurring shipments of fixed size over an infinite horizon.…”