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Business to business (B2B) auctions have become a dominant mechanism used by large shippers to procure contracts for transportation services from logistics companies. The bid analysis problem is of critical importance to shippers and determines which contracts are assigned to specific carriers and at what price. In practice this problem is further complicated by the consideration of shipper business rules, such as restrictions on carrier numbers, limits on the number of individual packages awarded and preferences for incumbent carriers. This paper examines the case in which bidding packages are mutually exclusive. This is referred to as a non-combinatorial auction. In practice, this type of auction is preferred to a full combinatorial auction because it allows the auctioneer (the shipper) to maintain control of the packages and creates much less cognitive strain for bidders (trucking companies). A mathematical programming model for the bid analysis problem is presented and heuristic construction algorithms and Lagrangian relaxation based algorithms are developed to solve the problem. Numerical results show that our Lagrangian relaxation based heuristics perform better than other heuristics and that the solutions are very close to optimal.

Combinatorial auctions are increasingly used by large shippers as a method to establish service contracts with trucking companies. In order to achieve maximal benefits in these auctions, carriers must determine a bidding policy that can accurately evaluate the costs they will incur to fulfill these contracts and which can quickly examine many different possible options. In this paper, we analyze the complexity of this bidding problem for the procurement of truckload trucking service contracts; further, we propose an optimization-based approximation method to aid a carrier in constructing bids. Using a simulation framework, we examine the performance of this method elative to a straightforward bidding policy similar to those used in practice.

In this paper, we examine the for-hire truckload trucking industry in the U.S. and propose a new auction based carrier collaboration mechanism designed to facilitate economically efficient cooperation among functionally equivalent small and medium sized trucking companies based on a post market exchange. An architecture for such a system is proposed and its economic benefits are examined. Analysis shows that the system is a Pareto efficient one in which no participants are harmed and many are better off. The complex decision problems associated with subcontracting, bidding and bid selection in such a system are investigated.

The bid valuation and construction problem for carriers facing combinatorial auctions for the procurement of freight transportation contracts is very difficult and involves the computation of a number of NP-hard sub problems. In this paper we examine computationally tractable approximation methods for estimating these values and constructing bids. The benefit of our approximation method is that it provides a way for carriers to construct optimal or near optimal bids by solving a single NP-hard problem. This represents a significant improvement in efficiency. In addition, this method can be extended to many other applications.

The procurement of transportation services is an important task for shippers because of the need to control costs at the same time as providing high service levels. When shippers with goods and/or materials to transport seek transportation services from outside companies they typically put out a request for quotes from a set of carriers. They then assign contracts based on negotiated service charges. This process is similar to a simple sealed-bid auction in which each bidder submits a sealed bid for a single item. In the past, when shippers need to procure transportation services for a set of distinctive delivery routes (called lanes) they would obtain quotes for each lane individually and repeat the simple auction process for each lane. Alternatively, they might negotiate for bundles of lanes with a single carrier at a time. However, in the last few years software has been developed to allow shippers to make all lanes available for bidding simultaneously and to allow carriers to simultaneously bid upon combinations of individual lanes. This method of awarding contracts, conventionally called a combinatorial auction, has been reported to result in significant cost savings for shippers. Our research examines the benefits of combinatorial auctions primarily from the carrier's perspective. Preliminary findings, based on a simple simulation model suggest that benefits for carriers can also be significant.

During the past two years, traditional freight transportation intermediaries, which include freight forwarders, brokers and third party logistics providers have been joined by a large number of intermediaries. The main drivers of the development of these new companies are advances in information and communications technologies, the development of web-based or on-line freight transportation marketplaces and the emergence worldwide of business-to-business (B2B) electronic marketplaces and business-to-consumer (B2C) e-tailers. Advances in Information Technologies make possible many new operational paradigms and potentially enable the efficient integration of supply chains. In this paper we examine these new companies, discuss the potential benefits and costs of shifting from traditional 3PL's to these on-line service providers and illustrate the extent to which changes in the industries appear to be more of a transition than a large scale transformation.

The third party logistics industry in the US and world wide is currently undergoing a rapid transition. The main drivers of these changes are advances in information and communications technologies, the development of on-line freight marketplaces and the emergence worldwide of the so called "e-tailers or dot-coms." The advances in IT make possible many new strategies and enable integration of supply chains. In addition, the new internet-enabled companies are setting up shop quickly and in some cases outsourcing all of of their logistics and transportation functions, increasing the need for both logistics services and a wide variety of new product offerings. In this paper we provide a characterization of the industry and discuss past practice and future research opportunities.