Empty runs, meaning trucks or even freight trains that return to their home base empty after delivering their cargo, account for a large proportion of all kilometers driven in freight transport. According to figures from the Federal Ministry of Transport and Digital Infrastructure (BMVI), trucks covered a full 6.595 billion kilometers in 155.4 million empty trips in Germany alone in 2019. This compares to a total of 263.7 million load trips and 23.821 billion load kilometers.
One reason for these many empty kilometers is that companies do everything they can to ensure that the competition does not find out about their own order volume, costs or regular customers. Researchers at the University of Klagenfurt, Austria, are now investigating how the “sharing economy,” or collaborative vehicle routing, could keep the innermost secrets but still change the logistics industry.
“The sharing economy is on the rise. Traditional business models need to be adapted and players need to learn how to survive in a world of shared free capacity and digital platforms,” says Margaretha Gansterer from the Department of Production Management & Logistics. She is leading the project entitled “EMIL – Exchange Mechanisms in Logistics,” which is being conducted at the University of Klagenfurt and the University of Vienna and funded by the Austrian Science Fund FWF.
Breaking down barriers
“In our project, we focus on horizontal collaboration where companies at the same level of a supply chain share resources with their competitors by exchanging selected transport orders,” explains Margaretha Gansterer. This exchange could happen via digital platforms where transport service providers share information about their orders in a way that avoids empty runs as much as possible. Such platforms already exist but only partially exploit the potential of such collaboration. To optimize this, a number of hurdles still need to be overcome.
First, competing companies naturally do not want to share important information. Second, a way must also be found to fairly share costs and also profits. Only when these issues are resolved to everyone’s satisfaction can transportation contracts be efficiently distributed between competing players.
Researchers are now working on mechanisms that, on the one hand, can get by with as little information exchange as possible and, on the other hand, can divide up transport orders fairly and at low cost. One way to achieve this goal is auction systems that use a bidding process to allocate existing capacities without requiring companies to disclose sensitive data such as costs or regular customers.
Creating incentives
In addition, the allocation process should be designed in such a way that as many transport service providers as possible see incentives to participate in a beneficial way, such as ensuring that jointly achieved profits are shared fairly, say the researchers. This means that one of EMIL’s central problems is also how to design such a profit-sharing arrangement. “We want to ultimately increase the overall efficiency of the transportation industry by avoiding costly and environmentally damaging empty runs in the aggregate,” Gansterer says.
The goal will be achieved with the help of complex, scientific methods from operations research and game theory. “Because the overall problem is very complex, computational studies are the only way we can analyze the effects of different exchange mechanisms, profit distributions and behavior of the actors*,” Margaretha Gansterer explains.
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