A Hierarchical Network Approach for Long-Haul Parcel Transportation

In this work, we study the long-haul stage of parcel transportation, which involves the integration of the sorting operation allowing better consolidation of parcels in containers. The transportation is optimized over a complex two-level hybrid hub-and-spoke network and is conducted with a heterogeneous fleet; there are two types of vehicles which are balanced over the network on a daily basis with the management of empty trucks. We are not aware of a framework for long-haul parcel transportation in the literature that is sufficient to handle all aspects of the industrial problem we address. In terms of finding a solution, we propose a hierarchical algorithm with aggregate demands whose performance is related to the value of a truck filling rate threshold. Roughly speaking, the demands above this threshold can be routed directly while the ones below this threshold follow the hierarchical structure of the network. The routing of the two types of demands is optimized, first separately and then together in a multi-step process in which the subproblems are solved via Mixed Integer Linear Programs. Numerical experiments are carried out on datasets provided by a postal company (225 sites with 2500 demands). Various threshold values are tested to find out which one is the best, in terms of solution quality obtained and computational time.