Allocating Profits among Collaborative Carriers in Less-than-truckload Industry

Though there are many less-than-truckload (LTL) companies, the LTL industry is still in a decentralized structure and the market is dispersive. Under the influence of economic recession and regional restriction in self-development, LTL companies urgently form a collaborative logistics network that is based on each's existed facilities and networks to make up their own deficiencies, share resources, reduce costs, enlarge market share and improve service quality. Profit allocation is a key issue to ensure the stability of collaboration. This paper researches on the profit allocation problem between two collaborative LTL companies. Different from other methods to calculate participants' weights, we propose a new one that considers both "profit per cost" and "profit per price" before and after collaboration. According to cooperative game theory's principles, the paper testifies the effectiveness of this method and then applies it to some instances. The paper provides reference for profit allocation among collaborative companies.