Collaborating freight forwarding enterprises - Request allocation and profit sharing

The paper presents a model for the collaboration among independent freight forwarding entities. In the modem highly competitive transportation branch freight forwarders reduce their fulfillment costs by exploiting different execution modes (self-fulfillment and subcontraction). For self-fulfillment they use their own vehicles to execute the requests and for subcontracting they forward the orders to external freight carriers. Further enhancement of competitiveness can be achieved if the freight forwarders cooperate in coalitions in order to balance their request portfolios. Participation in such a coalition gains additional profit for the entire coalition and for each participant, therefore reinforcing the market position of the partners. The integrated operational transport problem as well as existing collaboration approaches are introduced. The presented model for collaboration is based on theoretical foundations in the field of combinatorial auctions and operational research game theory. It is applicable for coalitions of freight forwarders, especially for the collaboration of Profit Centres within large freight forwarding companies. The proposed theoretical approach and the presented collaboration model are suitable for a coalition of freight forwarding companies with nearly similar potential on the market.