Publication Type

Journal Article

Version

submittedVersion

Publication Date

4-2021

Abstract

The growing population in cities and booming e-commerce activities create huge demand for urban last-mile delivery, exerting intense pressure on the cities' well-being. To keep congestion and pollution under control, a consolidator can operate an urban consolidation center (UCC) to bundle shipments from multiple carriers before the last-mile delivery. Alternatively, the consolidator can operate a peer-to-peer platform for the carriers to share delivery capacity. We provide guidance for the consolidator to choose between these two business models by comparative analysis. We capture the interactions between the consolidator and carriers using a game-theoretical framework. Under each business model, the consolidator first decides a price of delivery service to maximize her expected profit. Each carrier then observes his task volume, and decides whether to deliver on his own or use the consolidator's service to minimize his delivery cost. Under the UCC model, the carriers become more dependent on the UCC as their variable delivery cost increases. Under the platform model, the demand and the supply of delivery capacity on the platform are balanced in equilibrium. Between the two business models, the UCC is more profitable than the platform if and only if the carriers' variable delivery cost is sufficiently large. Moreover, the UCC becomes more dominant as there are more carriers. The UCC is also more efficient than the platform in mitigating the negative social-environmental impact of urban last-mile delivery if and only if there are sufficiently many carriers. Otherwise, the platform performs better.

Keywords

last-mile delivery, urban consolidation center, peer-to-peer platform, game theory

Discipline

Operations and Supply Chain Management | Operations Research, Systems Engineering and Industrial Engineering | Transportation

Research Areas

Operations Management

Publication

Production and Operations Management

Volume

30

Issue

4

First Page

997

Last Page

1013

ISSN

1059-1478

Identifier

10.1111/poms.13289

Publisher

Wiley

Embargo Period

4-20-2021

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1111/poms.13289

Download

Share

COinS