PERFORMANCE AND ANALYSIS OF SPOT TRUCK-LOAD PROCUREMENT MARKETS USING SEQUENTIAL AUCTIONS

Abstract

Competition in a transportation marketplace is studied under different supply/demand conditions, auction formats, and carriers' behavioral assumptions. Carriers compete in a spot truck-load procurement market (TLPM) using sequential auctions. Carrier participation in a TLPM requires the ongoing solution of two distinct problems: profit maximization problem (chose best bid) and fleet management problem (best fleet assignment to serve acquired shipments). Sequential auctions are used to model an ongoing transportation market, where carrier competition is used to study carriers' dynamic vehicle routing technologies and decision making processes. Given the complexity of the bidding/fleet management problem, carriers can tackle it with different levels of sophistication. Carriers' decision making processes and rationality/bounded rationality assumptions are analyzed. A framework to study carrier behavior in TL sequential auctions is presented. Carriers' behavior is analyzed as a function of fleet management technology, auction format, carrier bounded rationality, market settings, and decision making complexity. The effects of fleet management technology asymmetries on a competitive marketplace are studied. A methodology to compare dynamic fleet management technologies is developed. Under a particular set of bounded rationality assumptions, bidding learning mechanisms are studied; reinforcement learning and fictitious play implementations are discussed. The performance of different auction formats is studied. Simulated scenarios are presented and their results discussed.