Designing Efficient and Equitable Freight Services Markets for Sustainable Economic Performance

Abstract

Despite the indispensability of freight trucking services and truckers’ role as critical stakeholders in supply chains, relatively little attention has been paid to analyzing small independent truckers’ roles. Shippers often prefer working with larger trucking companies to the detriment of smaller independent truckers, who must grapple with an inherently disadvantageous job market. Furthermore, in the presence of uncertainty or peak demand periods, trucker shortages can pose significant economic challenges for shippers and downstream customers. In this paper, we propose an analytical framework to address these challenges in efforts to enhance the sustainability of the freight service industry. We formulate and solve a weighted bi-objective optimization model that simultaneously maximizes the total profits of both shippers and truckers to design a sustainable freight services market. Further, we leverage Monte Carlo simulation trials to examine how all players in this market can achieve a better solution under uncertainty. Ultimately, after evaluating multiple scenarios, we find that shippers and truckers yield the highest economic benefits under a balanced design that leverages principles of supply chain coordination, while satisfying all demand from shippers. This framework can serve as a decision support tool for policymakers who aim to ensure all stakeholders in the market can become and remain profitable. Based on our findings, this study suggests practical implications on how to consider humanitarian policies aimed at promoting equity for truckers and ensuring the timely shipment of essential products for both shippers and truckers.