Enabling joint distribution with blockchain technology in last-mile logistics

Abstract

Joint distribution is a crucial business model employed to improve courier delivery performance in last-mile logistics (LML). However, the moral hazard of the shared agent related to carrier selection impedes the model’s widespread adoption. Cutting-edge blockchain technology (BT) provides a new way out and allows us to propose a hybrid method by combining coordination contracts with BT. First, we theoretically analyze the behavior of participants in LML. Next, two-part tariff and revenue-sharing contracts are provided to overcome the double marginalization problems in a decentralized business model. Then, BT implementation makes the contracts dynamic and prevents moral hazards during the contract’s execution period. Finally, our method enables trust to be built in the joint distribution even with a relatively loose organizational structure (i.e., courier alliance) with the evidence of the proof-of-concept and numerical experiments. Moreover, the proposed method is highly relevant to the logistics industry and potentially solves a broader array of trust issues in operations and supply chain management.