The information value of logistics platforms in a freight matching market

Abstract

The information asymmetry in the freight matching of the long-haul trucking industry usually pushes shippers to join a logistics platform that has better knowledge of truckers’ cost information. A logistics platform that is plugged into a freight transportation system helps shippers overcome their information disadvantage but produces the double marginalization effect. We investigate the equilibrium characteristics of a shipper and logistics platform in the freight matching market and find that the shipper prefers to cooperate with the logistics platform in a small-scale sales market but searches for truckers by himself in a large-scale sales market. We show that the information value of a logistics platform for the freight system consists of two aspects: (i) employ low-cost truckers for the shipper and avoid the shipper’s inefficient expansion of the selling quantity in a moderate-scale sales market with greatly heterogeneous truckers, and (ii) improve both the total profit and social welfare of the freight system in a small-scale sales market. We further find that the shipper’s private information may hurt the logistics platform and the logistics platform can mitigate her double marginalization disadvantage by improving value-added services or lowering the logistics price in a large-scale market. Our findings provide guidelines for the shipper and logistics platform on how to choose the appropriate transportation strategy and employment strategy in different logistics markets.