Transportation Service Procurement Auctions in Cyber-Physical Internet

Abstract

This study is the first to propose auction models for transportation service procurement (TSP) in Cyber-Physical Internet (CPI). In the TSP problem, shippers are the service buyers who generate a large number of orders, and carriers are the service sellers who can deliver these orders. CPI is a novel concept aiming to completely alter freight transportation to develop a new generation of global logistics network (GLN). The introduction of CPI prompts the rethinking of several TSP basic issues, such as route planning, service mode selection, and real-time pricing based on spatial-temporal information sharing in CPI. Therefore, we first detail two key components of CPI, i.e., the router and the routing table and then describe the GLN in CPI through a typical example. We further establish a one-sided Vickrey-Clarke-Groves (O-VCG) online reverse auction mechanism to maximize social welfare. This auction mechanism is built to make decisions according to multidimensional information provided by the routing table about the transport services. Moreover, we further analyze the four important attributes of the auction mechanism, including allocative efficiency, incentive compatibility, individual rationality and budget balance. We finally conclude with critical challenges and future research directions, including potential TSP auctions in CPI and the applicability of the underlying model to general logistics systems based on spatial-temporal considerations.