Cost allocation for freight bundling networks in intermodal transport

Abstract

Policy makers at European as well as regional levels express the need to stimulate intermodal transport chains (EU, 2011). A growing market share for intermodal transport should mean a shift towards more environmental friendly transport modes, less congestion and a better accessibility of the seaports. Consolidation of freight flows is often suggested to improve the efficiency of intermodal operations as it creates denser freight flows and achieves economies of scale. Van Lier et al. (2013) discuss bundling of freight activities at the operational level. Shippers attain scale economies and a better utilization of transport equipment through consolidation of freight inside a loading unit. The cost of freight transport may be decreased by raising the fill rate of loading units. This may on the one hand reduce the costs of pre- and end-haulage by road or on the other hand increase the attractiveness of intermodal freight transport for further continental distribution.

The analysis of bundling networks for intermodal barge transport is an interesting research opportunity to further integrate inland waterway in the intermodal supply chain (Caris et al., 2013). Bundling networks require cooperation between multiple partners in the intermodal transport chain. Questions rise which type of bundling network is manageable and how benefits may be allocated among the participants in the cooperation. Cruijssen et al., (2007) suggest incentive alignment as a crucial group of facilitators of horizontal cooperation in transport and logistics. This may provide a mechanism for realignment of the benefits and burdens with the purpose of internalizing the responsibility for the attainment of overall profitability to the individual participants.

In this paper, several cost allocation methods are presented to allocate the cost savings of consolidation among the participants in the cooperation. While economies of scale are an obvious advantage for the consolidation of freight flows as a whole, the benefits for a single member are not always clear. The allocation of the benefits of consolidation to the individual members may cause lack of commitment and hesitation to take part in the consolidation. The cost allocation methods presented in this paper provide clarity in the allocation of cost savings among the participants. Very simple and straightforward cost allocation methods are compared to more advanced methods based on cooperative game theory (e.g. Shapley value).