Breaking Truck Dominance in Supply Chains: Proactive Freight Consolidation and Modal Split Transport

26 Pages Posted: 3 May 2022 Last revised: 15 Sep 2022

See all articles by Bram J. De Moor

Bram J. De Moor

Research Center for Operations Management, KU Leuven

Stefan Creemers

Catholic University of Lille - IESEG School of Management; KU Leuven

Robert N. Boute

KU Leuven - Faculty of Business and Economics (FEB); Vlerick Business School - Operations & Technology Management Center

Date Written: September 15, 2022

Abstract

Environmental concerns and a shortage of truck drivers motivate a paradigm shift in truck-dominated supply chains. To alleviate the pressure on truck transport, one can consolidate freight with other companies. Freight consolidation can be facilitated by third-party logistics service providers, who combine shipments that require delivery to the same destination on the same day. More gains can be realized through "proactive freight consolidation", by proactively synchronizing the timing of the orders placed. This is facilitated by a joint replenishment policy. The truck intensity of supply chains can be further reduced by shifting freight from road towards alternative transport modes, such as train or inland waterways. Modal split transport combines two complementary transport modes by using both modes in parallel. We analyze how proactive freight consolidation can be combined with modal split transport. We propose a heuristic that combines a can-order joint replenishment policy to consolidate freight orders proactively by truck, with a tailored base-surge policy to coordinate shipments via train or inland waterways. We develop a lower bound on the optimal cost to validate our heuristic. By comparing the truck usage and cost performance or our policy against alternative replenishment strategies, we show how the combination of proactive freight consolidation and modal split transport can shift freight towards alternative transport modes, without negatively impacting costs or service.

Keywords: Horizontal collaboration, Multi modal transportation, Joint replenishment, Dual sourcing, Sustainable supply chains

JEL Classification: M11

Suggested Citation

De Moor, Bram J. and Creemers, Stefan and Boute, Robert N., Breaking Truck Dominance in Supply Chains: Proactive Freight Consolidation and Modal Split Transport (September 15, 2022). Available at SSRN: https://ssrn.com/abstract=4093912 or http://dx.doi.org/10.2139/ssrn.4093912

Bram J. De Moor (Contact Author)

Research Center for Operations Management, KU Leuven ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

HOME PAGE: http://www.kuleuven.be/wieiswie/en/person/00139451

Stefan Creemers

Catholic University of Lille - IESEG School of Management ( email )

3 Rue de la Digue
Lille, 59000
France

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Robert N. Boute

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Vlerick Business School - Operations & Technology Management Center ( email )

Belgium

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