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Abstract
Multi-Stop Truckload (MSTL) is becoming increasingly popular among shippers (i.e. companies that need their products transported) for shipping less than truckload (LTL). According to a dataset from CH Robinson, the business share of MSTL has increased from 6.42% in 2013 to 7.39% in 2015. This is due to its cost savings potential, shorter transit time, reduced damages, more certain delivery time, and positive environmental impacts. At the same time, carriers have become more cautious about accepting multi-stop load tenders because they tend to impose extra travel distance, higher cost of operation, longer detention time for drivers, and disruptive effects on the flow balance of the carriers' transportation routes. This paper proposes a multi objective decision model that identifies the best two-stop routes that maximize the cost savings for the shipper and fulfill the most important load acceptance criteria of the carriers. The model provides a trade-off capability for selecting routes with more appeal to either shipper or carrier.
Keywords
Multi-stop truckload (MSTL), Milk run logistics, Multi objective decision analysis, Transportation management
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1.Introduction
The trucking industry primarily consists of two modes of transport: Full Truckload (FTL) and Less-than-Truckload (LTL). MSTL, which mostly targets the LTL market, consists of using one full truckload to deliver to multiple locations on a single trip. While it is considered as a new transportation option, many consider it as a variant of FTL. The main reason for this notion is that the pricing structure of MSTL has a very similar pricing structure as FTL within the United States. In the truckload market, there are two pricing alternatives, spot market and annual pricing contracts. Companies that regularly need large volume of products to be shipped often set annual pricing contracts with carriers to secure lower prices and avoid the volatility and uncertainty of the spot market. Although contracts added more certainty to the freight transportation, uncertainty is not completely removed because carriers are not obligated to accept all the loads offered by the shipper. The primary advantage of contracts over the spot market is the fixed cost per mile for different lanes (lanes are pairs of origin cities and destination cities) while in the spot market freight is put up for bid. The MSTL market...