An auction with rolling horizon for urban consolidation centre

Abstract

A number of cities around the world have adopted urban consolidation centres (UCCs) to address some challenges of their last-mile deliveries. At the UCC, goods are consolidated based on their destinations prior to their deliveries into the city centre. In many examples, the UCC owns a fleet of eco-friendly vehicles to carry out the deliveries. A carrier/shipper who buys the UCC's service hence no longer needs to enter the city centre in which time-window and vehicle-type restrictions may apply. As a result, it becomes possible to retain the use of large trucks for the economies of scale outside the city centre. Furthermore, time which would otherwise be spent in the city centre can then be used to deliver more orders. With possibly tighter regulation and thinning profit margin in near future, requests for the use of the UCC's service shall become more and more common. In [1], the authors proposed a profit-maximizing auction mechanism for the use of the UCC's last-mile delivery service. In this paper, we extend that work with the idea of a rolling horizon to give bidders greater flexibility in competing for the UCC's resources in advance. In particular, it addresses the challenge that many shippers/carriers plan their deliveries many weeks ahead, and simultaneously allows last-minute bidders to compete for the UCC's resources.