Minimizing Urban Logistics Cost Using Crowd-Shipping

Abstract

This study aims to determine the extent to which crowd-shipping delivery can reduce shipping costs. An extension of the classic Capacitated Vehicle Routing Problem (CVRP) is studied to model the possibility of performing deliveries using private citizen. A probabilistic model is incorporated to estimate the likelihood of finding a crowd-shipper for a given compensation. The model is applied to a logistics company based in Bandung, Indonesia. Results indicate significant advantages in using crowd-shipper as opposed to the traditional method. Specifically, costs can be reduced by about 20% and carbon dioxide (CO2) emissions can be reduced by 21% when a base scenario price sensitivity is considered. Overall, the case study suggests potential economic and environmental benefits relying on Occasional Couriers (OC's).