Game theoretic analysis of centralised road backhauling market

Abstract

Geographic imbalances of trade are a major reason for empty travel in long-distance road freight markets. One strategy to reduce empty vehicle-kilometres is backhauling. This consists in matching the supply of trips by hauliers who have empty vehicles available with the demand of trips by shippers. A spatial model is proposed to explain and predict matchings and shipment prices in networks of any size and topology. The model formulation is the one of assignment games. A digital platform managed by a social planner receives trip offers and shipment requests. Hauliers and shippers are matched to minimize travel standard costs. This centralized socially optimal market is stable, i.e. no pair of haulier and shipper (fronthaul service) and no triplet composed by one haulier and two shippers (backhaul service) has an incentive to break up the current partnership. Equilibrium conditions are satisfied, in the sense that each player individually maximises her surplus. Additionally, no haulier and no shipper loses, and, therefore, subsidies are not needed. Prices can be set to achieve backhaul, or fronthaul, Pareto optimal shipper surplus allocations. Toy cases and one real case related to regional transport of products of a specific industry are used for illustration.