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Maximizing Profits for North American Van Lines' Truckload Division: A New Framework for Pricing and Operations

Author

Listed:
  • Warren B. Powell

    (Department of Civil Engineering and Operations Research, Princeton University, Princeton, New Jersey 08544)

  • Yosef Sheffi

    (Department of Civil Engineering, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Kenneth S. Nickerson

    (Department of Operations Research, Stanford University, Stanford, California 94305)

  • Kevin Butterbaugh

    (North American Van Lines---Commercial Transport Division, PO Box 988, Ft. Wayne, Indiana 46801)

  • Susan Atherton

    (North American Van Lines---Information Services)

Abstract

The Commercial Transport Division of North American Van Lines dispatches thousands of trucks from customer origin to customer destination each week under high levels of demand uncertainty. Working closely with upper management, the project team developed a new type of network model for assigning drivers to loads. The model, LOADMAP, combines real-time information about drivers and loads with an elaborate forecast of future loads and truck activities to maximize profits and service. It provided management with a new understanding of the economics of truckload operations; integrated load evaluation, pricing, marketing, and load solicitation with truck and load assignment; and increased profits by an estimated $2.5 million annually, while providing a higher level of service.

Suggested Citation

  • Warren B. Powell & Yosef Sheffi & Kenneth S. Nickerson & Kevin Butterbaugh & Susan Atherton, 1988. "Maximizing Profits for North American Van Lines' Truckload Division: A New Framework for Pricing and Operations," Interfaces, INFORMS, vol. 18(1), pages 21-41, February.
    • Handle: RePEc:inm:orinte:v:18:y:1988:i:1:p:21-41
    DOI: 10.1287/inte.18.1.21
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    Cited by:

    1. Claudia Archetti & Martin Savelsbergh, 2009. "The Trip Scheduling Problem," Transportation Science, INFORMS, vol. 43(4), pages 417-431, November.
    2. Acocella, Angela & Caplice, Chris & Sheffi, Yossi, 2020. "Elephants or goldfish?: An empirical analysis of carrier reciprocity in dynamic freight markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 142(C).
    3. John Turner & Ben Peterson & Soo-Haeng Cho & Sunder Kekre & Alan Scheller-Wolf, 2012. "A Large US Retailer Selects Transportation Carriers Under Diesel Price Uncertainty," Interfaces, INFORMS, vol. 42(4), pages 365-379, August.
    4. Larry J. LeBlanc & Dale Randels & T. K. Swann, 2000. "Heery International's Spreadsheet Optimization Model for Assigning Managers to Construction Projects," Interfaces, INFORMS, vol. 30(6), pages 95-106, December.
    5. Long Gao & Jim (Junmin) Shi & Michael F. Gorman & Ting Luo, 2020. "Business Analytics for Intermodal Capacity Management," Manufacturing & Service Operations Management, INFORMS, vol. 22(2), pages 310-329, March.
    6. Burks, Stephen V. & Kildegaard, Arne & Miller, Jason W. & Monaco, Kristen, 2023. "When Is High Turnover Cheaper? A Simple Model of Cost Tradeoffs in a Long‐Distance Truckload Motor Carrier, with Empirical Evidence and Policy Implications," IZA Discussion Papers 16477, Institute of Labor Economics (IZA).
    7. Huseyin Topaloglu & Warren Powell, 2007. "Incorporating Pricing Decisions into the Stochastic Dynamic Fleet Management Problem," Transportation Science, INFORMS, vol. 41(3), pages 281-301, August.
    8. Ozlem Ergun & Gultekin Kuyzu & Martin Savelsbergh, 2007. "Reducing Truckload Transportation Costs Through Collaboration," Transportation Science, INFORMS, vol. 41(2), pages 206-221, May.
    9. Hall, Randolph W., 1999. "Stochastic freight flow patterns: implications for fleet optimization," Transportation Research Part A: Policy and Practice, Elsevier, vol. 33(6), pages 449-465, August.
    10. Zolfagharinia, Hossein & Haughton, Michael, 2018. "The importance of considering non-linear layover and delay costs for local truckers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 109(C), pages 331-355.
    11. Zolfagharinia, Hossein & Haughton, Michael, 2016. "Effective truckload dispatch decision methods with incomplete advance load information," European Journal of Operational Research, Elsevier, vol. 252(1), pages 103-121.
    12. Barrett W. Thomas, 2007. "Waiting Strategies for Anticipating Service Requests from Known Customer Locations," Transportation Science, INFORMS, vol. 41(3), pages 319-331, August.
    13. Gregory D. Glockner & George L. Nemhauser, 2000. "A Dynamic Network Flow Problem with Uncertain arc Capacities: Formulation and Problem Structure," Operations Research, INFORMS, vol. 48(2), pages 233-242, April.
    14. Zolfagharinia, Hossein & Haughton, Michael A., 2017. "Operational flexibility in the truckload trucking industry," Transportation Research Part B: Methodological, Elsevier, vol. 104(C), pages 437-460.
    15. F. Jordan Srour & Niels Agatz & Johan Oppen, 2018. "Strategies for Handling Temporal Uncertainty in Pickup and Delivery Problems with Time Windows," Transportation Science, INFORMS, vol. 52(1), pages 3-19, January.
    16. M. C. van der Heijden & A. van Harten & M. J. R. Ebben & Y. A. Saanen & E. C. Valentin & A. Verbraeck, 2002. "Using Simulation to Design an Automated Underground System for Transporting Freight Around Schiphol Airport," Interfaces, INFORMS, vol. 32(4), pages 1-19, August.
    17. Soeffker, Ninja & Ulmer, Marlin W. & Mattfeld, Dirk C., 2022. "Stochastic dynamic vehicle routing in the light of prescriptive analytics: A review," European Journal of Operational Research, Elsevier, vol. 298(3), pages 801-820.
    18. Warren B. Powell & Arun Marar & Jack Gelfand & Steve Bowers, 2002. "Implementing Real-Time Optimization Models: A Case Application From The Motor Carrier Industry," Operations Research, INFORMS, vol. 50(4), pages 571-581, August.
    19. Kuyzu, Gültekin & Akyol, Çağla Gül & Ergun, Özlem & Savelsbergh, Martin, 2015. "Bid price optimization for truckload carriers in simultaneous transportation procurement auctions," Transportation Research Part B: Methodological, Elsevier, vol. 73(C), pages 34-58.
    20. Ghilas, Veaceslav & Demir, Emrah & Woensel, Tom Van, 2016. "A scenario-based planning for the pickup and delivery problem with time windows, scheduled lines and stochastic demands," Transportation Research Part B: Methodological, Elsevier, vol. 91(C), pages 34-51.
    21. Budak, Aysenur & Ustundag, Alp & Guloglu, Bulent, 2017. "A forecasting approach for truckload spot market pricing," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 55-68.
    22. Barrett W. Thomas & Chelsea C. White, 2004. "Anticipatory Route Selection," Transportation Science, INFORMS, vol. 38(4), pages 473-487, November.
    23. Soumia Ichoua & Michel Gendreau & Jean-Yves Potvin, 2000. "Diversion Issues in Real-Time Vehicle Dispatching," Transportation Science, INFORMS, vol. 34(4), pages 426-438, November.

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