Collaborative shipping under different cost-sharing agreements

We study collaborative shipping where two shippers bundle their shipments to share the same transportation vehicle (also known as co-loading). The goal of such a collaboration is to reduce the total number of transports, thereby reducing transportation costs and CO₂ emissions. To synchronize the replenishment of both companies, we adopt a can-order joint replenishment policy for both companies, and we analyze how the costs of each individual company are impacted by the collaboration. In our analysis, we not only look at the impact on transportation costs, but we also study how collaborative shipping impacts each company's inventory costs. We consider different agreements to redistribute the costs (or the gains) of the collaboration, ranging from no cost redistribution at all, sharing the transportation costs (or its gains) only, to sharing the total logistics costs (or its gains) that are impacted by the collaboration, i.e., transportation plus inventory costs. We show that the stability of the collaborative agreement strongly depends on the cost-sharing agreement, in combination with the allocation mechanism used to share the costs (or gains) of the coordination. Whereas most companies focus on the redistribution of transportation costs, it may not necessarily lead to a win-win situation where each company benefits from collaboration.