An airfreight forwarder's shipment bidding and logistics planning

Today many web-based logistics platforms exist, enabling logistics agents worldwide to interact and form collaborations in an effective manner. In particular, some advanced e-platforms support online bidding of shipments. This paper integrates shipment bidding with logistics decisions. First, we formulate the shipment bidding and logistics planning model as a 0-1 mixed integer program, which addresses only buyout bids. Based on the properties of the model, we design a two-echelon solution procedure to search for the optimal shipment portfolio and the corresponding logistics requirements. We then extend the model to include placing either a buyout bid or an alternative bid for a new shipment with an estimated probability of success. The general model is formulated as a two-stage mixed 0-1 stochastic integer program, which allows forwarders to acquire some new jobs right away while placing alternative bids on others. The model is solved by modifying the two-echelon procedure. An illustrative example is included to highlight the significance of integrating shipment bidding with shipment logistics planning. Managerial issues are explored based on this example.