Optimizing Long-Haul Transportation Considering Alternative Transportation Routes Within a Parcel Distribution Network

Abstract

Due to increasing costs, intense competition and increasingly demanding customer expectations regarding delivery lead times parcel delivery services need to continuously improve their logistics networks and processes. This paper analyses the potential to improve both costs and delivery lead times by introducing alternative, direct transportation routes. Here, direct transports avoid hubs within the distribution network and, therefore, reduce transportation distance and time as well as sorting time. To examine the optimization potential of these new transportation routes, we consider a large-scale distribution network, where distinguishable items have to be transported from sources through certain hubs to predetermined sinks. We introduce a service network design model, which minimizes total long-haul transportation costs within the delivery network while meeting predetermined service levels. The model identifies the optimal transportation plan and decides if a service is offered at a specific time period or not.