Efficient Order Sharing with Privacy Preservation via Double Auction with Split Delivery

Last-mile logistics is vital to keep the economy of a city going. At the same time, however, the last-mile deliveries exert enormous pressures on the economic, environmental, and social well-being of the city. Delivery vehicles often remain for prolonged period of time traveling on congested roads around the city center. This drives up the delivery cost and contributes excessively to the carbon footprint. As loading/unloading bays inside the city are plagued with long queues, direct deliveries to multiple destinations (referred to as fragmented deliveries) not only diminish the delivery efficiency but also worsen the traffic condition, causing further inconveniences to the local residents. Order sharing is a plausible solution to such issue as it creates more consolidated deliveries, but not all orders can actually be shared. Carriers might have private orders they need to fulfill themselves. Herein, we introduce an order sharing mechanism in the form of a double auction with split delivery to facilitate an efficient collaboration among carriers while simultaneously preserving some degree of privacy. Computational experiments confirm the efficacy of our proposed mechanism in producing cost savings and reducing environmental impacts.