Large-Scale, Less-than-Truckload Service Network Design

We present a novel formulation for the service network design problem in the context of large-scale, less-than-truckload (LTL) freight operations. The formulation captures the basic network design constraints; the load-planning requirement that all freight at a location, irrespective of the freight's origin, loads to the same next terminal; and other important LTL specific requirements. Our modeling scheme fragments the underlying massive network design model with up to 1.3 million 0-1 variables and 1.3 million rows into a separate and efficient integer programming (IP) problem for each destination terminal along with a coordinating master network design problem. We produce high-quality solutions in very reasonable CPU times (similar to 2 hours) using slope scaling and load-planning tree generation with corresponding potential annual savings of $20-25 million dollars for the target company for which the research was conducted.