An Efficient Bidding Heuristic for Simultaneous Truckload Transportation Auctions

Abstract

Transportation auctions are increasingly made online and the bidding time intervals are becoming much shorter. From the carriers' perspective, bid determination problems need to be solved more quickly due to the increasing number of auctions in the online transportation marketplace for their survivability. In this research, we study the bid price determination problem of truckload (TL) carriers participating in multiple independent first-price sealed-bid single-request TL transportation auctions simultaneously. The carriers must win the right combination of auctions to ensure profitability. The high level of competition, the uncertainty of the outcomes of the auctions, and the independence of the auctions from each other constitute the main challenge in this setting. In order to solve this problem, we develop an efficient heuristic which identifies the auctions to participate and determines the carriers' bids in the selected auctions. We demonstrate the efficiency and the effectiveness of our proposed heuristic by simulating a competitive auction-based transportation procurement marketplace under various parameter settings. The simulations show that our proposed heuristic performs close to an existing approach found in the literature with much less computational effort.