Network characteristics and the performance of voluntary order-sharing networks in the container transport industry

The road transport industry is characterized by fierce competition, low margins and many suppliers. This thesis deals with an order-sharing network that allows hauliers to interchange orders to improve operational efficiency and create a competitive advantage. The main goal of this thesis is to examine how network characteristics affect the performance of the network and it’s participants. A probabilistic framework is developed and examined by means of simulations to assess the effect of network characteristics on the performance of the network. Mixed-integer linear programming has been used to empirically study the cost saving ability of an existing network: the Boxreload project. Multiple regression analyses have been conducted to assess how individual network characteristics affect the cost saving ability and the performance of the network in general. The results show that positive scale economies can be achieved in the network. Both the average amount of ‘reloads’ per order and the cost savings made by a reload are positively related to the size of the network. Due to directional restrictions (every import must be matched with an export), not every new entrant will enhance, and might even worsen the performance of the network. Voluntary order-sharing networks are, on average, more beneficial for small hauliers compared to large hauliers, because they are less capable to make internal reloads. An optimal size of the network has not been derived. However, the concave relationship between network size and network performance, and the rationale behind transaction costs imply that at some point, bigger is not always better.