Combinatorial Auctions for Trucking Service Procurement: An Examination of Carrier Bidding Policies

Combinatorial auctions are increasingly used by large shippers as a method to establish service contracts with trucking companies. In order to achieve maximal benefits in these auctions, carriers must determine a bidding policy that can accurately evaluate the costs they will incur to fulfill these contracts and which can quickly examine many different possible options. In this paper, we analyze the complexity of this bidding problem for the procurement of truckload trucking service contracts; further, we propose an optimization-based approximation method to aid a carrier in constructing bids. Using a simulation framework, we examine the performance of this method elative to a straightforward bidding policy similar to those used in practice.