Achieving Economic and Environmental Sustainabilities in Urban Consolidation Center With Bicriteria Auction

Consolidation lies at the heart of the last-mile logistics problem. Urban consolidation centers (UCCs) have been set up to facilitate such consolidation all over the world. To the best of our knowledge, most-if not all-of the UCCs operate on volume-based fixed-rate charges. To achieve environmental sustainability while ensuring economic sustainability in urban logistics, we propose, in this paper, a bicriteria auction mechanism for the automated assignment of last-mile delivery orders to transport resources. We formulate and solve the winner determination problem of the auction as a biobjective programming model. We then present a systematic way to generate the Pareto frontier to characterize the tradeoff between achieving economic and environmental sustainabilities in urban logistics. Finally, we demonstrate that our proposed bicriteria auction produces the solutions that significantly dominate those obtained from the fixed-rate mechanisms. Our sensitivity analysis on the willingness of carriers to participate in the UCC operation reveals that higher willingness is favorable toward achieving greater good for all, if UCC is designed to be nonprofit and self-sustaining.