Combinatorial Auction for Truckload Transportation Service Procurement with Auctioneer-Generated Supplementary Bundles of Requests

Shippers usually procure transportation services from carriers via combinatorial auctions to reduce costs and improve service levels. Compared with single-round sealed bid auctions, multi-round auctions can reduce the revelation of confidential cost information of the carriers. In this paper, a two-phase multi-round combinatorial auction mechanism is proposed for truckload transportation service procurement, in which each transportation request is represented by a lane. The first phase is a combinatorial clock auction, which is terminated when the prices of the lanes are raised high enough such that each lane is bid by at least one carrier. In the second phase, the auctioneer provides some supplementary bundles of requests open for bid and adjusts the prices of the bundles, and each carrier decides whether to bid for some of the bundles in addition to its bids submitted in the first phase. Computational results show that the proposed mechanism can achieve an optimal or a near-optimal allocation of the requests to the carriers in terms of social efficiency.