Authors: Ioannis Avgerinos, Yiannis Mourtos, Dimitris Zissis, and George Zois, ATHENS UNIVERSITY OF ECONOMICS AND BUSINESS – RESEARCH CENTER

Several industry-led initiatives had shown that pooling resources may help ameliorate the last-mile logistics and the related operations, while at the same time satisfying customers’ expectations for fast, error-free and on-time delivery. An indicative example which motivates our work can be found in the transportation section with the initiative taken by FedEx and UPS during the pandemic, which underlies collaboration among competitors (link). These two leading logistics companies, that are rivals, had announced their intention to work closely on the logistics of vaccine deliveries. This allowed for regional coordination by dividing the U.S. into two territories, with each company serving an area exclusively and the other refocusing its resources in its area of responsibility. This initiative points out a more efficient distribution network that ensures high-quality services at a satisfactory cost.

The impacts of collaboration in terms of reducing the operating cost and creating environmental benefits (reduced emissions) have been discussed in the literature (Van Loo et al., 2015). Other scholarly studies have explored the efficiencies that would be achieved when orders are grouped or picked at the fulfilment centre before the last-mile delivery (Boyer et al., 2009). It can be argued that the implementation of collaboration is much easier now compared to some years ago, in terms of available technological tools for sharing information in real-time (Agarwal & Narayana, 2020) and solve complex optimisation problems regarding the dynamic routing of vehicles with time windows that deliver the goods as well as the selection of appropriate locations (acting as shared micro-hubs). The main idea is to implement a cooperative model able to coordinate distribution networks aiming to eliminate overlapping routes and increase vehicle utilisation, while adhering to customer service levels. Under that approach it is possible to increase the capacity for delivery services at a lower cost.

In the GREEN-LOG project, we advocate that stakeholders involved in the transportation decisions should see collaboration with competitors (coopetition) as an enriching opportunity and rethink their last mile logistics process for more effective delivery with less (economic and environmental) cost. Coopetition is an evolutionary approach that combines cooperation and competition in decentralised systems (Brandenburger & Nalebuff, 1996). This however requires flexibility from the competition authorities, considering that in mature markets the size of stakeholders working together may have an impact on area coverage and consumer choice.

References:

• Agarwal, U.A., & Narayana, S.A. (2020). Impact of relational communication on buyer–supplier relationship satisfaction: role of trust and commitment. Benchmarking: An International Journal, 27(8), 2459-2496.
• Boyer, K., Prud’homme, A., & Chung, W. (2009). The last mile challenge: evaluating the effects of customer density and delivery window patterns. Journal of business logistics, 30(1), 185-201.
• Brandenburger, A., and B. Nalebuff. (1996). Co-Opetition. Doubleday, New York, NY.
• Van Loon, P., Deketele, L., Dewaele, J., McKinnon, A., & Rutherford, C. (2015). A comparative analysis of carbon emissions from online retailing of fast moving consumer goods. Journal of Cleaner Production, 106, 478-486.

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