Dynamic Pricing System for Physical Internet Enabled Hyperconnected Less-than-Truckload Freight Logistics Networks

TL;DR

This paper proposes a dynamic pricing system for a Physical Internet-enabled hyperconnected LTL freight network, aiming to improve efficiency and address industry challenges through simulation-based evaluation.

Contribution

It introduces a novel dynamic pricing framework for open, hyperconnected LTL logistics systems leveraging Physical Internet concepts, addressing consolidation and pricing inefficiencies.

Findings

System improves freight consolidation efficiency

Dynamic pricing adapts to demand and cost fluctuations

Simulation results show potential for cost reduction and stability

Abstract

Less than truckload shipping plays a critical role in modern supply chains by consolidating freight from multiple shippers into shared vehicles. Despite its operational flexibility and potential sustainability benefits, the LTL sector faces persistent challenges, including high per unit costs and financial instability, as evidenced by recent industry bankruptcies. This paper investigates two structural issues limiting LTL performance, including the constrained consolidation potential imposed by proprietary logistics networks, and the inefficiency of fixed pricing models that fail to reflect realtime network conditions. To address these, we explore a Physical Internet enabled, hyperconnected LTL logistics system based on open asset sharing and dynamic flow consolidation. We then propose a dynamic pricing framework tailored for this network. Through a simulation based study grounded in Freight Analysis Framework data and cost estimates from industry sources, we evaluate system performance across three demand and cost uncertainty scenarios in the Southeastern U.S. The results validate our system effectiveness and suggest a promising path forward for building more efficient LTL logistics operations.